Loyalty is preventing DIY investors from switching investment platforms, according to new research from interactive investor.
The research, part of interactive investor’s ‘Dare to Compare’ campaign, found 20% of DIY investors in the UK wouldn’t switch to a different investment platform out of loyalty to their current provider, despite more than a third (36%) having not compared the costs associated with their platform in over a year.
Half (50%) of those surveyed said they wouldn’t switch because they were satisfied with their current provider, however, less than four in 10 (37%) were completely confident that they knew what fees they were currently paying.
Myron Jobson, senior personal finance analyst at interactive investor, said: “While it’s understandable that many may feel loyal to their investment platform due to the years they have been tied to them, it may not always be the best choice when it comes to their money.
“It doesn’t always pay to be loyal, which is why it’s so important for investors to check their platform fees and make sure their provider is right for them.”
Interactive Investor said that while the majority of adults regularly compare car insurance, home insurance and savings, only 7% said they would definitely compare prices from different providers before opening a new account with an investment platform.
In addition, 30% of DIY investors admitted they won’t switch platforms due to fears of incurring hidden fees when switching.
Jobson added: “Scaling and, often, hidden fees are a big problem in the DIY investment world that make it difficult for customers to know whether they’re getting the best deal. Most people wouldn’t dream of sticking with a car insurer that wasn’t giving them the best price, so why should they stay faithful to an investment product that is charging them over the odds.
“Investors need transparency from their investment platforms – say ‘no’ to hidden charges and fee structures that disincentivise saving by increasing the more you invest. It’s time for a reset in our industry, and a shift to greater simplicity and better value.”
In response to the findings, interactive investor has launched a new comparison tool for ISAs and SIPPs to encourage transparency on fees and charges and help investors make informed decisions.
Main image: akyurt-Hlkuojv_P6I-unsplash
