These two firms dominate the DIY platform market by numbers of customers and assets under administration, with Hargreaves Lansdown the largest of the two. They both have long legacies in the investment world, offer trading accounts alongside tax-advantaged savings plans, come with lots of free guidance to help investors of all levels and have good customer service. So, when comparing the two, most investors look to the fee structures, which are very different. While Hargreaves Lansdown charges fees for its services based on a percentage of the funds held on its platform, interactive investor has a range of flat fee monthly subscriptions that’s unusual in the platform world.
What is Hargreaves Lansdown?
Hargreaves Lansdown is based in Bristol and is a constituent of the FTSE 100 Index of the largest companies listed on the London Stock Exchange. Founded in 1981, it has over 1.7 million clients and £120bn of assets on the platform. Its platform offers investments and savings, individual savings accounts (ISAs), and self-invested personal pensions (Sipps). But the firm also offers a wider range of financial services, including an investment arm, which manages a range of in-house funds, financial advice for customers who don’t want to make their own decisions, and annuity and currency brokerage services.
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, it was a relatively small player until 2016, when it went through a period of buying up rival platforms, meaning it now has over 400,000 customers and £50bn of assets. It offers investments and savings, ISAs and Sipps. 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 and has been working on reducing these fees.
Hargreaves Lansdown 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).
Hargreaves Lansdown offers a wider product range than interactive investor, including Junior ISAs, Lifetime ISAs and Cash ISAs, in addition to Sipps, Stocks and Shares ISAs, and trading accounts. It charges 0.45% on the first £250,000 invested in collective funds in its ISA and Sipp, with reductions for larger amounts. The headline platform fee of 0.45% (£4.50 for £1000 investment) is high relative to other platforms that charge percentage fees and has stayed the same for many years. But its charges for customers who only invest in shares are capped at £45 a year in the ISA and £200 a year in the Sipp. There’s no dealing charge for buying or selling funds but share trades are usually charged at £11.95, with reductions for more frequent traders.
interactive investor offers Sipps, ISAs, Junior ISAs and trading accounts through a range of flat fee subscription plans. Although interactive investor 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. Its Investor Essentials plan (for investors with less than £50,000) costs £4.99 a month, while its Sipp costs £12.99 a month. All ii’s plans allow you to invest as little as £25 a month using a free regular investing service.
Both platforms offer a wide investment choice of funds, plus UK and overseas shares, corporate and government bonds, exchange traded funds (ETFs) and investment trusts. interactive investor claims to offer the widest choice of international investments among DIY investment platforms, and through its direct access to global markets (which most other platforms don’t offer) it gives access to new shares and stock splits on the first day they are offered. It also has a multi-currency facility in trading accounts and Sipps means you can receive payments in those currencies, ready to invest again.
Both platforms also offer a cash facility.
Hargreaves Lansdown has partnered with sixteen banks and building societies to create a standalone savings platform, called Active Savings. 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 cash savings service provided by Flagstone that is standalone, so not linked to your other ii accounts. This allows you to hold your cash savings in one place and pick the best deal from over 25 UK banks and building societies.
Hargreaves Lansdown v interactive investor – 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 Wealth Shortlist, includes active and passive funds, plus responsible investing options. 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 inhouse by Hargreaves Lansdown. With ongoing charges of 0.88 to 0.99 per cent, they are relatively expensive.
Hargreaves Lansdown offers articles and newsletters written by its inhouse experts, plus a daily round up from leading news agencies, and a regular investment podcast. It also puts on educational events and webinars.
interactive investor offers ideas and inspiration for investors in individual stocks, in the form of analysis, interviews and news. For investors in collective investments such as funds, investment trusts and ETFs, it has two recommended investment lists, selected and managed by its independent research partner Morningstar. These are the ‘Super 60’ list and accompanying sustainable list, called ‘ACE 40’. For beginner investors, it 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. It also offers five Model Portfolios that investors can replicate within their own investment account.
interactive investor gives customers impartial, expert content from its team of financial journalists and daily newsletters and insights. The website allows customers to tailor the type of news content that they want to see, depending on product interest and level of expertise. It has lots of video and podcast content too and a series of regular educational webinars for customers.
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.
interactive investor also reveals a picture of how its customers’ investments are performing via its quarterly Private Investor Performance Index.
Hargreaves Lansdown v interactive investor – user experience
Hargreaves Lansdown has a TrustScore from consumer website Trustpilot of 4.1 (based on 8,400 reviews) vs interactive investor at 4.7 per cent (based on 23,208 reviews). But while Hargreaves asks its customers for reviews, 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. This indicates better service overall from interactive investor.
Hargreaves Lansdown’s app has a 4.7 rating on the app store (based on 50,324 ratings), while interactive investor’s app has a lower rating of 4.4 (based on 9.336 ratings).
Hargreaves Lansdown v interactive investor – quickfire advantages & disadvantages
Hargreaves Lansdown advantages
- Offers ready-made investments for those who don’t want to make decisions
- App rating is higher
- Good for investors with large amounts who only invest in shares
Hargreaves Lansdown disadvantages
- Percentage charges are relatively expensive for customers investing in funds up to £250,000.
- Trustpilot rating is lower
interactive investor advantages
- Trustpilot score is higher, indicating better customer service
- Recommended lists are selected by an independent third party
interactive investor disadvantages
- No lifetime ISA or Cash ISA
- Model portfolios are fiddly to follow
If you’re looking specifically for a Lifetime ISA, this would lead you to Hargreaves Lansdown. On investment content, particularly for more sophisticated investors, interactive investor has the edge. However, there are many similarities between the two offerings and the fee structures are relatively complex. interactive investor’s flat fees generally work out better for investors with larger amounts but if you’re just holding shares (with no funds held) Hargreaves Lansdown might work out cheaper. Your best option is to use Compare and Invest to find out what you’d potentially be charged for your type of investing style (products and tax-wrappers held, plus trading frequency). But don’t just focus on the amount saved over one year as the compounding of relatively small differences in fees and charges over several decades can amount to life-changing sums.
Photo by Compare and Invest