Interactive Investor found that 20% of DIY investors in the UK wouldn’t switch to a different investment platform purely out of loyalty to their current provider. That’s despite over a third (36%) not having compared the costs associated with their platform in over a year.
The figures come from a nationally representative survey of 1,000 UK investors as part of Interactive Investor’s Dare to Compare campaign, which aims to shine a light on the lack of comparison culture in the UK investment market.
The platform is calling for investors to check what fees they pay and ensure they are not being charged over the odds.
Half of respondents to the survey said they wouldn’t switch because they were satisfied with their current provider, despite only a small proportion (37%) being 100% confident that they knew what fees they were currently paying.
‘Doesn’t always pay to be loyal’
Myron Jobson, senior personal finance analyst at Interactive Investor, said: “While it’s understandable that many may feel loyal to their investment platform due to the years they have been tied to them, it may not always be the best choice when it comes to their money.
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“It doesn’t always pay to be loyal, which is why it’s so important for investors to check their platform fees and make sure their provider is right for them. Our flat-fee model means that the more your money grows, your fee stays the same. But this isn’t necessarily the case for all platforms, and particularly those who charge a percentage fee – meaning that the more your money grows, the bigger cut they take of your wealth.”
Interactive Investor’s research also discovered that the majority of adults regularly compare car insurance (57%), home insurance (54%), savings (53%) and mobile phone contracts (51%). Yet only 7% said they would definitely compare prices from different providers before opening a new account with an investment platform.
Additionally, about one in three (30%) DIY investors said they won’t switch investment platforms due to fears of incurring hidden fees when switching.
Jobson said: “Scaling and, often, hidden fees are a big problem in the DIY investment world that make it difficult for customers to know whether they’re getting the best deal. Most people wouldn’t dream of sticking with a car insurer that wasn’t giving them the best price, so why should they stay faithful to an investment product that is charging them over the odds?
“Investors need transparency from their investment platforms – say ‘no’ to hidden charges and fee structures that disincentivise saving by increasing the more you invest. It’s time for a reset in our industry, and a shift to greater simplicity and better value.”
Interactive Investor has launched new comparison tools for ISAs and SIPPs to encourage transparency on fees and charges, and to help investors make informed decisions about the products they use.
