High-tech help to transform your funds
Technology has made managing your money easier than ever before. Here’s how – and where – to do it
EVEN stuffy old finance is not immune to the technology revolution. There are now dozens of decent options for investors to set up and manage both investments and pensions online. There are two basic approaches to running a do- it- yourself investment or pension.
You can select the shares or funds to put into your Isas or pensions. This will suit more confident investors who enjoy researching stock markets and individual investment funds.
Alternatively, you can pick an option which does the investment heavy-lifting for you.
This minimises the decisions you need to take and gives you the comfort of having an expert on your side. Think of it as an online investment personal shopper. I have personal accounts with more t han 25 online i nvestment and pension providers so I can see what they are like from a customer’s perspective.
Behind the glossy web pages, the reality of using a service online, transacting, calling them up and tracking investment returns can be less than slick.
Here are my suggestions.
ONLINE INVESTMENTS
THERE is a vast array of options. These are the five main questions I think you need to ask when making a choice.
Are the charges fair? Do I have enough choice? Is the website easy to use? Is the service good? Do I trust the brand and does it seem safe?
No one wants to pay over the odds for investing. When assessing fees you have to factor in two basic charges.
First, the fees we pay a fund manager if we use funds rather than selecting our own individual shares.
Secondly, the administration fee – sometimes called a platform fee – that we pay the service provider.
I would expect to pay a fund manager around 0.75 per cent and a platform up to 0.4 per cent. Any more and you need to o feel sure you are getting value for money.
As for the actual ctual service and easee of use, t here is a huge disparity y in what goes on behind the scenes on the secure trading websites.
Here is a tiny example. I am currently doing my tax return and needd to dig out consolilidated tax vouchers ers for the investment ment accounts.
They are simple ple to find on AJ Bell, Charles arles Stanley, Hargreaves Lansdown and Interactive Investor. But I need to make phone calls to Alliance Trust Savings, Barclays, Nutmeg and The Share Centre as I cannot find them despite trawling through the websites.
In general when it comes to service, Hargreaves Lansdown is the clear winner. Their people on the phones pick up quickly, they are human
beings ( ho how retro) and know theirthei stuff. As cyber-crime is on the rise, I also think there is comfort in dealing with a FTSE 100 company such as Hargreaves Lansdown with all its processes and protocols.
With a 0.45 per cent platform charge, they are slightly on the wrong side of an acceptable fee but many people grin and bear it for the stellar service. When chatting to people
about the right investment platform for them, I do ask about their personal trade-off between time and fees charged.
Hobbyist investors may prefer to look for low charges and be happy to spend a bit more time on hold or working through a website which can be tricky to navigate.
Those less interested will value convenience and advice above everything. Finally, there are some dodgy firms out there. If you are considering a new brand, do check who the ‘custodian’ of your money is. This ringfences your investments if the firm you have invested with gets into trouble.
Also there is no such thing as a free lunch. Anyone promising ‘guaranteed’ returns is probably lying. So run a mile from those timber/car park/property investment schemes ‘ guaranteeing’ doubledigit returns. Good investments should be pedestrian.
Below I offer some suggestions for investment platforms.