ETF ISA - Fidelity vs FreeTrade

ChilliBob

Hey guys,
I was pretty set on Fidelity for an ISA for my partner, investing in only ETFs or ITs knowing it'd be capped at £45 per year, and was £10 to deal. So, with say 2 funds this tax year it'd be £65, then probably the same next tax year.
I've just looked into Freetrade again, whilst it's got a restricted set of ETFs it does have the ones I was considering from Fidelity anyway in the main. From what I can see this would end up costing just £36 per year - whether I opt for say 2 funds, or more. 
This almost seems too good to be true - it's standout cheaper than anything else - around Fidelity's pricing you have AJ Bell and HL (Assuming you stick to ETFs). I'm wary as it sort of doesn't feel right (perhaps because the name sounds pants and it's not a 'recognised' name like HL/Fidelity/etc, but at the same time really tempted by the cost savings!).
I know I asked about this before, but truth be told this was just for the free share thing I saw on Monevator, another reason I thought it was a bit rogue!

Am I missing something? Hidden charges? Exit charges? Higher fees or something?

Cheers!

dj1471

According to the Monevator comparison table there aren't any exit fees or anything unexpected - it looks like a solid product.

I've tried to open a trading account with Freetrade and it's been stuck awaiting manual verification for a week so far - I suspect like every broker they're overwhelmed with people trying to open accounts to trade meme stocks. So it may take you a while to get the ISA opened.

Note that Fidelity are currently offering £50 cashback via TopCashback if you open a new S&S ISA and deposit at least £2,500. If you only plan to make two ETF trades then the fees for the first year would be £15 after cashback (no exit fees if you subsequently want to transfer out to Freetrade or anywhere else):

https://www.topcashback.co.uk/fidelity-stocks-and-shares-isa/

Alexland

Personally I wouldn't use Freetrade (although I did briefly for the free share and to play with the app) as their business model is unproven and it can be very inconvenient if they go bust especially as they use fractional shares.

Fidelity's capping is competitive on a SIPP (where platform costs tend to be higher) but if you are only going low trade volumes on an ISA into an ETF (and already have iWeb accounts so assume you are looking to diversify platforms?) have you considered Jarvis X-O? With no ongoing charge and £5.95 per trade and they are still a solid profitable company. Eventually there is a £50+vat closure fee on their ISAs. When we had the kids JISAs with Jarvis the service was very good (although was a bit annoyed the JISA exit fee was introduced but they waived it for us when I complained they had failed to notify customers and give us a chance to exit without paying the fee) and you can check they have the investments you want by emailing them in advance of opening the account.

https://www.x-o.co.uk/isa-account.html

ChilliBob

Purely lookng for a good way to use my partners allowance for SS isa really! Hence why I can't use iWeb (well, my account).

I'd also considered Lloyds because of the cheap dealing on funds. 

The Jarvis one put me off a bit that the site still had copyright 2019 and looked worse than I web lol, plus the exit was a bit of a sting as you say.

Alexland

ChilliBob said:

The Jarvis one put me off a bit that the site still had copyright 2019 and looked worse than I web lol, plus the exit was a bit of a sting as you say.

I wouldn't worry too much about the website copyright date they are an active company and you can see their accounts filing history at Companies House going back to 1984 which is roughly when the website was designed on a green screen Tandy TRS-80. Still it does the job of buying and selling exchange traded asset at live market prices.

The exit fee is a bit of a sting but over a long enough time period if you are only doing 2 trades a year at £5.95 each then it would be £24.10 cheaper than paying Freetrade £36 pa for the ISA wrapper so the breakeven point is about 2.5 years.

ChilliBob

Cheers for that info, most helpful. I did look at this before over a longer time horizon, obviously due to the one time fee iweb always wins unless you intend to trade quite a bit each year, in which case Lloyds seemed to win if you stuck to shares (as its just £1.5 per trade), but a ten year horizon is too long me thinks - who knows what platforms and charging structures will exist by then!

I get your point about free trade, perhaps I'll revisit if/when all this meme trading stuff calms down or stops!