AJ Bell and interactive investor both trace their roots back to the mid-1990s, but today they are both Manchester-based giants of the platform world. They come with lower costs than some of their rival platforms but the charging structures are very different. When choosing between the two, you also need to consider product range and the type of investing that you plan to do.
What is AJ Bell?
Since it was founded as a small actuarial consultancy in 1995 by Andy Bell and Nicholas Littlefair, 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 470,000 customers and £70.9bn of assets on the platform. The firm caters for everyone from professional advisers to DIY investors, including those who are just getting started.
What is interactive investor?
interactive investor (sometimes referred to as ii) has a head office in Manchester and is owned by Abrdn, a global investment company which is a constituent of the FTSE 250 index of medium-sized companies listed on the London Stock Exchange. Founded in 1995, in recent years interactive investor has bought a few rival platforms, meaning it now has more than 400,000 customers and £50bn of assets on its platform. It is best-known for championing flat fees in pounds and pence over the percentage of investments charging structure that is prevalent in financial services.
AJ Bell v interactive investor – product on offer
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).
Both platforms offer taxable General Accounts, plus a range of tax-efficient investment accounts: stocks and shares Individual Savings Accounts (ISA), Junior Individual Savings Accounts (JISA) and Self-Invested Personal Pensions (SIPP). AJ Bell also offers Lifetime ISAs, which may give it the edge if you’re aged 18–39, and eligible to open one.
Both platforms offer a wide investment choice of active and passive funds, plus UK and overseas shares, corporate and government bonds, exchange traded funds (ETFs) and investment trusts. interactive investor has possibly the better international shares offering. Sophisticated investors might like the currency conversion option, plus the access to new shares and stock splits.
Cash hubs
Both platforms have added cash savings offerings. AJ Bell operates a free cash savings hub for existing customers, which allows them to apply for multiple savings accounts with a minimum £1,000 without the paperwork. This allows you to hold your cash savings in one place and pick and mix between easy access and fixed rate bonds.
interactive investor has a standalone cash savings service provided by Flagstone that allows you to pick the best deal from over 25 UK banks and building societies. You can open an account with a minimum of £10,000. Flagstone takes a 0.25% management fee which is reflected in the rates offered through the service.
Key differences
However, the key differences relate to the platforms’ fees for investing, with AJ Bell charging a percentage of your investments each year, and interactive investor offering its accounts through a range of flat-fee subscription plans.
AJ Bell charges a headline platform custody fee of 0.25% of your investments a year, divided into 12 monthly instalments. On a portfolio of £50,000, this would be £125 a year, and on £100,000, this would be £250 a year. However, the fee reduces to 0.10% on any amount 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%. That would be £75 a year on a £50,000 investment. But it’s not listed on the AJ Bell main services page – you’ll have to go to the ‘new to investing’ section of the site to find it.
interactive investor’s flat fees used to be better value only for investors with more than £50,000, but it has recently introduced fee levels that suit investors with lower amounts. For investors with up to £50,000, its Investor Essentials plan costs £4.99 a month and there is also a new beginner level Pension Essentials which charges £5.99 a month. On a portfolio of up to £50,000, these would be £59.88 and £71.88 a year, respectively.
Once you go above £50,000, you move to the Investor Plan, at £11.99 a month, and the Pension Builder plan, which is £12.99 monthly. Whatever the size of your portfolio, annual platform custody fees would be either £143.88 or £155.99, respectively. With interactive investor you can also can also add a pension to an existing plan for a lower combined fee.
Trading
There are also charges related to the costs of buying and selling investments – and these may be different depending on the type of investment that you hold. AJ Bell charges £1.50 to buy and sell funds online and £9.95 to buy and sell shares online. If you make more than 10 share deals a month, your shares dealing charge drops to £4.95).
Also, if you only invest in shares (with no collective fund holdings) AJ Bell sets maximum platform fee caps as follows: £2.50 per month (£30 a year) in a Junior ISA, £3.50 per month in an adult ISA or Lifetime ISA (£42 a year), £10 per month (£120 a year) in a Sipp.
interactive investor charges £3.99 for trading in funds and UK shares, and £9.99 for international shares. Investors in its Investor plan get a monthly credit of £3.99 to use against trading fees. Notably, all ii’s plans offer a free regular investing service, that doesn’t charge trading fees for drip-feeding as little as £25 a month into a wide range of funds and popular shares (including the FTSE 350). This means regular monthly investors don’t have to incur further charges beyond the subscription fees. interactive investor also has a Friends and Family service that allows you to gift 2-5 people a free subscription by adding them to your plan.
While both platforms allow their customers to vote for free on the shares that they hold, interactive investor has championed this with supporting content and by making shareholder voting the default setting for customers, who receive notifications, informing them when they are eligible to place a vote. They will also be notified about important shareholder events, including AGMs. Since July 2023 interactive investor customers can also vote through its app. AJ Bell customers who want to vote or attend an AGM need to send a secure message to the firm.
AJ Bell v interactive investor – research, tools and features
Both platforms offer daily market insights and investment ideas and inspiration, written by their in-house experts. They produce video and podcast content and host live events.
AJ Bell customers 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 an investment app called Dodl.
interactive investor’s website allows customers to tailor the type of news content that they want to see, depending on product interest and level of expertise. interactive investor also reveals a picture of how its customers’ investments are performing via its quarterly Private Investor Performance Index.
Both platforms also offer guidance to help investors narrow down their investment choices.
interactive investor has two recommended investment lists for investors in collective investments such as funds, investment trusts and ETFs, selected and managed by its independent research partner Morningstar. They are called the ‘Super 60’ list and the accompanying sustainable list is called the ‘ACE 40’. It also offers five model portfolios, put together using funds from these lists, that investors can replicate within their own investment accounts.
AJ Bell has a favourite funds list, comprising 86 investments, including passives and responsible options, selected by its own in-house experts. There’s also a tool to filter these to help find a suitable investment for your circumstances. For those who find sifting through a shortlist of recommended funds too difficult, AJ Bell offers four ‘ready-made’ portfolios, each comprised of 5-9 funds from the favourite funds list.
For beginner investors, interactive investor recommends six low-cost ‘Quick-Start’ funds with different risk levels and ongoing charges of 0.22 per cent, or 0.35 per cent for the sustainable options.
For those who want a simple investment choice, AJ Bell offers its own manufactured funds. Each one is built by them so you don’t have to worry about picking your investments yourself. 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 0.65% for the Income funds. It also offers a Pension Builder fund, powered by the AJ Bell Balanced fund, charging 0.31%.
AJ Bell v interactive investor – user experience
AJ Bell has a TrustScore from consumer website Trustpilot of 4.8 out of 5 (based on 5,000 reviews) v interactive investor at 4.7 (based on 23,000 reviews).
Note that AJ Bell asks its customers for reviews, while Trustpilot states it has no recent records of interactive investor asking their customers to review them. Overall, businesses that regularly invite their customers to write reviews tend to have a higher TrustScore than businesses that don’t. So this may account for AJ Bell’s slightly higher score.
AJ Bell’s main app has a 4.7 out of 5 rating on the app store (based on 9,600 ratings). AJ Bell’s Dodl app has a rating of 4.6 (based on 425 ratings). However, interactive investor’s app has a lower rating of 4.4 (based on 9,300 ratings).
AJ Bell v interactive investor – quickfire advantages & disadvantages
AJ Bell advantages
- Offers Lifetime ISA
- Custody fees capped for shares only investors
- Dodl offering for beginners
- Apps with higher ratings
AJ Bell disadvantages
- Beginner funds range is more expensive
- Lower commitment to shareholder voting
interactive investor advantages
- Flat fee structure good for larger amounts invested
- Monthly subscription plans for beginners
- No trading charge for regular investing
- Good shareholder voting
- Friends and Family feature
interactive investor disadvantages
- No Lifetime ISA
- Cash hub has Flagstone fee
Our conclusion
If you need a Lifetime Isa, you’ll have to choose AJ Bell. While, for beginners with very small amounts to invest, who are comfortable with a limited choice of investments, AJ Bell’s Dodl could be more competitive than interactive investor’s Essentials plan.
Sophisticated investors might be attracted to interactive investor’s international shares offering, plus its commitment to shareholder democracy. For those who want just ‘bog standard’ funds and shares, the difference between AJ Bell’s standard 0.25% platform custody fees v ii’s flat fees subscription plans is harder to unpick.
In theory, interactive investor’s flat fee subscription plans generally work out better value for investors with larger amounts. However, total costs will depend on the investments you wish to buy, plus the number of trades you’ll make. Use our comparison tool to work out the best option for you.
Remember that over many years, the compounding of relatively small differences in fees and charges over several decades can amount to life-changing sums. With larger amounts and longer time scales the amount lost will magnify due to the effects of compounding. So try putting various scenarios into Compare and Invest to find out what you’d potentially be charged before making your decision.
