What are 'platform charges' in my investment portfolio?

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Ask the expert at Smith & Pinching about what platform charges mean for your investment portfolio - Credit: Getty Images/iStockphoto

I have an investment portfolio that was recommended by my former financial adviser, which contains a mix of different investment funds. My adviser retired a few years ago and I haven’t signed up to anyone else since. I thought my portfolio was doing just fine as it was. I’ve just had a statement that details various fees and charges and can see “platform charges” listed on top of the fund charges. Can you explain what these are, please?

Richard Barker, chartered financial planner with Smith & Pinching

Richard Barker, chartered financial planner with Smith & Pinching - Credit: Smith & Pinching

Richard Barker of Smith & Pinching responds:

An investment platform is an online facility where you can hold investment funds and manage the overall content of your investment portfolio. It provides the structure for your investments, in tax wrappers such as ISAs or pension funds. Importantly, it also provides the functionality to enable you to buy and sell funds in your portfolio of investments.

Different platforms may have different charging structures, but here are details of the most common charges you may encounter. An annual platform charge is a basic charge levied by most platforms for the use of their services and will be either a percentage of the value of your investments or a fixed fee. On top of this annual fee (which may be paid on a monthly basis), you may have a tax wrapper charge for the pension or ISA structure in which your investment sits. Again, tax wrapper charges may be a percentage of your investments or a fixed fee.

If your platform buys or sells investment assets for your portfolio, the provider may charge a separate trading fee for each transaction. Platform charges will appear as separate charges to the annual management charges associated with the funds you hold in your portfolio.

You say that your portfolio is “doing just fine” but I think that if you haven’t reviewed it for some time, you would benefit from independent financial advice on an ongoing basis to ensure that your investments are meeting your targets and that the fund and platform charges remain competitive. Markets, funds and platforms have changed greatly over the past few years and providers are under increasing pressure from the Financial Conduct Authority to keep charges down.

Any opinions expressed in this article do not constitute advice. The value of an investment and the income from it could go down as well as up. The return at the end of the investment period is not guaranteed and you may get back less than you originally invested.

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