AJ Bell and Fidelity both have long legacies in the investment world and come with lower costs than some of their rival platforms. Both firms offer lots of free guidance and ideas to help investors from beginners to experienced. However, when choosing between the two there are a few differences in product and service to consider alongside the cost of investing.
What is AJ Bell?
Since it was founded as a small actuarial consultancy in 1995, AJ Bell has grown to become one of the largest investment platforms in the UK and a constituent of the London Stock Exchange’s FTSE 250 index of medium-sized companies. It has more than 444,000 customers and £37.1bn of assets on its consumer platform. The firm caters for everyone from professional advisers to DIY investors, including those who are just getting started.
What is Fidelity?
Fidelity International is a private employee-owned company that operates its UK investment management services from London and has helped clients to save for retirement and other long-term investing objectives for more than 50 years. Alongside a fund platform it provides mutual funds and pension management. It’s a big enterprise, with 1.6 million UK customers, and a total of over 2.8 million global customers, managing total money worth USD $900.7 billion.[1] In the UK, it has £40.6bn and more than 560,000 customers on its consumer platform .
AJ Bell v Fidelity – the basics
Both platforms offer taxable general accounts, plus a range of tax-efficient investment accounts, stocks and shares Individual Savings Accounts (ISAs), Junior Individual Savings Accounts and Self-Invested Personal Pensions (Sipps).
AJ Bell also offers Lifetime ISAs and a free cash savings hub for existing customers that allows them to apply for multiple savings accounts without the paperwork. This means savers can hold their cash savings in one place and pick and mix between easy access and fixed rate bonds.
Both platforms allow you to get started investing with as little as £25 a month. They are regulated by the Financial Conduct Authority and covered by the Financial Services Compensation Scheme (FSCS).
AJ Bell v Fidelity – investment choices
In terms of investments, both firms offer active and passive funds, plus UK and overseas shares, exchange traded funds (ETFs) and investment trusts.
AJ Bell boasts a wider choice of overseas shares, offering dealing in 24 international markets including the US, Canada, Japan, France, Germany, Italy and Spain. It also offers trading in UK government bonds, also called gilts, and corporate bonds. The AJ Bell platform gives investors a choice of over 4,000 funds, including its own managed funds.
AJ Bell has a favourite funds list, comprising 80 vehicles, and a tool to filter these to help find a suitable investment for your circumstances, plus a fund screener tool to help you choose from the whole universe of available funds. It also offers four ready-made portfolios, each comprising between 5 and 9 funds from the favourite funds list. For those who want their investment choice to be even simpler, AJ Bell offers its own manufactured funds.
Fidelity’s platform product range includes its own funds alongside those from other providers – a total choice of more than 3,000 funds. Investors can also select from more than 2,000 UK and overseas shares, corporate and government bonds, ETFs and investment trusts. Fidelity has negotiated discounts on many funds on its platform. These discounts may be built into the fund’s ongoing charges, so you pay a lower charge than usual. In others, the discount will be a payment that will be reinvested at the end of every quarter into the qualifying funds.
Fidelity’s recommended list is called the Select 50 and features active and passive funds, investment trusts and ETFs. Fidelity partners with Fundhouse, an independent fund research company, to add independence and enhance the selection process. It also has a Navigator tool that assists you in making your own investment choice based on features that are important to you and your appetite for risk, presenting a Fidelity-branded and in-house managed multi-asset fund that correspond with your inputs.
AJ Bell v Fidelity – costs and charges
The other key differences relate to the platforms’ fees. Both platforms look at the value of the investments in your account and charge you a percentage of that value divided by 12 each month. The fee then reduces in bands as your investments grow above certain amounts.
AJ Bell charges a headline platform fee of 0.25%. On a portfolio of £100,000, this would be £250 a year. However, the fee reduces to 0.10% on amounts invested above £250,000, with no fees on amounts invested above £500,000.
For beginners, AJ Bell offers Dodl, a pared down offering with investment choice limited to seven different investment portfolios, 10 themed investments and 80 popular UK and US shares. Dodl charges less than the AJ Bell platform, at 0.15% with a minimum charge of £1 per month.
There’s no dealing charge to buy an AJ Bell fund. The annual ongoing charge is 0.31% for the Growth funds, 0.45% for the Responsible Growth fund and 0.50% for the Income funds. It also offers a Pension Builder fund, powered by the AJ Bell Balanced fund, charging 0.31%.
Fidelity charges a higher headline platform fee of 0.35% of your investments, which works out as £350 per year on £100,000, with no additional charges for holding a Sipp. The service fee drops to 0.20% (£500 a year) when your money grows to £250,000, with no charge on investments over £1 million, making the maximum fee £2,000.
The ongoing charge for the Fidelity Select 50 fund, an actively managed fund mainly made up of funds from the Select 50 is a hefty If you have less than £25,000 in total with Fidelity, there will be a flat fee of £90 (£7.50 a month) a year, although this changes to 0.35% if you have a monthly regular savings plan (which would be £17.50 a year on investments worth £5,000). For exchange-traded instruments held in the taxable option of Fidelity’s investment account, there is no service fee. There’s also no fee for investments held in a Junior ISA or Junior Sipp.
Frequent fund traders should also note that Fidelity has no dealing charges for buying or selling funds, while with AJ Bell it’s £1.50 to buy and sell funds online. Both platforms have additional trading charges when you buy and sell shares, ETFs and investment trusts. Fidelity charges £7.50 per trade, while AJ Bell has a standard charge of £5. However, with AJ Bell, if you make more than 10 share deals a month, your shares dealing charge drops to £3.50.
Also, if you only invest in shares (with no collective fund holdings) AJ Bell sets maximum custody fee caps as follows: £2.50 per month (£30 a year) in a Junior ISA, £3.50 per month in an adult ISA, Lifetime ISA or general investment account (£42 a year), and £10 per month (£120 a year) in a Sipp.
AJ Bell v Fidelity – research, tools and features
Both platforms offer daily market insights and investment ideas and inspiration, written by their in-house experts, and offer guidance to help investors narrow down their investment choices. They produce video and podcast content and host events.
AJ Bell’s customers also get free access to Shares Magazine articles and newsletters written by their inhouse experts, regular investment podcasts and educational events and webinars. And, for beginner investors, AJ Bell attempts to take the fear out of investing with the Dodl investment app.
AJ Bell v Fidelity – user experience
Indicating better overall customer service, AJ Bell has an impressive TrustScore from consumer website Trustpilot of 4.9 out of 5 (based on more than 9,500 reviews), compared with Fidelity’s 4.4 (based on almost 5,600 reviews).
Both firms ask customers for Trustpilot reviews. Overall, businesses that regularly invite their customers to write reviews tend to have a higher TrustScore than businesses that don’t.
AJ Bell’s main app has a 4.7 out of 5 rating on the app store (based on almost 16,000 ratings), while its Dodl app scores 4.6 from 541 ratings. Fidelity’s app has a 4.5 rating on the app store (based on 20,000 ratings).
AJ Bell v Fidelity – quickfire advantages & disadvantages
AJ Bell advantages
- Lifetime ISA and cash hub.
- Better customer service and apps.
- Lower platform fee and share dealing fees.
AJ Bell disadvantages
- Charges for fund dealing.
- Cash savings hub is only for existing customers.
- No fund discounts.
Fidelity advantages
- No fund dealing fees.
- No platform fee for investments in ETFs.
- No fee for Junior ISA or Junior Sipp.
Fidelity disadvantages
- No Lifetime ISA or cash savings service.
- Smaller range of investments.
- Higher share dealing fees.
Our conclusion
AJ Bell has a superior product range and investment choice, plus better user experience. Meanwhile, the difference between AJ Bell’s 0.25% v Fidelity’s 0.35% headline platform fees is something to consider seriously. And if you’re a beginner comfortable with a pared down investment choice, AJ Bell’s Dodl is hard to beat on charges.
Nevertheless, if you’re only going to invest in ETFs, or you want to do a lot of trading in funds, or you have an eye to saving for children, Fidelity may work out cheaper.
Your best option when searching for the right platform for you is to use our free and easy-to-use comparison tools to find out what you’d potentially be charged for the type of investing you want to do.
[1] https://www.fidelityinternational.com/about-us/our-business/
