About Fund Platforms

Funds have historically included initial charges to pay for upfront sales commissions. Given commissions are now banned for new sales and most platforms waive upfront commissions where they still can be paid (on pre 6 April 2014 sales), the majority of funds have nil initial charge via platforms. Nevertheless, there are exceptions, so worth checking.

Funds charge annual management fees, which you'll still pay via platforms. On sales after 5 April 2014 platforms must offer funds that do not pay sales commissions and platform fees, which usually means a lower annual charge (called 'clean' fund versions).

A one-off fee when opening a platform account, either a percentage or fixed amount. Quite rare.

An ongoing annual charge for as long as you hold your platform account. Either a percentage or fixed fee, the latter is obviously preferable on larger sums. This is sometimes paid via higher fund charges on pre 6 April 2014 purchases.

You can always expect to pay a dealing fee when buying and selling shares. However, some platforms also levy these fees when buying and selling funds. If you only trade occasionally they won't have much impact, but they can mount up for active traders. And bear in mind that switching between funds counts as 2 deals (i.e. sell fund A = 1 deal and buy fund B = 1 deal).

If you decide to move from one platform to another, the platform you're leaving might hit you with 2 charges. Firstly there may be a fixed fee for closing your account. Secondly you might have to pay a fixed fee per investment if you want to move them 'as is' (called 're-registration' or 'in-specie'), rather than selling everything and transferring cash.

You can expect to choose from 1,000+ funds (unit trusts and oeics) from a wide range of fund managers, which should suit the vast majority of fund investors. Offshore based funds are still not that well represented, although this is unlikely to be an issue for most UK based investors. You may find some smaller niche funds are only featured on a few platforms, if at all.

Some platforms allow share trading, often restricted to the London Stock Exchange. This means you can usually hold shares in UK listed companies, investment trusts and exchange traded funds (ETFs). You may also be offered share dealing in overseas markets, although this tends to be restricted to electronic versions of overseas shares which can be traded on usual UK systems in pounds - called 'Crest Depositary Interests' (CDIs).

Investment trusts may be held on platforms which offer share trading.

Exchange traded funds (ETFs) are normally only available via platforms which offer share trading, although starting to make an appearance on some fund-only platforms.

Platforms include a cash account, which is where any un-invested monies sit while you decide what to do with it. Unfortunately most platforms pay appalling rates of interest, quite often zero, (a nice earner for them!) so it's a poor choice if you want to hold a large cash balance as part of your overall investment strategy.

Note: cash balances within stocks & shares ISAs are taxed at 20% and large balances are generally prohibited for more than a few months - as HMRC rules state the money can only be held with the intention of investing.

You can choose to have whatever income the platform is holding for you paid to your bank account (via BACS), usually once a month. Although there's typically no charge for such payments, they're often subject to a minimum of around £10. If your income balance is too low, it'll be rolled over to the following month.

You can re-invest dividends back into your investments. However, buying further shares will incur dealing fees, as will funds on some platforms. Although such dealing fees might be lower than normal, they can make small re-investments prohibitive, so always check how much you'll pay.

If you plan to re-invest fund income, select 'accumulation' ('Acc') units to avoid potential dealing fees. Acc units increase in price to reflect the income rather than paying it out, hence avoiding any dealing fees. The income is still taxed in the same way as usual though, even though it hasn't physically been paid out.

Platforms have a cash account, where money not invested is kept. You can leave income payouts here, but bear in mind interest rates are usually negligible, if not zero.

All platforms offer online valuations, allowing you to see how your portfolio is doing at a glance. At the cheaper end of the market this is typically all you get, although this may well suffice depending on your expertise and needs.

Some platforms offer tools to help analyse your portfolio. At their simplest it might just mean highlighting bad performers, but more sophisticated tools can make suggestions based on risk, performance, your objectives and how your underlying funds invest.

Suggested 'model' fund portfolios for a variety of different objectives (e.g. low risk income, higher risk growth etc.) are becoming more commonplace. They can be genuinely useful for novice investors or those with too little time/inclination to pick their own funds, just pay attention to how they're constructed and make sure it looks sensible. Also beware they may duplicate funds you might already hold.

Hands on investors can benefit from good investment research and data. The extent and quality varies between platforms - from none at all to just performance data to full blown qualitative fund research. The latter is obviously expensive to produce, so don't expect to find it on cheaper platforms.

Transferring investments 'as is' is commonly referred to as 're-registration' or an 'in-specie transfer' - platforms have been compelled to allow this since 31 December 2012. However, you may face a charge per investment for doing so (in addition to any charges for closing your account) and the platform you're moving to will need to offer identical versions of the investments, which isn't always the case.

If you instead sell investments then repurchase on the new platform, you may incur dealing fees and run the risk of your money being out of the market (i.e. un-invested) for a week or more. Unless you're planning to change investments anyway it's usually the less preferred route.