According to The Lang Cat, Hargreaves Lansdown controls around a third of direct platform assets (£52.4bn) and has more than 700,000 active clients. However, both surveys point out that the king of direct investing is not perfect, being relatively expensive and having a charging structure that is difficult to understand.
Investors still need to check if they can get a better deal elsewhere. Mark Polson, principal at The Lang Cat, said: "The UK platform market offers a bewildering amount of choice for direct investors and the best platform will depend on a range of things, including how much you have to invest, what you want to invest in and how much help and support you want to have along the way. These factors all have a bearing on the price you pay for the service."
Some platforms charge a percentage of your investments every year, while others charge a fixed cost. Some charge dealing fees, others don't. Some charge extra - or differently - for holding your investments tax wrappers such as individual savings accounts and self-invested personal pensions, others don't.
In naming Hargreaves Lansdown as the best all-rounder, The Lang Cat said: "The ancillary charges still annoy us but these are outweighed by all the good stuff on offer."
In the Which? survey, Hargreaves had the top 5 star rating for customer service, administration, information on investment opportunities, online account functionality, online tools and guidance. However, it was let down on value for money (3 stars) and clarity of charges (2 stars). Which? said: "If you're happy to pay for a premium service, Hargreaves Lansdown offers solid core services with bells and whistles that are appreciated by its clients. For those with smaller portfolios, Hargreaves could cost you £10 or £20 a year more than its cheaper rivals - a relatively small premium if you really value the service.
"If you do have a larger portfolio, Hargreaves Lansdown could prove costly. Its fees are calculated as a percentage of your portfolio value, so you could end up paying thousands of pounds a year more than a broker charging a fixed fee in pounds and pence."
One Hargreaves Lansdown customer quoted in the Which? survey said: "They offer reasonably fair charges, functionality and a reliable service, marred by slightly over-enthusiastic marketing and a tendency towards hype."
Both studies are well worth reading. The Lang Cat survey, called 'Come and have a go too', is an extremely detailed and entertaining read, with plenty of useful tables to help you work out which platform will be cheapest for your needs. It is available to download for free. http://langcatfinancial.co.uk/white-paper/come-and-have-a-go-too/
You can access the Which? survey online - worth doing to read some of the customers' comments and the full scoring for 13 platforms - by subscribing for a £1 trial Which? membership.
Best platforms for different investor types
Here we put the findings of Which? and Lang Cat studies together to pick the best platforms for different types of investors:
Good: Hargreaves Lansdown (hl.co.uk). The Lang Cat says: "The service offering is just as good as everyone says it is; there is always support on hand should you need it and the platform layout makes it easy to see your investments and manage them individually or collectively. This all costs, however, and HL is rarely the cheapest option (although it is very well priced for drawdown), but that's not want it's all about. In our experience, investors are willing to pay that premium for service and user experience. And others charge more for less. It's not a perfect operation: the service isn't always faultless and there are a couple of other aspects we don't love, mainly around the Wealth 150 and exit charges. The fact that we are handing this award over despite those things should indicate that the rest of it is exceptional."
AJ Bell Youinvest (youinvest.co.uk) is the runner-up all rounder according to the Lang Cat. Which? calls it "a compelling option for the cost conscious" and "likely to be among the cheapest options for small, medium and large porfolios". Charles Stanley Direct (charles-stanley-direct.co.uk) also scored higly in the Which? customer satisfaction survey.
Avoid: Selftrade (selftrade.co.uk) came bottom in the Which? survey.
Which? says TD Direct Investing is: "One of the cheapest brokers around for those with smaller pots. A £10,000 stocks and shares Isa invested in funds could cost as little as £110 a year."
Avoid: Alliance Trust Savings (alliancetrustsavings.co.uk) and Interactive Investor (iii.co.uk) - Which? says for both platforms: "A £10,000 stocks and shares Isa is likely to be cheaper with brokers charging a percentage based fee."
If you invest in shares alongside funds, then Barclays Stockbrokers charges extra fees, which some investors may find too convoluted.
Good: Alliance Trust Savings, Interactive Investor and The Share Centre (share.com) - based on the Which? survey.
Avoid: TD Direct Investing - Which? says it has a "complicated charging structure" which can "leave investors with a middling service on cost". Bestinvest - Which? says: "If you have a six figure portfolio value, you're likely to be significantly better off with a broker that charges a fixed fee." Also avoid Barclays Stockbrokers and the HSBC fund supermarket.
SELF-INVESTED PERSONAL PENSIONS
Good: AJ Bell YouInvest. The Lang Cat says: "AJBYI's Sipp pedigree is second to none, and that absolutely lifts it up beyond many of its rivals. It offers a decent online experience and has the added option of commercial property (which Hargreaves Lansdown does not offer) should this be on your investment wish list in a Sipp. Charges are reasonable for all but the smallest funds and very good higher up."
Avoid: The Share Centre. Which? says the company is expensive for smaller Sipp portfolios, charging £172.80 a year, compared with Interactive Investor, which charges £96 a year for the same size portfolio.
Good: The Lang Cat recommends Charles Stanley Direct and TD Direct Investing for buy and hold investors with smaller funds and Alliance Trust Savings or The Share Centre for larger funds.
If you deal infrequently and aim to just buy and hold, Which? says consider Halifax Sharedealing (halifax.co.uk/sharedealing). It has a fixed annual fee of £12.50 for a stocks and shares Isa and £90 to £180 for a Sipp. If you want to trade shares, investment trusts, or funds online it will cost you £12.50 so frequent dealing will ramp up your costs. It did come second bottom in the Which? customer satisfaction ratings partly due to its lack of online tools and guidance, which you may not be bothered about anyway.
Good: The Lang Cat recommends Clubfinance (clubfinance.co.uk), which charges a competitive £2.50 per trade, with a bulk trader option that can see this drop to 50p per trade. The Lang Cat says: "This award is less about the overall offering. Here it's the straight fund research and competitive trading charges that win the day."
The Lang Cat doesn't like iWeb (iweb-sharedealing.co.uk), despite its low dealing charges. It says: "We accept that the increase in iWeb's account opening charge for Isas and trading accounts from £25 to £200 only applies once and that the low trading charges still make it an attractively priced offering overall. But we still don't like it. We suspect the move was intended to discourage smaller investments but this isn't the best way. A minimum account level is better than adding unreasonable charges to small pots."
The Lang Cat's second choice is Interactive Investor. The Lang Cat says: "While not quite as cheap as iWeb, Interactive Investor offers a far more engaging experience than its low-cost rival and is considerably less clunky. A good choice if you know what you're doing."
INDEX TRACKER FUNDS
If you're going to hold a lot of money as a low-cost core for your portfolio in index tracker funds, then you need to pay attention to the annual platform fee that is charged on top of your low-cost fund charges.
Good: Which? says "Fidelity's (fidelity.co.uk) 0.35 per cent headline rate platform charge is cheaper than rivals Hargreaves Lansdown and Bestinvest. All three start charging less if you have more than £250,000 but Fidelity apply this threshold across your whole portfolio whereas the others apply it per account (Isa, Sipp and so on)."
Barclays Stockbrokers also has a headline 0.35 per cent platform fee, meaning a £10,000 Isa invested in tracker funds will cost £120 a year.
The Lang Cat says the majority of platforms do away with core charges if you decide to invest in stocks and shares, which is to say they dispose of those charges on the element of your portfolio invested in stocks and shares. The table below is based on someone trading 25 times a year. Lowest charges for this pattern of trading are from iWeb, SVS XO (svsxo.com) and X-O (www.x-o.co.uk).
Cost of stocks and shares dealing account (25 trades per year)
|AJ Bell Youinvest||£249||£249||£249||£249||£249||£249||£249|
|Alliance Trust Savings||£388||£388||£388||£388||£388||£388||£388|
|Aviva Consumer Platform||£248||£288||£388||£563||£1,088||£1,713||£1,713|
|Charles Stanley Direct||£250||£250||£250||£250||£250||£250||£250|
|Fidelity Personal Investing||£286||£286||£286||£286||£286||£286||£286|
|Halifax Share Dealing||£325||£325||£325||£325||£325||£325||£325|
|James Hay Modular iPlan||£375||£375||£375||£375||£375||£375||£375|
|TD Direct Investing||£313||£313||£313||£313||£313||£313||£313|
|The Share Centre||£155||£180||£243||£209||£209||£209||£209|
Source: The Lang Cat, 28 July 2015. *Includes one off £200 fee on opening an account.
HARGREAVES LANSDOWN VIDEO Q&A
Earlier this year we asked readers to give us questions to put to Hargreaves Lansdown ahead of a visit to their offices. The response was huge and you can watch the results in two videos on our website.
Moira O'Neill, personal finance editor at the Investors Chronicle, travelled to Hargeaves HQ in Bristol where she grilled chief executive Ian Gorham and head of research Mark Dampier on a range of queries supplied by you: from exit fees, dealing in foreign currencies and the investment selection process, to whether fund managers ever pay to be included in Hargreaves' famous Wealth 150 list of favoured funds.