It's a great platform, but its facing stiffer competition than ever.
There are many good reasons why Interactive Investor is the second biggest trading platform in the UK. It has the widest range of stocks of the major providers, its platform looks modern (even if it still needs a refresh in certain places) while its flat-fee structure offers certainly and, for larger portfolios, good value. However, if you’re prepared to go for a newer entrant to the market (e.g. Trading 212 or InvestEngine), you might be able to save on fees and get a better digital experience. If instead you’re after a company with a long-standing history, ii could be for you.
💷 Flat monthly fees can be significantly cheaper than Hargreaves Lansdown and AJ Bell for larger portfolios.
👩🎓 Great research and educational materials.
📱 Huge range of investments.
💰 Long-standing reputation.
☎️ Awesome customer service.
💰 Flat monthly fees can be more expensive than percentage-based fees for smaller portfolios.
💸 High trading fee for funds.
📱 Newer app-based platforms are offering better digital experiences and lower costs.
💹 Still have to pay FX costs.
📈 Expensive to make lots of trades.
Interactive Investor, or ii as they have now rebranded, is the second largest investment platform in the UK, behind Hargreaves Lansdown.
It was founded way back in 1995 by entrepreneur Sherry Coutu to provide financial information but soon added the ability to trade. Today it’s owned by investment giant Abrdn and has 400,000 customers, over £50 billion under administration and 700 employees. It has won heaps of awards and offers loads of research including its popular Super 60 and ACE 40 lists of funds.
Its main selling point however is its flat fee cost structure.
[.custom-color]Opening and setting up an account is pretty easy.[.custom-color]
You’ll be asked for the usual details like your name, date of birth and address. You will also need your National Insurance number. ii go a bit further than other providers in additionally asking your occupation, employment status and name of your employer. We’re not entirely sure why this is necessary.
Once you have provided your details, you will be asked to make a 1p payment via bank card to verify your identity. Then, after you agree to the terms and conditions and set up two factor authentication, you’re set to go. However, ii will annoyingly badger you to set up a direct debit.
[.custom-color]Interactive Investor offers a variety of account options that cater to most investment needs.[.custom-color]
Stocks and Shares ISA: This account allows you to invest £20,000 a year tax-free i.e. any increase in stock value or dividends will not attract capital gains nor income tax. It should be noted that this is not a “flexible” ISA. This means that if you can’t withdraw and then replace money without it counting toward your annual ISA allowance. Given ii is such a big provider we really do think it should offer this.
Trading Account: This is ii’s general investment account. Any profits or dividends will attract tax.
Self-Invested Personal Pension (SIPP): This account allows you to take control of your pension and can be opened in addition to your workplace pension.
SIPPs offer some great tax benefits. Basic rate taxpayers can put in up to £60,000 a year and the government will top it up with another 25%. Higher and additional rate taxpayers can claim back even more through self-assessment. It’s an option for those who want to avoid tax and to manage their retirement savings more actively – but do make sure you get tailored financial advice on your individual tax circumstances.
Junior ISA (JISA): This is a tax-efficient savings account available in the UK for children under 18. Contributions are made by parents or guardians, and the money is locked until the child turns 18. Like an ISA, the account shields interest or investment gains from tax. For the 2023-2024 tax year, the annual contribution limit is £9,000.
Cash Savings: We won’t really go into this but ii has an account that allows you to pay in money and select the best interest rate return from a selection of banks. It has a £10,000 minimum deposit.
[.custom-color]ii’s range of investments is one of its big selling points.[.custom-color]
Here’s a rundown of what you can invest in:
Shares: You can buy and sell shares of individual companies listed on various stock exchanges, including those in the UK and around the world.
Funds: These are managed by dedicated professional fund managers and offer diversification across different asset classes and investment strategies.
ETFs: This stands for exchange-traded funds. They are like normal funds, but are traded on stock exchanges and usually don’t have a dedicated fund manager. They are often themed around a certain topic – e.g. sustainability, tech or property. They can also be trackers for a market – e.g. a FTSE 100 ETF would invest in all the companies listed on this stock exchange.
Bonds and Gilts: Investors can purchase government or corporate bonds. These are essentially loans and so provide a fixed income over a certain period. They are usually seen as lower risk than stocks.
Investment Trusts: These are listed companies that invest in other companies. A popular example is Scottish Mortgage.
Interest: You can earn interest on any uninvested cash you hold in your account. For ISAs this will increase to 2% and for SIPPs it will increase to 3% from this month (February 2024).
So how does this range of investments compare to rivals? The answer is very well. Here’s our breakdown:
So out of the major providers ii offers the widest range of investments. It’s probably overkill for most people but we have found a couple of shares we wanted to invest in (Hello Fresh and On The Market) that were available on ii but not on AJ Bell.
However, it doesn’t offer everything. Crypto is not available, presumably because it is such a risky investment. ii isn’t really an FX broker either – this tends to the preserve of day trading platforms.
You can only trade in full shares too, which is a shame because newer providers are offering fractional trading. This allows you to buy part of a share and can be useful when you are buying companies that trade for a high price. For example, Booking Holdings (the company behind Booking.com) trades at over $3,000 a share! We really want ii to bring in this feature to make investing more open to those with small pots.
[.custom-color]One of Interactive Investor’s main plus points is its curation of funds.[.custom-color]
ii offers a lot of ideas and inspiration so you can cut through the noise of the thousands of potential funds out there.
ii Super 60: This curated list is designed to provide investors with a choice of high-quality investment options across a range of asset types, investment sectors, and geographical regions. This list includes a selection of funds, investment trusts, and ETFs that are carefully chosen based on rigorous criteria, including performance, fees and the quality of the fund management team. It is analysed and monitored by Morningstar to make sure ii is doing a good job in picking the funds.
ii Ace 40: This specifically focuses on ethical, social, and governance (ESG) investments. The list comprises 40 funds, investment trusts, and ETFs that are selected based on their approach to responsible investing. The criteria for selection include the quality of the investment management team, performance, and how well each investment aligns with ethical, sustainable, and governance principles. The ACE in “ACE 40” stands for “Avoids, Considers, and Embraces,” reflecting different approaches to responsible investing.
Model Portfolios: ii has 5 ready-made investment portfolios that you can follow. They are labelled as “growth” or “income” depending on whether you would want to grow value over the long term or claim income via dividends. These are also vetted by Morningstar.
Quick-start Funds: A simple set of 6 funds arranged according to risk level. They fall into two categories:
[.custom-color]Interactive Investor stands out from the market by offering a fixed-cost subscription charge rather than charging you a percentage of your portfolio each month.[.custom-color]
You may also have to pay extra for any trades you make. Let’s see how this breaks down for each account type:
*Note: You can only hold up to £30,000 in an Investor Essentials account.
Let’s compare this to Hargreaves Lansdown and AJ Bell’s percentage fee model for a portfolio made up of 50% stocks and 50% funds. We will presume you buy one US/UK stock or fund a month. Here are the charges in this example:
So with a mix of funds and shares, you can see very quickly that ii’s structure becomes pretty compelling. However, let’s look at what would happen in the example above if you only bought stocks:
Here the difference is much less stark and AJ Bell is actually cheaper for the smallest portfolios. It’s important therefore to compare the total amount you plan to put in and how you plan to split your purchases between asset classes.
We’ve compared Interactive Investor against the big traditional brokers in our examples, but against newer platforms it can start to look expensive. For instance, Freetrade only charges £60 for a yearly account and trades are commission-free. With ii you are partly paying for the history and brand of the company so you need to weigh up if this is important to you.
ii’s US/UK fee used to be £5.99 but it has recently lowered it to £3.99 suggesting it is responding to the new trend for lower fees – long may it continue!
SIPPs have a set monthly charge of £5.99 until their value goes over £50,000 when the cost rises to £12.99. There are no free trades included with this, with US and UK trades costing £3.99. Generally, this will be OK as SIPP investors tend to be less active, usually picking long-term funds for security.
Like with ISAs you should assess your own circumstances to see if the flat fee would work out well for your SIPP. As a general rule of thumb, ii works out better for bigger portfolios but can be comparatively expensive for smaller ones.
[.custom-color]Overall the platform is pretty good.[.custom-color]
We reckon it has a nice design (though we’ve seen quite a lot of people hating on it) but it is a touch on the basic side. Here is a walkthrough of some of the things it can do:
To search for a stock (or fund) simply go to the magnifying glass icon and type in its name. Once selected, you are taken to the share overview page. This shows the current and historical of the asset (provided by TradingView), along with info on the company and its fundamentals such as market cap and P/E ratio. It also compares against competitors which is handy.
There is an analyst rating provided by Morningstar to help you assess the potential of the stock. However, we feel Lightyear does a much better job of this by aggregating together often dozens of analyst views.
The latest news on the company is also provided (see the right screenshot above).
Most importantly, it’s from this page that you can make a trade. In our tests, the process was very simple. We did notice some differences between the price quoted and the price we paid but this may have been down to market movements.
The portfolio tab is functional, but not much more. It gives you an overview of all your investments, what price you bought them for, their current price and your gain or loss as money and as a percentage.
The only real analysis feature here is the portfolio “X-ray”, which is an integration from Morningstar’s X-Ray tool. It has basic level info but there isn’t really any info on how to use this knowledge. Oh, and it looks like it’s from the 1980s.
[.custom-color]ii’s toolset does not stand out.[.custom-color]
ii has the basics – e.g. you can view the price of assets over time, set up a watchlist of stocks and also get alerted when they reach a pre-determined price.
Under the research section, there is the ability to refine potential investments by filters such as sector, market cap, returns etc. There is also a bolt-on integration with Trading Central. We’re sure it’s a powerful tool but it’s not well integrated and, to be frank, seems like a bit of an afterthought.
ii isn’t a day trading platform, so we’re not expecting fancy Fibonacci charts, but we do think it should have more in the way of analytical tools.
[.custom-color]This is a strong plus point for Interactive Investor.[.custom-color]
ii’s knowledge centre is brilliant for those just starting on their trading journey. We particularly like Kyle Caldwell’s “How To Invest” video series in which he explains complex concepts and strategies in a disarmingly uncomplicated way.
The Super 60, ACE 40 and Quick-start funds lists are good starting points for anyone not sure where to begin.
On top of this, ii has a well-written and informative news section.
[.custom-color]It’s really good.[.custom-color]
Believe it or not, you can speak to a person over the phone from 7.30 am to 5.30 pm on weekdays (and until 9 pm for trading assistance). We tested this and were able to get through to a person in 50 seconds.
Alternatively, for anything non-urgent, you can raise a ticket online. The quoted time is 5 working days but most are dealt with quicker than this.
The online help centre is well-structured, comprehensive and easy to follow.
[.custom-color]It is fine for beginners, but it could be a bit expensive.[.custom-color]
The platform, even if a little clunky in places, is easy to use and customer support is on hand to help. As mentioned above, their curated funds and model portfolios are good starting points for newbies.
However, the flat fee structure only really starts to pay off when your portfolio goes over £30,000. Those starting small may want to look elsewhere.
[.custom-color]Yes, it’s safe.[.custom-color]
Interactive Investor operates under the regulation of the Financial Conduct Authority (FCA), ensuring adherence to strict financial standards and consumer protections. Clients’ investments are protected up to £85,000 by the Financial Services Compensation Scheme (FSCS) in case the firm faces financial difficulties.
We like that ii forces two-factor authentication to help keep accounts safe from cyber fraud.
Lastly, it has a strong reputation for safety based on 28 years of operation.
Yes, it’s a very good platform. We love the design, even if many don’t, and the flat fee can be a good choice for certain portfolios. However, with newer companies like Trading 212, Lightyear and InvestEngine entering the investing space with ever-improved user experience and competitive prices, we think consumers will have to think harder than ever before when choosing a platform.