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  • FIRST POST
    • jpi
    • By jpi 17th Jun 17, 8:33 PM
    • 3Posts
    • 0Thanks
    jpi
    Fixed fee platform - how is it so cheap?
    • #1
    • 17th Jun 17, 8:33 PM
    Fixed fee platform - how is it so cheap? 17th Jun 17 at 8:33 PM
    I opened an account with IWeb recently, but this might apply to some of the other fixed fee on-line investment platforms.

    One can never be sure about the future but I am expecting to hold investments in this platform for 10 years or longer. My guess is that I will average something like 1.5 trades per year, perhaps three or four trades in the first few months as I move money from some of my other investments then perhaps about one trade per year thereafter. Each trade costs £5. There is now a £25 charge for joining up and opening an account (I actually joined just before they reduced that charge from £200, but that's by the way)

    So, an investor such as myself, joining at the present time, might pay them something like £100 over a period of ten years. I know that I should not complain about low costs, but I feel slightly suspicious, wondering how they operate with this level of income? My first trade had a bit of a hiccup becasuse I did not know there is a maximum amount per trade and I was a bit over that - the website didnt seem to give me any indication of what was wrong -,it just came up with a message saying 'try again later'. That took a couple of half hour telephone calls to sort out, at their expense. So considering likely employment costs they have probably already spent that £100 on my account. I am sure I am not the only customer who they will need to occasionaly contact by phone.

    Am I missing something - are there other significat fees I havent spotted, or do they somehow get some remuneration from the companies you trade with, or from some other source? Or do most customers make lots of small trades so the £5 trading fees start to add up?
Page 1
    • EdSwippet
    • By EdSwippet 17th Jun 17, 9:06 PM
    • 486 Posts
    • 450 Thanks
    EdSwippet
    • #2
    • 17th Jun 17, 9:06 PM
    • #2
    • 17th Jun 17, 9:06 PM
    iWeb is one facet of Halifax Sharedealing. The others are: their own; and Lloyds Sharedealing Direct. Each has a slightly varying charging model to suit different customer types and preferences, but all three are cost-effective bare-bones 'parking places' in which a DIY investor can safely and cheaply keep portfolio holdings.

    There aren't any hidden charges, nor do Halifax accept backhanders from funds or other things you might buy through them (the 'Retail Distribution Review' outlawed funds paying backhanders to platforms a couple of years ago, anyway). So no, you're not missing anything.

    In my experience, Halifax do not even send you the tiniest bit of marketing or junk-mail unsolicited. As you've found, you may occasionally have to work within an oddity or two of their web site operation, perhaps reflective of their cost-saving nature. But by and large they seem to do exactly what a competent DIY investor would want -- trouble-free execution of trades, payment of dividends, an annual tax certificate, and no expensive but unwanted bells-and-whistles add-ons.

    Halifax either makes money from trading volumes, then, or iWeb etc are cross-subsidised from other Halifax operations. I don't think there's any way of knowing whether or not this is sustainable, but also no reason I can see to avoid it just in case, either. They are, for now, exactly what they appear to be -- good value for customers.
    • pinkllama
    • By pinkllama 17th Jun 17, 9:53 PM
    • 82 Posts
    • 24 Thanks
    pinkllama
    • #3
    • 17th Jun 17, 9:53 PM
    • #3
    • 17th Jun 17, 9:53 PM
    I think their business model/hope is that customers trade more than they think they do/will. I've just joined them and have only made my pre-planned investments so far, but the temptation to tinker - incurring trading costs remains strong!
    • bigadaj
    • By bigadaj 17th Jun 17, 10:02 PM
    • 9,344 Posts
    • 5,973 Thanks
    bigadaj
    • #4
    • 17th Jun 17, 10:02 PM
    • #4
    • 17th Jun 17, 10:02 PM
    I opened an account with IWeb recently, but this might apply to some of the other fixed fee on-line investment platforms.

    One can never be sure about the future but I am expecting to hold investments in this platform for 10 years or longer. My guess is that I will average something like 1.5 trades per year, perhaps three or four trades in the first few months as I move money from some of my other investments then perhaps about one trade per year thereafter. Each trade costs £5. There is now a £25 charge for joining up and opening an account (I actually joined just before they reduced that charge from £200, but that's by the way)

    So, an investor such as myself, joining at the present time, might pay them something like £100 over a period of ten years. I know that I should not complain about low costs, but I feel slightly suspicious, wondering how they operate with this level of income? My first trade had a bit of a hiccup becasuse I did not know there is a maximum amount per trade and I was a bit over that - the website didnt seem to give me any indication of what was wrong -,it just came up with a message saying 'try again later'. That took a couple of half hour telephone calls to sort out, at their expense. So considering likely employment costs they have probably already spent that £100 on my account. I am sure I am not the only customer who they will need to occasionaly contact by phone.

    Am I missing something - are there other significat fees I havent spotted, or do they somehow get some remuneration from the companies you trade with, or from some other source? Or do most customers make lots of small trades so the £5 trading fees start to add up?
    Originally posted by jpi
    What was the maximum Trade?

    I've bought six figures in a single find within a sipp and it went through without any problems.
    • tg99
    • By tg99 17th Jun 17, 10:22 PM
    • 483 Posts
    • 211 Thanks
    tg99
    • #5
    • 17th Jun 17, 10:22 PM
    • #5
    • 17th Jun 17, 10:22 PM
    What was the maximum Trade?

    I've bought six figures in a single find within a sipp and it went through without any problems.
    Originally posted by bigadaj
    If you want to do a fund trade over £100k you have to call up to do it as it won't go through online.
    • Glen Clark
    • By Glen Clark 18th Jun 17, 8:07 AM
    • 3,740 Posts
    • 2,728 Thanks
    Glen Clark
    • #6
    • 18th Jun 17, 8:07 AM
    • #6
    • 18th Jun 17, 8:07 AM
    I've been doing more trades than I thought I would - just reinvesting dividends, selling and repurchasing in ISA or to use up CGT allowance etc. Trading is so quick and easy online I can imagine people getting addicted to it and doing it a lot more.
    For society to function well, people generally need to feel that they have a fair chance of success through their ability and efforts. The more entrenched hereditary elites we have, the less likely people are to feel that way
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