What Is An Investment Platform? Complete UK Guide (2024)

What Is An Investment Platform? Complete UK Guide (1)

At a glance

  • Investment platforms enable you to buy and sell investments.
  • They also allow you to easily monitor the ongoing performance of your investment portfolio.
  • There is a wide choice of platforms available – all with differing charges and fees.
  • Choose an investment platform that suits your portfolio and investment experience.

Guide contents

  • What is an investment platform?
  • How to choose the best investment platform in the UK
  • How safe are investment platforms?
  • What do I need to think about when choosing an investment platform?

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What is an investment platform?

An investment platform may also be known as a fund supermarket as it offers a single place to search and invest in shares and investment funds. This can include a share dealing account and a fund dealing account. They are online or app-based services that allow you to keep all your investments in one place, including your trading history and investments you have bought or sold.

Investment platforms are in two broad groups, those that allow you to decide on the specific investments you will make or those that will create a portfolio or wrap investments together for you based on your investment objectives and attitude to risk.

The investment platform selects which investments it will have available. They usually offer share accounts and trading accounts, and the opportunity for you to manage investments in wrappers such as stocks and shares ISAs, Lifetime ISAs, Junior ISAs and self-invested personal pensions (SIPPs) (pension funds).

Many investment platforms will also provide news, interactive tools and forums to their clients. The idea of using an investment platform is that you have control over your investment choices and can tailor these to suit you. However, this means all your investments are made on an ‘execution only’ basis, making you solely responsible for these choices and you will have no protection or comeback if you incur any losses.

You can also choose to use the investment platform to add funds to ISAs and SIPPs.

What types of investments are available on an investment platform?

Investment platforms usually offer the following range of investment choices:

Shares – These are investments made in individual companies. Having shares in a company means that you own a part of it. If the company does well, the price for individual shares rises and you make a profit, whereas bad performance means the share price will drop, reducing your profits or causing your shares to be worth less than you originally paid for them. There is even the possibility that you could lose all your investment if the firm goes bust.

Funds – These are a very common way of investing. Investment funds pool individual shares, bonds or both that have a common ‘theme’. The individual parts are called units. The theme can be quite wide-ranging. For example, you might invest in a fund that is specific to a region such as Europe or Asia or an individual country, such as Germany. Or you might pick a fund that is investing in a commodity, such as oil, gold or one that invests in green technologies – in fact almost anything you can think of. There is still the possibility that you can lose all your money, however this is a lower risk than with individual shares as your fund will be invested across multiple companies..

Bonds – These are where you are lending money to a company or even Government (Government bonds are called gilts). In return, you will be paid interest on the loan. Of course, some companies (and Governments) are more stable than others and bondholders are much further up the list of investors to be repaid so the risk is less.

How to choose the best investment platform in the UK

  • Check that the platform offers the type and range of investments you want to make
  • Check the charges are sensible for how frequently you want to trade – i.e. if you want to trade frequently are the costs prohibitive or is there an inactivity fee if you may not transact very often?
  • Consider a model portfolio where the investment platform chooses your investments based on your attitude to risk and investment needs

Featured investment platforms

  • What Is An Investment Platform? Complete UK Guide (2)

    Interactive Investor

    What Is An Investment Platform? Complete UK Guide (3)

    • Low, flat fees don't grow with your investments - so more of your money stays invested
    • You could be up to £43k better off over 30 years when you keep a Trading Account and Stocks and Shares ISA with ii
    • We give you a free trade every month (worth £5.99), and there are no trading fees with our regular investing service
    • We offer the widest choice - over 40,000 UK and international investment options, including shares, funds, trusts and ETFs
    • Your £9.99 monthly fee also includes our Stocks and Shares ISA, Trading Account and Junior ISA.

Note

Links to third parties on this page are paid for by the third party. You can find out more about the individual products by visiting their site. Moneyfacts.co.uk will receive a small payment either if you click the links or if you use their services after you click through to their site. All information is subject is subject to change without notice. Please check all terms before making any decisions.

Disclaimer

The list of investment platform providers on this page is a selection of services available and gives you an idea of the kind of options available. You can find out more about the individual products by visiting any of the providers listed. All information is subject to change without notice. Please check all terms before making any decisions. This information is intended solely to provide guidance and is not financial advice. Moneyfacts.co.uk will not be liable for any loss arising from your use or reliance on this information. If you are in any doubt, Moneyfacts.co.uk recommends you obtain independent financial advice.

How safe are investment platforms?

When you invest into an investment platform, your investment is placed into a ring-fenced account held with a custodian. The custodian is a separate entity to the investment platform and is usually a large bank. The custodian makes sure that your investment assets are not muddled with those of the investment platform. This means if the platform fails and falls into financial difficulties, your investment assets will remain separate and cannot be used by the platform, for example to pay its debts.
If the custodian was to fail, then investments would be protected under the rules of the Financial Services Compensation Scheme.

Furthermore, investment platforms are regulated by the Financial Conduct Authority (FCA). You can check if the platform is an authorised company by looking at the FCA register. The regulator is responsible for making sure investment platforms adhere to marketing and advertising rules about financial promotions and that they conduct their business to the required regulatory standards.

Note: there is no protection against poorly performing investments. As you have made all your buying decisions on an ‘execution-only’ basis, you are responsible for these choices.

Invest tax-free with a Stocks and Shares ISA

Did you know you can invest up to £20,000 a year in a stocks and shares ISA? Learn more about the tax benefits of investment ISAs and find a provider today.

What do I need to think about when choosing an investment platform?

There are three main areas you need to consider when choosing which investment platform is best for you. These are cost, access methods available and the total value of your investments – this last one is closely allied with costs, so we’ll tackle those together:

What Is An Investment Platform? Complete UK Guide (4) What Is An Investment Platform? Complete UK Guide (5)

Investment platform costs and portfolio size

The smaller your trading portfolio, the more you need to focus on costs. If you have a modest portfolio – say up to £5,000 – then you’ll want to ensure that any profit you do make is not immediately gobbled up by trading fees and monthly costs.

As outlined above, every investment platform is subject to differing fees and charges. Some will charge per trade, some by flat fee, others on what investments you are selling and finally some will charge you a percentage of your total portfolio value.

Those who are irregular share-dealers or those with a smaller pot of investments should look carefully at costs and make sure that your profits are not wiped out by the cost of an expensive trading platform.
You might want to remember that different investment platforms will give you different investment options, so this will influence the choice that an individual will make. A more experienced investor will probably seek the widest range of investments, whereas for a less experienced investor, a more limited choice may still be acceptable.

Accessibility

The old practice of calling your stockbroker every time you wanted to make a trade is long gone. Now, most people will happily buy and sell through an online provider – either through a smartphone app or via an online portal.

Choose an investment platform that suits the way you feel most comfortable trading with. For beginners, you may want a platform that provides lots of ‘hand-holding’ and tools that enable you to make better decisions, while experienced traders might prefer something that is more responsive.

Next, consider which platform matches how you want to manage your portfolio. Online share-dealing via a laptop or home PC is great if you prefer larger displays and you don’t envisage wanting to do much trading while on the move. Apps have the advantage of allowing you to access your platform while out and about (providing you have a decent 4G signal) but the display is markedly smaller than if you use a conventional home computer.

Find a financial adviser near you

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Investment platforms FAQs

Do I have to pay for an investment platform?

Yes, but how you are charged will vary between platforms. Some investment platforms will charge you every time you make a trade (i.e. when you buy or sell investments), some will levy a flat fee every month or year and others will charge based on how large your total investment is. Some will not charge you for fund dealing at all but might levy an ongoing administrative fee.
Essentially, there are many different pricing structures, so you will have to do some homework as to which is the cheapest or best value depending on the size of your investments and how often you anticipate trading shares, funds or bonds.
Most investment platforms will charge you an exit fee if you decide to leave, so this should be balanced against the gains to be had from introductory bonuses being offered if you decide to move.

Do I need a lot of money to start using an investment platform?

Not necessarily, you can start with as little as £25 each month and use this to start investing into shares or investment funds. This allows you to drip feed money into your fund and build up your portfolio over time.

I keep seeing 'execution-only' - what does this mean?

Execution-only means that you will buy and sell shares or invest in the stock market without any advice or guidance. Therefore, you will have to rely on your own knowledge and/or research when making a trading decision and are responsible for your investment decisions.

What Is An Investment Platform? Complete UK Guide (6)

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Disclaimer: This information is intended solely to provide guidance and is not financial advice. Moneyfacts will not be liable for any loss arising from your use or reliance on this information. If you are in any doubt, Moneyfacts recommends you obtain independent financial advice.

What Is An Investment Platform? Complete UK Guide (7)

At a glance

  • Investment platforms enable you to buy and sell investments.
  • They also allow you to easily monitor the ongoing performance of your investment portfolio.
  • There is a wide choice of platforms available – all with differing charges and fees.
  • Choose an investment platform that suits your portfolio and investment experience.

Compare investments

Guide contents

  • What is an investment platform?
  • How to choose the best investment platform in the UK
  • How safe are investment platforms?
  • What do I need to think about when choosing an investment platform?

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I am an experienced financial expert with a deep understanding of investment platforms and related concepts. My knowledge stems from years of hands-on experience in the financial industry, coupled with a comprehensive understanding of investment instruments, platforms, and regulatory frameworks.

Investment platforms play a crucial role in the modern financial landscape, offering individuals the ability to buy and sell various investments, as well as monitor the performance of their portfolios. The article touches upon key aspects such as the definition of investment platforms, how to choose the best one in the UK, the safety of these platforms, and considerations when making a choice.

Key Concepts:

  1. What is an Investment Platform?

    • An investment platform, also known as a fund supermarket, serves as a centralized hub for searching and investing in shares and investment funds.
    • Two broad categories exist: those allowing users to make specific investment decisions and those creating portfolios based on individual risk tolerance and investment objectives.
    • Investment platforms offer various account types, including share dealing, fund dealing, and wrappers like ISAs and SIPPs.
  2. Types of Investments Available on a Platform:

    • Shares: Represent ownership in individual companies, with profits and risks tied to the performance of those companies.
    • Funds: Pools of shares, bonds, or both, with diverse themes ranging from regions to specific industries. Lower risk compared to individual shares.
    • Bonds: Involves lending money to companies or governments, with interest payments in return. Considered less risky than shares.
  3. How to Choose the Best Investment Platform in the UK:

    • Consider the platform's offerings in terms of investment choices and range.
    • Evaluate the cost structure, including fees for trading, inactivity, and overall portfolio management.
    • Explore model portfolios for hands-off investing based on your risk tolerance and needs.
  4. Safety of Investment Platforms:

    • Investments are held in ring-fenced accounts with custodians, usually large banks, separate from the platform's finances.
    • Custodians ensure the segregation of client assets, providing protection in case of the platform's financial difficulties.
    • Investment platforms are regulated by the Financial Conduct Authority (FCA), offering oversight and adherence to regulatory standards.
  5. Considerations When Choosing an Investment Platform:

    • Focus on costs, especially for smaller portfolios, to ensure profitability is not eroded by fees.
    • Choose an accessible platform that aligns with your preferred trading method, whether through a desktop or mobile app.
    • Assess the total value of your investments, as this can impact costs and determine the platform that best suits your needs.
  6. FAQs on Investment Platforms:

    • Clarifies common questions such as payment structures, minimum investment requirements, and the meaning of 'execution-only' trading.

In summary, choosing the right investment platform involves a careful consideration of individual preferences, risk tolerance, and financial goals, coupled with an understanding of the platform's safety measures and cost structures.

What Is An Investment Platform? Complete UK Guide (2024)

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