What's a fair price to pay for investing? £25 a month, investors say

The average investor sees £25 a month as a fair price to pay for using DIY investing platforms – much higher than most companies actually charge, according to a new survey.

Just over half give fair costs top priority when choosing who to invest with – but what is considered fair varies widely by age and amount of money invested.

One in ten said investment firms shouldn’t charge anything, while 4% considered more than £100 a month to be fair, according to the survey of 1,000 UK adults who invested money outside of ‘a pension commissioned by the DIY platform interactive investor.

The £25 average also masks the fact that a total of 32% consider a charge between £5 or less and £10 to be a fair charge.

Do-it-yourself investment fees: Perceptions of fair pricing increase with the value of investments held

The perception of fair pricing increased with the value of investments held, rising from £13.80 per month for those with less than £25,000 to £38 per month for those with £250,000 or more.

Experience, however, has the opposite effect. Novice investors said they were willing to pay £30 a month, which was more than those who had invested for more than ten years.

Investors aged 55 and over with average investments worth £200,000 saw £17 a month as a fair charge – half of the £34 that 35-54 year olds with similar amounts invested were willing to pay .

Paying £25 per month can be considered expensive, considering that flat-fee investing platforms like Interactive Investor and Freetrade charge £4.99 per month for their entry-level pricing plans.

The survey also revealed that there is considerable overlap between what investors consider fair and what they think they are paying their provider.

On average, UK investors believe they are paying £26 a month, barely a pound more than the amount they think is fair.

Some 13% said they did not believe they had paid anything, while 4% said they pay more than £100 a month.

Fair enough? The £25 average masks the fact that a total of 32% consider a charge between £5 or less and £10 a fair charge

New investors generally think they are paying £30, exactly the figure they consider fair, falling to £22 a month for those who have been investing for over ten years.

The results suggest the need for a better understanding of true fees as reforms to prevent consumers from being ripped off by financial firms loom, according to an interactive investor.

Fair pricing rules are on the way

From July, as part of the Financial Conduct Authority’s consumer bond reform, banks, insurers and other financial firms will be required “to act to deliver good results for retail customers”, per example by setting a fair price for their services.

Financial firms fear the reforms will hurt the sector, with City of London Minister Andrew Griffith reportedly harshly criticizing the FCA at a recent dinner.

According to a Financial Times report, Griffith said the reforms could lead to a wave of lawsuits from opportunistic claims companies.

But consumer groups have previously welcomed the rules, which should end fraudulent fees and charges through more transparent promotions, and make it easier to cancel or switch investments.

Rocio Concha, director of policy and advocacy at consumer group Which?, previously said: “The financial industry must accept these new protections, and companies that are able to do so now should not wait for them to do so. be officially introduced to bring positive change to consumers.

“When companies fail to comply with the new rules, the FCA must stand ready to impose severe penalties.”

The survey also found that two-thirds of investors agreed with the idea of ​​companies charging a fixed subscription fee, as opposed to a floating percentage, which was the preferred option for 15% of respondents to investigation.

Around a quarter think fixed subscriptions are a fairer way to charge, think it’s a simpler method or find it more attractive, while 16% also think it’s a more transparent way to charge.