Is there any benefit to investing through a bank compared to using a trading platform?

bluehydrangeas

I'm considering getting started with investing. I would most likely be investing with a stocks and shares ISA. I feel comfortable accepting the higher level of risk which accompanies investing, compared to just putting money in savings accounts, which I have always done until now. I am only looking to invest small amounts so I can get used to how it works, then deciding later if I want to invest more. 

I've noticed that high street banks allow you to invest a minimum of around £20 a month. For example Santander allow you to choose from 4 different "fund boxes" all with increasing levels of risk and potential reward. Link here: https://www.santander.co.uk/personal/savings-and-investments/investments/ready-made-investments#1 The caveat is that there is a fund manager fee in addition to the platform fee itself. If you are a complete beginner, would it be better to choose an investment in one of these "fund boxes" (or a similar product from another bank) as the funds being invested in are chosen by experts who are doing it for a living, as opposed to choosing individual funds to invest in yourself? Does the cut taken by the fund manager make it not worth it compared to just doing it on your own and investing in individual funds through a platform (such as Trading 212)? I would personally feel safer doing it through a bank, but I'm trying to weigh up if the extra fees justify this. I am not in a rush currently and I am trying to do as much research as I can before starting to invest.

Albermarle

Although definitions are not set in stone, most people would think of trading as buying and selling many times a day. Individual shares, ETFs, CFDs etc and would be considered very risky.

I think what you mean is comparing bank investment propositions with investment platforms. Now with some of the 'whole of market' platforms you can buy and sell shares etc quickly, but the majority of customers will be invested in funds long term.
Then you have more restricted platforms where only a smaller range of funds are available.

In most cases there is a platform fee and a fund fee. Same as with Santander, although they seem not to make their fund fees very visible without registering with them.
Also many platforms will offer similar ready made investments.

If you are happy with this simple choice, then it is really just a matter of comparing fees.

masonic

You'll pay fund fees whether you opt for ETFs through Trading212, or the full range of investment funds through a low cost platform like Scottish Widows Share Dealing or bank like Santander.

Of these, Santander looks most expensive as it also charges a custody fee for just holding your assets at 0.35% per year (on first £50k, then 0.2%, ... 0.1% on £500k+), compared with nothing at T212 or SWSD. So this is the extra fee.

Then you have the fund fee, which for Santander MyWealth ready made funds is 0.45% per year. This is rather more expensive than other multi-asset funds you could choose. You wouldn't be able to invest in most of these via T212 as they are not exchange traded, but I think Vanguard Lifestrategy has ETF variants these days. But at SWSD you could choose from most of those and save 0.25% per year on the fund fee component, or a total saving of 0.6% per year, with the saving at T212 being almost as much.

Finally, there are transaction fees. SWSD has free regular investing, but charges a £5 transaction fee to sell, whereas T212 has no transaction fees. I'd assume there would be no transaction fees at Santander, given the platform fee that is charged.

So it comes down to whether you want the full range of fund options and can avoid making fund sales, or would be happy with being restricted to exchange traded funds for the benefit of no transaction fee to sell.

The difference between 0.35+0.45 = 0.8% per year vs about 0.2% may not seem massive, but paying four times the fees will have a cumulative impact over many years, especially as your investments grow. It's an extra £6 per year on £1,000, but an extra £600 on £100k.

wmb194

bluehydrangeas said:

I'm considering getting started with investing. At I would most likely be investing with a stocks and shares ISA. I feel comfortable accepting the higher level of risk which accompanies investing, compared to just putting money in savings accounts, which I have always done until now. I am only looking to invest small amounts so I can get used to how it works, then deciding later if I want to invest more. 

I've noticed that high street banks allow you to invest a minimum of around £20 a month. For example Santander allow you to choose from 4 different "fund boxes" all with increasing levels of risk and potential reward. Link here: https://www.santander.co.uk/personal/savings-and-investments/investments/ready-made-investments#1 The caveat is that there is a fund manager fee in addition to the platform fee itself. If you are a complete beginner, would it be better to choose an investment in one of these "fund boxes" (or a similar product from another bank) as the funds being invested in are chosen by experts who are doing it for a living, as opposed to choosing individual funds to invest in yourself? Does the cut taken by the fund manager make it not worth it compared to just doing it on your own and investing in individual funds through a platform (such as Trading 212)? I would personally feel safer doing it through a bank, but I'm trying to weigh up if the extra fees justify this. I am not in a rush currently and I am trying to do as much research as I can before starting to invest.

Banks offer stockbroking and DIY funds platforms as well e.g., Barclays Smart Investor, HSBC GIC and InvestDirect, Halifax/Lloyds/BoS/Scottish Widows Share Dealing.

Section62

wmb194 said:

Banks offer stockbroking and DIY funds platforms as well e.g., Barclays Smart Investor, HSBC GIC and InvestDirect, Halifax/Lloyds/BoS/Scottish Widows Share Dealing.

I've recently signed up with Barclays Smart Investor for the cashback offer and am finding their site rather poor in terms of bugs and being logged out for no apparent reason.  Also the list of funds that can be transferred in is only available once you've signed up, and the list apparently isn't complete, other funds can be transferred in-specie, but aren't listed.

HSBC GIC has an order deadline of 10:30am for funds valued at noon - which is useful for sinful folk who try to time the market, if there has been an event which offers a good buying opportunity. 

dunstonh

Most of the bank investment products are robos.  So, very limited.     A trading platform, as noted is completely at the other end of the scale.   Most here would be in the middle with an investment platform.

So, before you start looking at providers, you need to consider the product and style you want to invest.  And then look at the appropriate ones.

isotonic_uk

I was in a very similar position about 12 months ago — total beginner, wanted to start small, and wasn’t sure whether to go with a bank’s ready‑made option or a DIY platform like Trading 212. A few things I learned along the way might help you think it through.

1. The “safety” of a bank vs an investment platform isn’t really different
The money in a Santander ready‑made ISA and the money in a T212 ISA are both covered by FSCS up to £85k. The underlying investments carry the same market risk regardless of who you buy them through. The main difference is convenience and cost, not safety.

2. Ready‑made portfolios are basically paying for simplicity
Banks’ “fund boxes” are just pre‑selected mixes of funds. They’re fine for beginners, but you’re paying for that convenience. Santander’s fees (platform + fund manager) are noticeably higher than low‑cost index funds you can buy yourself.

If you’re only putting in £20–£50 a month, fees matter more than people realise because they compound over time just like returns do.

3. DIY doesn’t mean picking individual stocks
This was the biggest misconception I had.
You don’t need to pick stocks or become an expert. On platforms like T212 you can just buy a single global index fund or ETF (e.g., a broad world tracker) and that’s already more diversified than most bank “fund boxes”.

It’s still “expert‑built” — you’re just cutting out the expensive middle layer.

I would say bite the bullet, especially your starting off small, the more you learn along the way, the sooner you then make better informed decisions, and education around this topic is really important. Just keep getting little nuggets of information from other pro's based on your the way you absorb information, whether thats on MSE forums, Podcasts, blogs, YouTube etc. There's loads of places to better inform your knowledge

friolento

Be careful with bank-specific investments. I would avoid them altogether as it could be costly if you want to transfer them at a later stage to another provider. If you pick a fund(s) traded at a stock exchange, you can make in-specie transfers, thereby saving the costs and potential losses associated with having to sell bank-specific investments before you can transfer them. The easiest is to pick a global multi-asset fund, on the cheapest platform you can find