UK investors overpaying platform fees by hundreds of pounds
UK investors who fail to shop around are overpaying hundreds of pounds in platform fees leaving some missing out on compound gains.
Over 50 per cent of UK investors are using the market’s 12 most expensive providers, with both active and passive investors shelling out hundreds in fees alone, according to the latest research from IG.
Active investors, who regularly buy and sell assets in a bid to outperform the market, who use the expensive platforms would have cumulative fees £515 higher than those who use the low-cost market alternatives.
On average, those who use one of the four most expensive platforms have an over payment of £711.
Over a span of 40 years investing, this would amount to a staggering £28,440 in costs, based on today’s fees and not accounting for lost compounding.
Passive investors not immune
Passive investors also failed to dodge the hiked fees, overpaying an annual average of £263, while those using the platforms at the top of the upper end of the market overpay £344
Those who make an average of three trades per month fork out an annual £357, while investors using the top four platforms pay £459.
Michael Healy, managing director UK and Ireland at IG Group, said: “Most retail investors in the UK are being ripped off, paying hundreds of pounds a year in fees for a service they could access for far less by switching platforms.
“While investing was once expensive, it’s no longer the case, and there’s no reason for customers to miss out on compounded gains by paying through the roof in annual charges.”
Staying in the dark and dodging hassle
The findings come as Brits remain in the dark on fees, with 47 per cent having never calculated their total fees while investing.
Others credited investment fee jargon, such as FX spreads and tiered changes, to their lack of engagement.
Despite this, 55 per cent are confident they are paying the lowest fees possible, reflecting the lack of understanding towards investment platforms.
Those who were aware of high fees, blamed the hassle of changing towards their lack of action, with nearly half complaining of the ‘life admin’ involved.