These are two of the largest investment platforms and come with many similarities so choosing between them is not easy. Hargreaves Lansdown is the leader of the DIY platform market but AJ Bell continues to win new customers. Both firms have long legacies in the investment world, good products and vast investment choice. When choosing between the two, your decision is most likely swayed by differences in the cost of investing.
What is Hargreaves Lansdown?
Hargreaves Lansdown is a constituent of the FTSE 100 Index of the largest companies listed on the London Stock Exchange. It has over 1.7 million clients and £120 billion of assets on the platform. Alongside investments and savings, individual savings accounts (ISAs), and self-invested personal pensions (Sipps), the firm also offers a wider range of financial services. These include an investment arm, which manages a range of in-house funds, financial advice, and annuity and currency brokerage services.
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 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.
Hargreaves Lansdown v AJ Bell – product on offer
Both platforms offer a large range of tax-efficient investment wrappers: stocks and shares Individual Savings Accounts (ISA), Junior Individual Savings Accounts (JISA), Self-Invested Personal Pensions (SIPP) and Lifetime ISAs, with Hargreaves Lansdown also offering Cash ISAs. Plus, they both offer taxable general investment accounts. They also both 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. And both allow you to get started investing with as little as £25 a month.
A relatively new development for both platforms is the introduction of cash savings hubs (Hargreaves Lansdown started first), allowing customers to apply for multiple savings accounts without multiple applications. This allows you to hold your cash savings in one place and pick and mix between easy access and fixed rate bonds. The services are free, but Hargreaves Lansdown’s is a stand-alone savings platform, while AJ Bell’s is exclusively for existing customers.
Hargreaves Lansdown v AJ Bell – fees
However, the key differences are in their fees for investing. Hargreaves Lansdown charges a headline platform custody fee of 0.45% while AJ Bell’s is 0.25%, significantly lower. On a portfolio of £100,000, this would be £450 and £250 a year, respectively. But as portfolio sizes grow into significant sums, both platforms reduce their custody fees, with AJ Bell winning on this measure too.
AJ Bell charges 0.10% on amounts invested above £250,000 and no fees on amounts invested above £500,000. With Hargreaves, the 0.45% is charged on the first £250,000, with this reducing to 0.25% on portfolios worth between £250,000 and £1 million, and 0.10% on £1 million to £2 million, with no charge on the value over £2 million.
However, if you only invest in shares (with no collective fund holdings) both firms set maximum fee caps – again, AJ Bell offers the better value. For AJ Bell, this is £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), v Hargreaves’ cap of £45 in the ISA. For Sipp investors who only invest in shares, AJ Bell caps the platform fee at a maximum £10 per month (£120 a year), v Hargreaves’ cap of £200 a year.
There are also nuances in trading fees which can change the fees picture if you’re an active investor, buying and selling frequently. With AJ Bell it’s £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. With Hargreaves Lansdown, there’s no dealing charge for buying or selling funds but share trades are charged at £11.95. This reduces to £8.95 for 10 or more monthly share deals, or to £5.95 for 20.
Also notably, Hargreaves Lansdown has cut all fees for its Junior ISAs, making it completely free to buy and hold any investments within this wrapper. If you’re a parent wanting to save for a child, this may be attractive.
Hargreaves Lansdown v AJ Bell – research, tools and features
Hargreaves Lansdown’s Wealth Shortlist is a selection of 74 funds that its analysts have identified as having the potential to outperform their peers over the long term. The list was overshadowed by its predecessor, the Hargreaves Lansdown Wealth 50, promoting the Woodford Equity Income Fund until the fund’s collapse in 2019. But Hargreaves Lansdown says the newer Wealth Shortlist launched in 2020 comes with significantly greater risk monitoring.
For those who don’t want to choose, monitor and manage their investments on a day-to-day basis, Hargreaves Lansdown offers a suite of four ready-made investments with different risk levels. These funds use a selection of different managers, chosen and managed in-house by Hargreaves Lansdown. With ongoing charges of 0.88% to 0.99%, they are relatively expensive.
AJ Bell also has a favourite funds list, comprising 86 investments, and a tool to filter these to help find a suitable investment for your circumstances. Also, 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.
For those who want their investment choice to be even simpler, 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%.
Both platforms offer articles and newsletters written by their in-house experts, regular investment podcasts and educational events and webinars.
AJ Bell customers get free access to Shares Magazine. And, for beginner investors, AJ Bell attempts to ‘take the fear out of investing’ with an investment app called Dodl.
Hargreaves Lansdown v AJ Bell – user experience
Indicating better overall customer service, AJ Bell has a higher TrustScore from consumer website Trustpilot of 4.8 (based on 4,840 review) v Hargreaves Lansdown’s TrustScore of 4.1 (based on 8,664 reviews).
However, user experience on the apps is similar. Hargreaves Lansdown’s app has a 4.7 rating on the app store (based on 51,200 ratings) v AJ Bell also at 4.7 (based on 9,000 ratings). AJ Bell’s Dodl app has a rating of 4.6 (based on 359 ratings).
Hargreaves Lansdown v AJ Bell – quickfire advantages & disadvantages
Hargreaves Lansdown advantages
- Stand-alone savings platform
- Offers Cash ISA
- Junior ISA is free
Hargreaves Lansdown disadvantages
- Platform charges are expensive
AJ Bell advantages
- Lower platform and trading fees
- Dodl app for beginners
- Higher Trustpilot score
AJ Bell disadvantages
- Cash savings hub is only for existing customers
- Charges for fund trades
Our conclusion
If you want Junior ISAs, cash ISAs or a stand-alone savings platform, Hargreaves Lansdown is the winner. However, on the whole, AJ Bell tends to work out cheaper.
For investors with up to £250,000, saving of 0.20% a year on the platform fees by choosing AJ Bell is perhaps a bigger deal than you may think. Over many years the compounding of relatively small differences in fees and charges over several decades can amount to life-changing sums. If you invested £100,000 over 10 years and got an average annual growth of 6% from the investments, with a 0.25% charge your fund would grow to £174,905. But a 0.45% charge would reduce the end sum to £171,626. You lose £3,279 to Hargreaves Lansdown’s additional platform fees. With larger amounts and longer time scales the amount lost will magnify due to the effects of compounding.
Nevertheless, if you intend to hold funds and buy and sell very often, consider if AJ Bell’s additional fund trading fees could override any platform fee savings v Hargreaves Lansdown.
Your best option is to use Compare and Invest to find out what you’d potentially be charged for investing with each of the platforms.
