26 min Read
10 Sep 2018

Written by Damien

Damien is one of the most widely quoted money and investment experts in the national press and has made numerous radio & TV appearances. He created MoneytotheMasses.com while working in the City when he became disillusioned with the way the public were left to fend for themselves because they could not afford financial advice.

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Charles Stanley Direct Review 2018 – the best home for your portfolio

Charles Stanley Direct reviewCharles Stanley Direct review

Charles Stanley Direct is one of the leading investment platforms in the UK. In this comprehensive Charles Stanley review I look under the bonnet of the investment platform, at the products it provides, its charges, performance and how it compares versus its peers such as Hargreaves Lansdown which remains the UK's most popular investment platform.

Who is Charles Stanley?

Charles Stanley & Co. is one of oldest firms on the London Stock Exchange with its roots stretching as far back as 1792. Today Charles Stanley Co. Ltd. is one of the foremost investment companies in the UK offering a range of financial products and wealth management services to private clients, charities and small institutions.

Charles Stanley Direct is the company's award-winning online investment service which allows individual investors to invest in an ISA, SIPP or Investment Account from as little as £50 per month. They also offer a competitive Junior ISA product.

The wider umbrella company Charles Stanley & Co. has over £24.3billion under management versus Hargreaves Lansdown's £55.3billion of assets under management. So while Charles Stanley isn't the largest online investment platform in the UK it certainly has a significant market share.

What products and services are offered by Charles Stanley Direct?

Charles Stanley Direct ISA review

Investing in an ISA is a tax-efficient way of building up a lump sum for the future. Investments of up to £20,000 (2018/19 tax year) are free of capital gains tax and any further income tax.

The Charles Stanley Direct Stocks and Shares ISA is one of the few 'flexible' Stocks and Shares ISAs available in the UK. A flexible ISA allows you the to withdraw money from your current tax year's Stocks and Shares ISA and replace it at a later date within the same tax year. So if for example you had invested your full £20,000 ISA allowance into a Charles Stanley Direct ISA and then withdrew £5,000 during the same tax year you would have £5,000 of your ISA allowance still available if you wanted to top-up your investment later that tax year. With an ordinary, non-flexible, Stocks and Shares ISA (which most ISA providers offer, including Hargreaves Lansdown) you could not replenish the £5,000 withdrawal in the aforementioned example. When it comes to keeping track of any withdrawals or contributions then the Charles Stanley Direct dashboard makes organising payments and withdrawals quick and easy.

The Charles Stanley Direct Stocks and Shares ISA has won numerous industry awards including the best self-select ISA provider at the Investment and Wealth Management awards.

In terms of costs, we compared the cost of running different sized ISA portfolios via a Charles Stanley Direct ISA vs other leading Stocks and Shares ISA providers. This heatmap shows how cost-effective each ISA provider is at any given ISA portfolio size assuming you are investing using unit trusts. Green represents low costs while red indicates that the ISA provider is expensive for the given size of ISA portfolio. You can clearly see from the heatmap that Charles Stanley is very cost-effective, particularly as your portfolio grows, and it is no wonder that it has won awards for being the best investment platform for investors wanting to buy and hold smaller funds.

Charles Stanley Direct ISA Fees

Charles Stanley ISA charges are as follows:

Annual platform charge

For stocks and shares the platform charge is:

  • 0.35% per annum on the value of all stocks & shares held across all accounts

For fund investments the platform charge is:

  • Up to £250,000 - 0.35%
  • £250,000 to £500,000 - 0.20%
  • £500,000 to £1million - 0.15%
  • £1,000,000 to £2,000,000 - 0.05%
  • Over £2,000,000 - no charge

Dealing Charges

  • Fund trading - no charge (some ISA providers such as AJ Bell charge for fund switches)
  • Stocks & share trading - £11.50 per trade which is cheaper than Hargreaves Lansdown although Hargreaves does offer discounts the more trades you do - see the 'Charles Stanley Direct Trading Account' review section below for more information.

Charles Stanley Direct Junior ISA review

The Charles Stanley Direct Junior ISA is an award-winning Stocks and Shares Junior ISA. In our independent comparison of the Best Stock and Shares Junior ISA the Charles Stanley Junior was the best overall Stocks and Shares Junior ISA across the market. It combines low charges (especially if you are investing in unit trusts), a wide investment choice and a low monthly minimum contribution amount of just £50 (or a lump sum of £500).

While I would be more than happy using a Charles Stanley Direct Junior ISA to invest for my children if you are looking for more online tools and research then the award-winning Hargreaves Lansdown Junior ISA is a viable alternative at a similar cost. Both the Charles Stanley Direct Junior ISA and the Hargreaves Lansdown Junior ISA come into their own if you want to pick the underlying investments yourself. However, if picking investments is not for you then robo-advice firm Wealthsimple offers the Wealthsimple Junior ISA account where they will invest your money on your behalf which can be monitored via their app. In addition, you can invest with as little as £1 and charges are low. Charles Stanley does offer its own managed portfolios, called Foundation Portfolios, and multi-asset funds which I look at later in this Charles Stanley review but both are more expensive than using Wealthsimple. Wealthsimple is currently one of the only robo-advisers offering a Stocks and Shares Junior ISA.

The big advantage of investing for a child or grandchild via a Junior ISA is that you can invest up to £4,260 (in the 2018/19 tax year) free of capital gains tax and any further income tax. When the child attains the age of 18 the proceeds of the Junior ISA are theirs to access or continue as a full ISA.

Charles Stanley Direct Junior ISA Fees

Annual platform charge

For stocks and shares the platform charge is:

  • 0.35% per annum on the value of all stocks & shares held across all accounts

For fund investments the platform charge is:

  • Up to £250,000 - 0.35%
  • £250,000 to £500,000 - 0.20%
  • £500,000 to £1million - 0.15%
  • £1,000,000 to £2,000,000 - 0.05%
  • Over £2,000,000 - no charge

Dealing Charges

  • Fund trading - no charge
  • Stocks & share trading - £11.50 per trade (which is cheaper than Hargreaves Lansdown)

Charles Stanley Direct SIPP Review

We analysed the charging structure of every SIPP in the marketplace to determine which is the cheapest based on portfolio size. The full fundings can be found in our article 'The Cheapest SIPP – the best value pension for you'. However, the Charles Stanley Direct SIPP  was the cheapest SIPP for investors with a pension fund of up to £50,000 who predominantly invest in unit trusts. The Charles Stanley SIPP also remains very competitively priced for pension pots up to £100,000 in value. That means that if your SIPP grows in value (whether a result of investment growth or further contributions) the Charles Stanley SIPP will remain good value, negating the need for you to switch SIPP providers at a later date in order to keep costs low. Charles Stanley Direct has won numerous industry awards for its customer service and overall quality as an online investment platform but I am surprised it hasn't won more industry awards specifically for its SIPP product.

The Charles Stanley Direct SIPP is a tax-efficient way to save for retirement with as little as £100 per month or a £500 lump sum. Any UK resident under the age of 75 may contribute and receive tax relief up to an annual contribution allowance of £40,000.

The Government will top up contributions with 20% basic rate tax relief. Higher rate taxpayers can claim back a further 20% through their tax return with additional rate taxpayers able to claim a further 25%.

Charles Stanley Direct SIPP fees

The Charles Stanley Direct SIPP charges are:

Annual platform charge

For stocks and shares the platform charge is:

  • 0.35% per annum on the value of all stocks & shares held across all accounts

For fund investments the platform charge is:

  • Up to £250,000 - 0.35%
  • £250,000 to £500,000 - 0.20%
  • £500,000 to £1million - 0.15%
  • £1,000,000 to £2,000,000 - 0.05%
  • Over £2,000,000 - no charge

Dealing Charges

  • Fund trading - no charge (unlike AJ Bell which charges £1.50 per fund transaction)
  • Stocks & share trading - £11.50 per trade

SIIP Account Charge

  • Annual charge of £100 + Vat waived if you have combined assets across the platform of £30,000 or more

Transfer Out Charge

  • £125 charge for transferring out to a UK pension scheme

Charles Stanley Direct Trading Account review

Besides the ISAs and SIPP, Charles Stanley has a trading account that lets you invest outside of a tax-wrapper. As such all income and capital gains are liable to taxation. Again, you can start investing with as little as £50 per month or a £500 lump sum. Charles Stanley Direct Trading Account ticks all the right boxes but there are some drawbacks. For example, if you compare Charles Stanley vs Hargreaves Lansdown then while the latter's trading costs for ETFs, shares and investment trusts start at £11.95 (compared to Charles Stanley's £11.50) they quickly drop in price the more trades you do a month. If you make 20 or more trades a month then the cost of each drops to £5.95 with Hargreaves Lansdown while Charles Stanley charges £11.50 regardless. That makes Hargreaves Lansdown one of the cheapest trading accounts in the market. So if you are a high-frequency trader then it is worth looking at alternatives such as Hargreaves Lansdown Fund & Share Account or IG share dealing.

Charles Stanley Direct's site isn't particularly pretty on the eye and quite text heavy in places but it does offer charting tools on a par with other investment platforms and also price alerts, limit orders, share watch lists and live price streaming. You can invest in shares, unit trusts, investment trusts, government bonds, corporate bonds and Venture Capital Trusts. However, you can't invest in CFDs or spread bet (activities you can do with Hargreaves Lansdown).

Overall the Charles Stanley trading account suits most investors who want to invest in unit trusts, ETFs and investment trusts. However, sophisticated investors wanting to trade frequently will find the trading costs expensive but also the lack of research and tools off-putting. For sophisticated investors/traders there are better more cost-effective platforms out there with Hargreaves Lansdown being the most popular choice.

Charles Stanley Direct Trading Account Fees

Annual platform charge

For stocks and shares the platform charge is:

  • 0.35% per annum on the value of all stocks & shares held across all accounts

For fund investments the platform charge is:

  • Up to £250,000 - 0.35%
  • £250,000 to £500,000 - 0.20%
  • £500,000 to £1million - 0.15%
  • £1,000,000 to £2,000,000 - 0.05%
  • Over £2,000,000 - no charge

Dealing Charges

  • Fund trading - no charge
  • Stocks & share trading - £11.50 per trade

Charles Stanley - other services

As well as the DIY investment products discussed above Charles Stanley also offers a range of other services aimed at wealthier customers. These are listed below:

Charles Stanley Wealth Management

The Charles Stanley Wealth Managemen service gives clients access to a dedicated financial planner who will assist in building an investment portfolio tailored to the client's goals and risk profile. The service can also provide retirement planning, tax planning as well as protection planning. Minimum investment of £200,000.

Charles Stanley Discretionary Management

If a client wants to have freedom from making investment decisions then the Charles Stanley Discretionary Management Service can make those decisions on their behalf in line with the client's financial goals and risk profile. Minimum investment of £200,000.

Charles Stanley Advisory Management

With the Charles Stanley Advisory Management Service recommendations are made to clients  on how to achieve their investment goals. The final decision on whether to act on any recommendations remains with the client.

Charles Stanley Advisory Dealing

The Charles Stanley Advisory Dealing Service is for clients who prefer to take an active interest in the markets and are confident in making investments, with Charles Stanley advising on an individual stock/fund basis.

Charles Stanley Personal Portfolio Service

The Charles Stanley Personal Portfolio Service offers a range of 5 managed Charles Stanley funds. Each fund is built to meet a specific risk profile (so not bespoke to each client) and achieve a targeted return. Access is available to research and advice when required by the client.

Free tools and investment advice offered by Charles Stanley to DIY investors

For investors wanting to choose their own investment funds, Charles Stanley does offer a range of tools fund shortlists to help you make a decision. These include Charles Stanley's fund lists.

Charles Stanly Direct Fund Lists

Foundation fundlist

Firstly there is the Foundation Fundlist which is a list of preferred funds across the major sectors, selected by the Charles Stanley Collectives Research Team. This is akin to Hargreaves Lansdown's Wealth 150+ list or the AJ Bell Favourite Funds list. Both the AJ Bell and Hargreaves Lansdown lists contain more funds than the Charles Stanley list but as all these lists are available to non-customer there's nothing to stop you using all three to make your fund choices and invest via your chosen platform. Only Hargreaves Lansdown's Wealth 150+ has historical performance data which I analyse in my Hargreaves Lansdown review

Foundation Portfolios

The Foundation Portfolios are portfolios created to assist clients in making investment choices by creating a range of funds reflecting different investment outlooks. The client selects whether to invest for growth, income or a balance of both. You then you pick a risk level (cautious balanced or adventurous) before you are shown 5 funds (that make up one of the Foundation Portfolios) which you can add to your fund basket to invest in. While most investment platform ready-made portfolios are pre-packaged I do quite like the way the foundation portfolios show you a nice breakdown of the funds included, the overall asset mix and the geographical mix. It means that you could use the portfolio selection tool to get an idea of how to build a balanced portfolio yet ultimately choose your own funds to achieve the suggested asset mix for your risk profile. That is not what the Foundation Portfolio tool is designed to do but it is a useful by-product.

Charles Stanley Multi-asset funds

Charles Stanley also offers one fund solutions in the form of their multi-asset funds. There are five funds of varying risk levels which aim to give you inflation-beating returns by investing in a range of assets but mainly equities and bonds. The funds only launched in April 2017) so they don't have much of a track record. However, as the table below shows the medium risk multi-asset fund has actually underperformed the average of its peer group over the first year which is not unusual for platforms' in-house funds. Personally, I would rather choose my own portfolio of funds, But if you are looking for a single fund solution then you would be better off considering a robo-advice proposition or a passive solution such as those offered by Vangaurd.

Name Total return since April 2017
Mixed Investment 40-85% Shares sector average fund return 3.94%
MI Charles Stanley Multi Asset 3 Moderate 3.28%

 

Summary – Charles Stanley Direct review – Should you use them?

The Charles Stanley Direct platform is very competitively priced and is about the cheapest platform for investors with SIPP portfolios worth up to £100,000 or Stocks and Shares ISA portfolios under £50,000 mainly investing in unit trusts. It means that as your portfolio grows you probably won't need to transfer to another investment platform in order to keep costs down. It is only when your portfolio is £250,000 in size then you would be better off looking at a platform with a fixed fee structure (such as Interactive Investor) rather than one that charges fees as a small percentage of your portfolio size. This observation is true of most investment platforms including Hargreaves Lansdown.

Charles Stanley is ideal for investors wanting to invest in an ISA, SIPP or Junior ISA who will likely favour unit trust over investment trusts and ETFs. For those wanting to invest in the latter options then it remains cost-effective as long as they keep the number of trades they carry out to a minimum.

Perhaps the best recommendation for Charles Stanley comes from the customers themselves. The below quote is from a MoneytotheMasses.com reader who had agonised over whether to invest via AJ Bell or Charles Stanley.

"When I was choosing a fund platform, I considered A J Bell but in the end chose Charles Stanley for my ISA. With Charles Stanley, there are no fund switch charges, their switches are carried out faster than AJ Bell and their telephone help service (which I’ve contacted several times) is first rate."

Charles Stanley Direct Alternatives

Hargreaves Lansdown is the big competitor to Charles Stanley which is why I have included a specific section below on Charles Stanley vs Hargreaves Lansdown. Charles Stanley is not only cost-effective but also user-friendly which makes it a more attractive proposition than something like Fidelity, one of the other major and best-known players in the investment platform industry.

If you are looking to regularly trade investment trusts, ETFs or shares then you would be better off considering either Hargreaves Lansdown, IG or Interactive Investor.

For investors with relatively small sums wanting someone to run their money for them then Charles Stanley's discretionary services are aimed at those with over £200,000, so are not ideal. So it would be worth considering a robo-advisor like Wealthsimple that is not only a cheaper alternative to Charles Stanley's discretionary service but can be accessed with as little as £1 to invest. If you simply want to invest in passive investments with the priority of keeping costs low, rather than trying to outperform the market, then have a look at our Vanguard Investor review.

Charles Stanley vs Hargreaves Lansdown

Charles Stanley is an award-winning investment platform and rightly so. For investors with portfolios under £100,000 who want to invest in unit trusts then it is cheaper than Hargreaves Lansdown. However, if you want to invest and regularly trade in investment trusts, ETFs or shares then Hargreaves Lansdown will be more cost-effective. That's because Charles Stanley's cost per trade on these types of investments is fixed at £11.50. While this is cheaper than Hargraves Lansdown's £11.95, Hargreaves' charges quickly drop the more trades you do in a month. If you make 20 or more trades a month they cost just £5.95 a month which is among the cheapest rate in the market. It is worth pointing out that neither platform charges for unit trust switches.

Also, sophisticated investors wanting to spread bet or invest in CFDs will favour Hargreaves Lansdown over the Charles Stanley as the latter does not offer these. For usability, functionality (both online or via their respective apps) and independent research Hargreaves Lansdown wins over Charles Stanley.

Ultimately which of the platforms you choose will depend on the types of investments you plan to hold and whether you are cost sensitive. For most investors (who will only ever invest in investment trusts) Charles Stanley is not only cheap but a more than adequate choice that will grow with your portfolio. However, if you are looking to trade in more sophisticated investments and be a very active investor then Hargreaves Lansdown will be a more attractive option.

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