What’s a fair price to pay for investing? £25 a month, investors say

The average investor considers £25 a month a fair price to pay for using DIY investment platforms – far higher than what most companies actually charge, a new survey finds.

Just over half list fair fees as a top priority when choosing who to invest with – but what is considered fair varies widely depending on age and how much money is invested.

One in 10 said investment companies shouldn’t ask for anything, while 4 percent thought more than £100 a month was reasonable, according to the survey of 1,000 UK adults with money invested outside a pension commissioned by DIY platform interactive investor.

The £25 average also masks the fact that a cumulative 32 per cent consider a charge between £5 or less and £10 a fair charge.

The perception of fair pricing increased with the value of investments held, from £13.80 a month for those with less than £25,000 to £38 a month for those with £250,000 or more.

However, experience has the opposite effect. Early-stage investors said they were willing to pay £30 a month, which was more than those who had invested for more than a decade.

Investors aged 55 and over with an average investment of £200,000 considered £17 a month a fair return – half the £34 that 35-54 year olds with similar invested amounts were willing to pay.

Paying £25 per month can be considered expensive as fixed fee investment platforms like Interactive Investor and Freetrade charge £4.99 per month for their entry-level pricing plans.

The research also found that there was significant overlap between what investors consider reasonable and what they believe they are paying their provider.

On average, UK investors believe they are paying £26 a month, just a pound more than what they consider reasonable.

About 13 per cent said they did not believe they were paying anything at all, while 4 per cent reported paying more than £100 a month.

New investors typically think they are paying £30, just the amount they consider reasonable, dropping to £22 a month for those who have been investing for over a decade.

The findings suggest there is a need for a better understanding of the true costs as reforms to prevent consumers from being ripped off by financial firms loom, according to Investor Interactive.

Fair pricing rules are on the way

From July, under consumer tax reform, the Financial Conduct Authority will require banks, insurers and other financial firms to ‘act to deliver good results for retail customers’, for example by pricing their services fairly.

Financial firms fear the reforms could hurt the industry, with City of London Secretary Andrew Griffith reportedly sharply criticizing the FCA at a recent dinner.

This is according to a report from the Financial TimesGriffith said the reforms could lead to a wave of lawsuits from opportunistic claims management firms.

But consumer groups have previously welcomed the rules, which are expected to end scam fees and fees through more transparent promotions and make it easier to cancel or switch investments.

Rocio Concha, the director of policy and advocacy at consumer group Which?, previously said: “The financial industry needs to get on board with these new protections, and companies that can do so now shouldn’t wait until they do. be formally introduced to bring about positive change for consumers.

“If companies fail to comply with the new rules, the FCA must be ready to impose harsh penalties.”

The survey also found that two-thirds of investors agreed with the idea of ​​companies charging a fixed subscription fee, as opposed to a variable percentage basis, which was preferred by 15 percent of respondents.

About a quarter believe that fixed subscriptions are a fairer way of charging, find it simpler or more attractive, while 16 percent also think this is a more transparent way of charging.