Investment platform AJ Bell has announced a significant change to its fee structure, removing the £1.50 dealing fee previously charged for regular monthly investments. This move, effective from this month, also sees the minimum investment amount for these regular contributions reduced to just £25, making it possible to invest in the stock market for the cost of a takeaway meal.
The dealing fee, essentially a commission charged for executing a trade, has been a standard cost across many investment platforms. Its removal by AJ Bell applies specifically to investments made via direct debit into funds, shares, and investment trusts. This means that individuals committing to regular, automated monthly contributions will no longer incur this specific charge, potentially saving £18 annually for those making a single regular investment each month. Existing customers who utilise this service will automatically benefit from the change without needing to take any action.
This initiative appears to be aimed at making investing more accessible, particularly for those with smaller sums to put aside. By lowering the entry barrier to £25 and eliminating the dealing fee, AJ Bell is positioning itself to attract new investors and encourage consistent saving habits among its existing client base. The firm stated that the changes are designed to help more people start investing and stay invested for the long term.
While the £1.50 dealing fee has been scrapped for regular investments, it is important for consumers to understand that other charges still apply. AJ Bell charges a platform fee, which is an annual percentage based on the value of assets held. For funds, this is typically 0.25% on balances up to £250,000, reducing for higher values. For shares, exchange-traded funds (ETFs), and investment trusts, the platform fee is 0.15% on balances up to £250,000. Additionally, dealing fees for one-off trades, outside of the regular monthly investment service, still remain at £5 per trade for shares/ETFs/investment trusts and no charge for funds.
When considering the overall cost, investors should compare AJ Bell's platform fees and remaining dealing charges with those of competitors. Other platforms may offer different fee structures, such as fixed monthly charges, no platform fees but higher dealing fees, or entirely commission-free trading for certain assets. For example, some providers offer commission-free trading on US stocks, while others have flat monthly subscription fees that cover all trades. Consumers should carefully assess their expected investment frequency, portfolio size, and asset types to determine which platform offers the most cost-effective solution for their individual needs. Under UK consumer law, platforms must clearly display all charges, allowing for transparent comparison.
This move by AJ Bell aligns with a broader industry trend towards making investing more transparent and affordable, as platforms compete for a growing market of retail investors. The emphasis on regular, smaller contributions also reflects a recognition of the financial realities for many UK households, where large lump sums for investment may not be feasible.
Source: AJ Bell