Quick n dirty report: Trading platform relative satisfaction

6th Dec '17 by fwyburd

82 comments 15983 reads

On the 4th December, I invited the readers of the Small Cap Value report to share their experiences of the platform they use to trade. 123 investors responded and completed the brief online survey by 9am on the 5th December.

The summary findings are as follows:

1. Trading frequency

Perhaps unsurprisingly given they are readers of Paul and Graham's blog, the majority are 'frequent traders". For the trading platforms, this readership therefore is gold dust, as frequent traders represent the most attractive and profitable segment of the market.

"On average I trade" (123 respondents)

Daily	11%
Weekly	41%
Monthly	49%

None traded less frequently than this.

2. Which trading platforms do you use mostly to trade?

17% iii/TD Direct
16% Hargreaves Lansdown
13% AJ Bell/Youinvest
10% Barclays
10% IG Index
7% Selftrade
7% i web
4% The share centre
3% i dealing
2% XO
2% Charles Stanley
2% Halifax
2% Lloyds
2% Alliance Trust
1% Internaxx International
1% Bank of Scotland

3. How long have you been using this platform as your primary trading platform?

The vast majority have been using their preferred platform for 3 years+.

74% 3 years +
19% 1-2 years
2% More than 6 months less than a year
4% Last 3-6months
1% Less than 3 months

4. Relative satisfaction and intention to switch (or not).

I asked five questions about how they rated the following: : Ease of use; Customer service, market information, market prices achieved and value for money. I then asked if they had considered leaving their provider recently.

There seem to be gripes about every supplier, often related to very specific issues. But there are clear patterns relating to individual providers.

iii/TD Direct (17% of respondents), it scored the average for ease of use, customer service and value for money but below average for market information and prices achieved. Customers seem torn about whether to stay or leave after the recent acquisition of TD by iii with some 29% saying they'd leave but 38% saying they'd stay.
Hargreaves Lansdown (16% of respondents) scored above average on four measures but was let down by its value for money. It was 1= for ease of use. The loyalty of its customers was extremely high with 70% saying they had not considered leaving and only 10% saying they had.
AJ Bell/You invest (13% of respondents) also scored above average ratings for four measures but was let down by prices achieved. Its market information had the best score out…

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Rusty2

14th Dec '17

No I'm still using HL for Euro stocks, have been thinking about IG but still undecided. Will wait until next tax year. Not keen on this new IG charge if it is correct, £25 per quarter.

Howard Adams

Herbie

Ok, like you I'll carry on thinking about that then.

Thanks
Howard

Well I prefer to trade within an ISA but I don't want to move my ISA, so if I open a new ISA next April I can buy Euro ones within that and compare prices with HL. I think having several ISAs is probably a good idea rather than all with one broker.

Herbie

That's a useful idea, I had not thought it through like that. I like it.

I feel I have too much with HL and want more than a single platform as well as dollar and/or Euro accounts to build a more robust trading infrastructure for myself (Recalling Barclays issues, likely volatility of sterling-based assets and a desire to extend across markets).

Regards
Howard

daveinthelakes

I am also with HL but thanks to you are now considering Schwab for my USA portfolio.

As an addition to Herbies question if it is sterling is their exchange rate competitive? The only problem I have with HL is that the exchange rate on foreign trades is a rip off although they claim it is the marketmakers and not them. Presumably with Schwab dealing in dollars this could produce quite a saving?

Also do they send you an account tax statement at YE, HL do and very convenient for dealing with the Revenue.

Thanks.

Star8

15th Dec '17

I only transferred money once at the start of the account in 1996 and do not remember how it was done whether is USD or GBP - I suspect the former since we had substantial Dollars. Judging by the rest of their service I would guess it was at a reasonable rate and I am surevthey will accept Sterling.

However rather than guessing I suggest you contact them. Speak to the manager Mr Kully Samra
Address: 33 Ludgate Hill, London EC4M 7JN
Hours: Open today · 9am–6pm
Phone: 020 3795 2704

Regards

Michael

More on Charles Schwab- forgotten points:

1 You get an automatic margin facility based on the realisable value of the securities held i.e. you can invest more than the capital you lodged by borrowing against it . Useful if you want to increase the portfolio in the short term without funding Dollars. The interest rate is a bit heavy - it depends upon how much you borrow; 7.5% p.a. was my initial rate until I bargained them down.

2 You can short stocks if you self-certify as a knowledgeable investor: useful if you think the market or a stock will decline

3 Their options pricing is very clear and bid-offer quotes are very clear and available at a key strokes, as are various option strategies. You can also trade VIX options - useful if you think US market volatility will increase or decrease .

4 They do not permit Futures trading.

5 Their bond trading and research facilities are USD and US centric with no other possibilities. And the bonds are all or almost all Investment Grade so debarring the most interesting sectors e.g. Emerging Market Debt and Junk Bonds.

slopsjon

I've moved my ISA's a few times XO to iWeb, XO to IG, IG to iWeb. Cash and stocks, so far without any problems, usually takes 4 to 6 weeks to complete. You can still trade your holdings up to a point when they actually move them. An obvious problem with this is that you lose your original book cost but I use a spreadsheet for this. So to anybody reading this, if you are having problems with a broker don't be afraid to move.

Having more than one ISA is a good idea as it acts a backup and also gives you the chance to try another provider.

Thanks for that, I have read some horror stories when people have moved from Barclays and HL. But I quite like the idea of 3 different platforms then I can choose the best one for each trade. I presume I can just move cash out of one into another?
With different platforms I can check live prices and compare. Is HL better than IG or AJ Bell? Are IG really that bad for Aim shares as some report?

The Third Man

I recently completed the transfer of my ISA and my wife's ISA from Barclays to HL. I was told by four different members of Barclays staff that we could not buy nor sell throughout the time it took to complete the transfer which was something of the order of 12 weeks.

When I did this first I wanted a second ISA so I moved some cash from XO to iWeb I then moved all cash and stock from XO to IG and then all cash and stock from IG to iWeb. You need to check what you can do with each broker and make sure they understand if you are just doing a partial move. What you don't want them to do is sell your holdings if you wanted them to move the holdings intact.

Yes I had that problem when I moved from Natwest to HL, I was informed they had to sell everything, it took ages and the information about the sales was a long time after the move and not at all clear. But anyway a fresh start at HL been there about 4 years now.

Hi Michael,

Thanks for all that info. I not looking to do it just yet maybe early next year, I don't work or live near London anymore. I will contact them about the transfer in due course.

AlanJenkins2

Not sure how safe Charles Schwab are long-term.Their debt seems to keep creeping up.

Andrew L

17th Dec '17

Quick update on some thoughts -
III/TD - this merger has now completed with III taking on TD's platform. Quarterly fees are up slightly and the FX charge is up from 1% to 1.5%. Most stocks below the FTSE 350 won't allow dividend reinvestment anymore. More international markets now and you can hold foreign currency in your account. On balance, though, I am surprised that the merger has resulted in lower service (less dividend reinvestment) in some areas and higher fees. III were one of the cheapest around. The III quarterly charge is also a trading credit. So if your trading costs came to the quarterly charge you would have no fees. This is a key difference with other platforms. However, this merger with TD doesn't really appear to have benefited clients versus the previous status quo.

Youinvest/AJ Bell - This does feel like a nice platform and you get shares magazine. FX charge for foreign dealing is 1% (not tiered). Offers lifetime ISAs. The mobile app and news service is very good in my view. Hargreaves Lansdown appear to contract out the news function or just link to other providers.
Hargreaves Lansdown - As has been noted a few times here you only have the 0.45% platform charge on funds. For stocks there is no ongoing charge. So actually Hargreaves may be a competitive platform. However, the trading costs are slightly higher than rivals.

Execution - this survey highlighted dealing executing (Price). I am not sure how this can really be measured from a survey? In reality I would have to have a few different accounts and do a trial order for something at the same time to see which platform could execute it for the best price. I wasn't really aware that some platforms can execute at better prices?

FX - what is surprising to me is that III is now more expensive than Hargreaves on FX. This is due to the tiered FX charge structure as they are both 1.5% from £0 to £25k. So from over £50k to £100k the charge from III is 1% while from Hargreaves it is 0.5%.
http://www.iii.co.uk/foreign-exchange
http://www.hl.co.uk/investment-services/fund-and-share-account/charges-and-interest-rates
The tiered structure means that Youinvest will be cheaper for small deals, below probably around £70k or something, but the others might be better for larger foreign share deals. Youinvest charges 1% for all amounts.
Test - cost to buy £100,000 foreign stock with Hargreaves is £875 in FX i.e. 0.8745%. Cost with Youinvest is £1k or 1% and cost with III is £1,187 i.e. 1.19%. Very surprised that III has made itself a very expensive option on FX. By comparison IG is 0.3% and so charges £300 while Degiro I think is 0.1% or £100. Its a great shame that the mainstream platforms make foreign stocks too expensive to deal in.

I think I will try Degiro and maybe open an account with Hargreaves to see what they are like. Losing a lot of money just to buy a foreign stock doesn't really make much sense. We also have an annual capital gains tax allowance of £11k and the capital gains tax rate is only 20% (not too onerous).

I think Hargreaves Lansdown has done a good job at offering an alternative to expensive wealth managers. But the company is ridiculously profitable. The operating profit margin is 68% and the return on capital is 85%. It seems to me that they are unwilling to pass on the economies of scale that their growth has generated onto their clients in areas like FX and trading fees.

I can understand why people choose Hargreaves though. If you have had issues with things like Barclays Stockbrokers you will want to switch to the safest and most reliable company there is. It is similar to people choosing to go with Apple products after buying cheap PCs from companies like Dell.

CAPH

Don't know if this has been discussed before but I am concerned about security of any cash holdings in a broker account in the event of the broker or banks they hold funds in having problems.

Because I am a little nervous of the markets and of the possibility of a 2008 type scenario , I am 80% in cash in my interactive investor account . The cash held is well above the deposit protection scheme amount.

I wrote to interactive investor regrading the risk and this was their reply;

"The firm adopts a robust Treasury Management Policy and places client
money across a range of approved banks where they are held in trust within a
client money bank account. As the client money is pooled there is no way to
know where client A's money is. It may not be the same place as client B due
to the pooled nature when it is received.
Should one of the banks fail where client cash is held - say £20m,
this money would be assumed unrecoverable from a secondary pooling event and
each client who had deposited funds with the firm would share in this loss
pro-rata. However, these clients would be able toclaim via FSCA up to a
maximum of £85k "

Just wondering do most of you split your funds into several different broker accounts to try and mitigate this risk as I am now considering?

ISAallowance

According to their website, HL have a 0.45% custody charge on shares in either an ISA or a SIPP (max £45 per annum). It's only the vanilla share dealing account where there is no share custody charge at all.

Albertos

18th Dec '17

Hi

I do - probably unlikely but gives another level of safety - also means a bit of "testing of the market" every so often as detailed above.

Phil

rpannell

Homoyouni wrote:
Just wondering do most of you split your funds into several different broker accounts to try and mitigate this risk as I am now considering?

On the basis of the UK government being more solvent that banks, I try to move cash into gilts. Gilts are very liquid so can be easily sold when the cash is required.

ISAallowance. Fair enough but the £45 cap is pretty low. So anything over £10,000 and your percentage fee is less than 0.45%. The III standing charge is £22.5 a quarter or £90 a year. Although that does give you trading credits for the period. Pretty complicated assessing all these different fee structures!!!

Quick n dirty report: Trading platform relative satisfaction

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Fwyburd

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