What Are the Fees Associated With Investing in a Stocks & Shares ISA?

Ian Lewis[1]

Ian Lewis

Money Savings Advice What Are the Fees Associated With Investing in a Stocks & Shares ISA?

If you invest your money in a Stocks and Shares ISA, there may be fees and charges to pay. 

Understanding the costs of a Stocks and Shares ISA can ensure that you’re not taken by surprise and can help you make sure that returns on your investments aren’t wiped out by annual charges.

There are several different potential costs that you should be prepared for. Check the terms and conditions of your Stocks and Shares ISA so you fully understand what you’re agreeing to.

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Stocks & Shares ISA Platform Charges

Think of the Platform Charge as a payment you’ll be making just for holding your account.

Some providers will have a Platform Charge that’s a percentage of the funds you’re keeping with them. A percentage-based fee is the best way to pay if your ISA funds are relatively low because this ensures that the charges start small and only rise as your savings balance grows.

Other providers will charge a flat fee for maintaining your Stocks and Shares ISA. If you’re investing a lot, this option is better because there’s a standard price to pay. You don’t need to worry that your chosen provider is taking a huge cut from your savings.

Stocks & Shares ISA Management Charges

Where a Platform Charge is something you pay just to hold your account, the Management Charge is a fee that you’ll pay for the management of your investments. Often, investments are managed automatically by computer algorithms. In some cases, there’s a real person making all the investment decisions. Understandably, a fully managed account will come with higher Management Charges.

Management Charges are percentage-based. You’re likely to pay up to 1% per fund or investment.

Stocks & Shares ISA Trading Fees

A Trading Fee isn’t an annual charge but something extra you’ll pay if you’re taking control and moving your money around. There may be a new charge applied every time you buy or sell shares or funds, so Trading Fees can quickly mount up if you’re doing a lot with your account. If you leave your investments to do their own thing, you won’t have many of these charges.

Some providers don’t charge Trading Fees, but others might apply a charge of up to £25 per transaction.

Stocks & Shares ISA Transfer Fees

If you want to leave your current provider and move to somewhere new, you might be charged a Transfer Fee. Think of a Transfer Fee is a fee for leaving and a charge you’ll pay to leave your current platform. Transfer Fees aren’t always applied but can be up to £50, so you’ll want to be prepared for this cost. Before you move your investments to a new platform, check if there’s a Transfer Fee to pay.

Fees Affecting Investment Returns

When you have your money in a Stocks and Shares ISA, the goal is to get a good return on your investment. You want your money to grow, but annual charges and other payments can eat into the profits you’re making.

Check the money in your account frequently. Consider any upcoming costs and charges, then decide if it’s beneficial for you to keep your money where it is. You may decide that your ISA costs are outweighing the benefits, but even transferring can come with extra charges, so make every decision very carefully. Moving to a new provider might seem like the best thing to do, but if moving saves you about £30 a year, then it might not be worthwhile once a £50 Transfer Fee’s applied.

The Most Expensive Stocks and Shares ISA

The more effort your provider must make to manage your investments, the more they’re likely to charge. Active Funds are usually the most expensive ISAs because they involve a fund manager. A human representative monitors the market, making investment decisions. A fund manager is an experienced professional with the knowledge needed to move your money to places where it should perform best.

For most investors, an Active Fund is an unnecessary cost. Most people will choose a Passive Fund, where computer algorithms keep an eye on the market and roughly track the market index. With a Passive Fund, everything is automated, and the costs of these ISAs are lower.

When Are ISA Fees and Charges Applied?

In most cases, you’ll receive an annual statement. This statement details your yearly charges, with the money then taken from your funds.

Sometimes, charges will be applied to certain events throughout the year. A Transfer Fee will be charged straight away, and some Trading Fees will be charged when purchases or sales take place.

Make sure you check your annual statements to monitor how much you’re being charged. This can help you to decide if your Stocks and Shares ISA is financially worthwhile.

Charges for Financial Advisors

Whilst most people are happy to invest with very little advice from professionals, some providers will offer a more personalised service for an additional fee.

Financial advice can cost a lot of money, and the charges are higher the more money you’ve got in your account. Expect to pay more than £500 for detailed and personalised advice, which might include a tailored report with investment recommendations.

Not all providers will offer advice, and it’s something that most people won’t need, but if you’re investing lots of money and want to maximise growth, then financial advisors can help. They can also help to minimise your risks, even if you’ve chosen some risky investments to try and get the very best returns.

Checking Stocks and Shares ISA Fees and Charges

ISA providers publish stocks and Shares ISA Fees and charges. It must be clear how much you’ll be charged before you apply for an ISA. Once you’ve got your ISA, your documents should detail any charges and fees that might apply.

If you have a Stocks and Shares ISA, you should make sure that you understand the costs that apply to maintaining your account. Even if you take a hands-off approach and ignore your investments month-to-month, your annual charges will still be applied, and the money might be taken from your funds.

How Can Money Savings Advice Help You if You Are Thinking About Investing in an ISA or Stocks & Shares ISA?

Here at Money Savings Advice, we have partnered with some of the UK’s leading ISA & Stocks & Share ISA Investment companies. They have already helped thousands of people invest safely and they can do the same for you.

Choosing an independent investment company means they won’t recommend a scheme unless they are sure it is in your best interests. Their advice is also regulated by the FCA, which gives you an additional layer of protection.

If you would like to speak to one of these investment specialists, then click on the below and answer the very simple questions.

Money Savings Advice Author Ian Lewis

Ian Lewis

Ian Lewis is one of our specialist financial writers. Ian has over 15 years of financial writing experience, having worked for some of the largest financial publications in the UK covering topics from mortgages, equity release, loans and financial claims, to name a few.

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