Interactive Investor Review

What is Interactive Investor?

Interactive Investor or II as its known is one of the UK’s largest self-determined investor platforms. II can trace its roots back to1995 and the startup floated on the London stock exchange back in the year 2000 before being bought by the Australian business Ample in 2002.

Todays Interactive Investor is a privately held company with assets under administration of more than £50.00 billion and 400,000 customers to whom II offers share trading and investment services including, ISAs SIPPs and share dealing, alongside research and analysis. Including model portfolios, selected funds and thematic investments.

Interactive Investor is a low-cost provider competing directly with the likes of Hargreaves Lansdown and AJ Bell.

Investing with Interactive Investor

Interactive Investor is a largely online platform and the starting point for many of its services is applying for and opening an account. There are three investment account options covering Sipps ISAs and share trading. Interactive Investors offers joint account as well as corporate trading and investment facilities, something that’s its two main rivals don’t appear to offer.

II also offers cash savings accounts that access the best interest rates from a pool of more than 25 banks. For active traders, the firm has its own streaming level 2 price display system, for which it charges users £20.00 per month.

Interactive Investor Trading Account

The trading account does what it says on the tin and gives clients access to more than 40,000 UK and international investment opportunities including shares, funds and ETFs.

Traders pay £9.99 per month and get one free trade for that fee, with additional trades charged at £7.99 each. Clients can trade in leading European, US and APAC stocks and shares, and can trade these overseas stocks in any of 9 foreign currencies, though you will pay additional FX conversion charges for doing so.

You can quickly search for stocks on the II website where you will find quotes, charts and basic information on the stock and its sector and industry peers.

Though there is less detail available here compared to that offered by Hargreaves Lansdown’s and AJ Bell’s websites.

Interactive Investor Stocks & Shares ISA

The stocks and shares ISA is a way to invest in the markets through a government-approved tax-free wrapper. Individuals can invest up to £20,000 per annum in their stocks and shares ISA or indeed across several other ISAs.

In an ISA there are no capital gains taxes on trading profits and no tax is levied on the income from stock dividends or bond coupon payments. Stocks and Shares ISAs are open to all UK residents aged 18 or over, who can open a new Stocks and Shares ISA each year.

There are many securities, both domestic and international that are ISA eligible. However, an ISA can only contain pounds sterling which means that if you trade in overseas securities you will incur FX conversion charges.

II does not charge any additional fees for a Stocks and Shares ISA, over and above its standard trading account charges. Whilst competitors Hargreaves Landsdown and AJ Bell both charge annual custody fees based on the value of your holdings.

Interactive Investor Pensions

Interactive Investor offers customers the opportunity to transfer an existing pension into its II SIPP or Self-Invested Pension Plan, alternatively, clients can opt to set up a new SIPP from scratch and contribute to that plan.

II do not charge transfer fees, in or out. However, another provider may charge you for transferring your pension out and you should always check whether you would lose any safeguarded benefits in an existing scheme if you transfer this into a SIPP.

On retirement, you can access the funds within your SIPP in one of three ways (or a combination thereof) which are income drawdown, lump Sums or through an annuity though this would be through a third party as II do not offer annuities themselves.

Interactive Investor SIPP

A SIPP is a self-invested pension plan a way of saving and managing money for your retirement in a tax-efficient fashion. A SIPP can run alongside an occupational pension scheme or stand-alone and it provides the same tax benefits and flexible retirement option as other defined contribution pensions.

The main selling points of a SIPP are that they provide access to individual stock and shares from the UK and abroad and that you, the pension holder, make the investment decisions.

In terms of fees, Interactive investor charges £19.99 per month a charge that combines their £9.99 account service and an additional £10.00 fee for SIPP administration.

II calculates that their flat fee structure could save you as much as £94,000 in charges over the pension lifetime when compared to competitor offerings which is a significant sum.

SIPP account holders can open a Stocks and Shares ISA and trading account at no extra cost and also qualify for one free trade per month.

Interactive Investor Junior ISA

The Junior ISA is a stock and shares ISA for those under the age of 18 away for children to save and for others to help them save on their behalf. The funds in junior ISA only become available to the child when they reach their 18th Birthday.

Currently, up to £9000.00 per annum can be invested into a Junior ISA year and any trading profits are free from UK capital gains tax.

There are no additional costs in opening a Junior SIPP for existing II customers and their standard dealing charges apply.

Junior ISAs can invest in the full range of II’s ISA eligible securities and can take advantage of IIs pre-selected ranges of funds and thematic investments.

Interactive Investor Charges & Fees

Interactive Investors chargers flat monthly fees to account holders that start at £9.99 with additional admin charges of £10.00 per month for SIPP administration. All account holders receive one free trade per month and additional deals are charged at £7.99 per trade.

If you are trading in overseas securities you will also pay FX conversion fees which vary based on the size of your transaction. There are occasional special offers and research and ideas are provided free of charge.

The flat fee per month structure differentiates Interactive Investor from its peers many of whom charge fees on the monetary value of your portfolio, based on either a fixed-rate or sliding scale.

It could be argued that the monetary flat fee approach doesn’t penalise success in that you pay no more, or indeed less, for the service regardless of your investment performance.

Whereas under a percentage fee scheme the bigger your portfolio the more you could potentially end up paying

Interactive Investor IPOs

Interactive Investors offers its customer access to new issues and IPOs from companies listing on the stock exchange for the first time. You can apply for shares in these businesses through II, but you will need to open a trading account to do so. II advertises the available new issues on the dedicated IPO section of its website there and there are links to offer documents and details of the issue. II does not charge a commission for new issue applications.

Interactive Investor International Investing

You can trade in international stocks and shares with Interactive Investors and you can check if stock is available by typing the name into the search for an investment box on the II website and it will return any matches from the list of securities that Interactive Investors offers.

Account-holders get one free trade per month and each subsequent trade costs £7.99. The only other charges are for any FX conversions required to settle the trade or to convert sale proceeds back into sterling for example.

You can trade shares from across Europe and North America as well as Asian markets such as Hong Kong, Australia and Singapore. The coverage is not as extensive as that offered by some rivals for example Hargreaves Landsdown, though their charges are likely to be higher than II’s unless you are trading 20 times a month or more.

Interactive Investor Ethical Investing

Interactive Investor offers some pre-selected and pre-packaged investment ideas and styles to their customers. One of which is Ethical Investing the firm have selected 140 funds that allow clients to invest in both the UK and abroad from an ethical perspective.

Alongside equity-centric vehicles, there are bond, money market and property funds to choose from. These are complemented by a clutch of specialist ethical investments.

The list of funds was created with the help of independent research house SRI and data from fund specialists Morningstar, and the II ethical overlay encompasses ESG and sustainability factors.

Costs are the same as other II investment products, which is a flat fee of £9.99 per month including one free trade and additional trade at £7.99 per deal thereafter. And of course, if you dealing bin overseas securities then you may incur FX conversion charges.

Interactive investor Refer a friend

II offers a refer a friend scheme which rewards existing customers with £100.00 for each friend they introduce to the company, who opens an account and deposits £10,000 or more in either stocks, investments or cash, or a combination of all three.

The rewards are credited to your II trading account and not SIPPs or ISAs.

Friends that are introduced benefit from 12 months of IIs free service plan which is worth £120.00 to them, so it's a win win situation.

Refers can only introduce a maximum of 6 friends under the scheme and referral fees can be reclaimed if the friend closes their account within a year of their introduction. You can't refer yourself and you will need to wait 10 days to receive your rewards.

Interactive Investor Investment Trusts

II has a long association with the investment trust market. Investment trusts are closed-end funds that follow a specific investment mandate. Investment trusts are listed on the stock exchange and their shares trade in the same way that other stocks do.

However, unlike open-ended funds such as ETFs, the value of the shares in an investment trust are driven by the supply and demand for the shares in the trust rather than the values of the underlying investment.

That said investment trusts typically trade and are valued at a premium or discount to the NAV or Net Asset Value of those underlying investments.

You can invest in as many investment trusts as you wish. Though most investors will try to select the best funds in a particular space or theme.

II provides plenty of information about the best-performing Investment trust over various times frames and which funds have proven most popular with II clients, and articles on the sector and investing in it.

II’s flat fee charges apply once again so thats£9.99 per month for a trading and or ISA account, inclusive of one free trade per month and additional trades charged at £7.99 each. SIPP holders pay an additional £10.00 per month admin fee on top of the £9.99 charge.

Interactive Investor ETFs

Interactive Investors offer trading in ETFs, these are open-ended funds that typically track the performance of an equity index, sector, commodity or other investment themes.

Most ETFs are passively managed meaning that they aim to match the market return rather than outperform it. As such the price of the ETF reflects the performance on the assets it is tracking.

ETFs are among the best investing innovations of the last couple of decades and their proliferation means that investors and traders can quickly and easily allocate to almost any investment theme using these Exchange Traded Funds. The shares of which can be bought and sold like any other stock.

To invest you simply need to identify an ETF that meets your objectives and place an order to buy those shares. Once again II provides details of ETF performance and popular ETFs among its clients alongside topical and educational articles.

II’s flat fee charges apply once again so that’s £9.99 per month for a trading and or ISA account, inclusive of one free trade per month and additional trades charged at £7.99 each. SIPP holders pay an additional £10.00 per month admin fee on top of the £9.99 charge.
FX conversion fees will apply to trades in ETFs not priced in pounds sterling.

Interactive Investor Funds

As well as investment trusts and ETFs, II offers clients access to managed funds sometimes referred to as mutual funds.

These funds are usually unlisted and are bought from and sold to the management company by investors and as with investment trust and ETFs they typically invest in a specific theme or sector, for example, UK smaller companies.

There are hundreds of funds available to investors and once again II breaks down the performance of the best of these funds over time and which of them have proved most popular among its clients.

It also offers some curated lists of funds and model portfolios from these funds that meet specific criteria, for example, active growth, active income and low-cost growth.

II is not an advisory service, unlike some of its rivals, which do offer investment advice as an additional service. The model portfolios allow clients to benefit from the expertise of II’s investment committees and are a good starting point for anyone interested in a disciplined approach to portfolio construction and asset allocation, which is often seen as the bedrock of long term investing.

As to fees, yes you have guessed it, flat fee charges apply once again so that’s £9.99 per month for a trading and or ISA account, inclusive of one free trade per month and additional trades charged at £7.99 each. SIPP holders pay an additional £10.00 per month admin fee on top of the £9.99 charge.

Interactive Investor ii Super 60 Investments

Interactive Investors Super 60 investments are a curated list of funds investment trust and ETFs designed to help clients build portfolios that meet their investing goals.

The list constituents are selected by an investment committee made up of senior II staff members and independent experts.

Potential Investments are put through a series of rigorous qualitative and quantitative screens, before inclusion in the Super 60 list and are then subject to a regular review once on it.

Investments on the list are then subdivided into the following theme income, low cost, core, small-cap and adventurous. The thinking and characteristics of these themes are clearly explained on the website.

The super 60 list will be very useful for those who are new to investing or those looking to manage their pension within a SIPP for the first time as it’s designed to facilitate simple straight forward portfolio construction and specific investment goals.

In terms of cost as with all II predicts the flat fee structure applies so that £9.99 per month including one free deal and any subsequent deals being charged at £7.99 per trade. SIPP holders pay an additional £10.00 per month admin fee on top of the £9.99 charge.

Interactive Investor Quick Start Funds

The quick start fund is another group of curated investments compile by IIs experts they are designed to allow those who are new to investing to hit the ground running.

There are six quick start funds that allow an investor to gain exposure based on their risk appetite and II provides a straight forward guide with a gauge system to identify the degree of risk associated with the funds that vary from low to higher risk.

As with all other II products the flat fee structure applies and the quick start, funds are very good place for those who are new to investing or those who don’t want to micro manage their portfolio to set out from.

Interactive Investor Model Portfolios

II’s model portfolios are pre-selected groups of funds constructed to meet specific investment criteria they are designed to allow investors to allocate to specific themes and diversify their portfolio without having to do lots of number crunching and research for themselves.

II has created four portfolios that aim to facilitate active growth, active income, low-cost growth and low-cost income.

Active growth for example is a portfolio of 10 funds aimed at investors who are looking to build their wealth by investing in active fund management. Active funds are run by managers who specifically buy and sell stocks based on their underlying characteristics, with the goal of beating return generated by an index or other benchmark.

Once again IIs flat fee charging structure applies to the model portfolios.

Interactive investor ii ACE 40 Investments

The ACE 40 investments are a set of a model portfolio specifically targeting ethical investors and investments. The portfolios cover a variety of asset classes and sectors for example bonds and equities and also different geographies such as Europe and Asia as well as alternative investments.

Once again these portfolios are constructed by IIs experts and they designed to allow investors to allocate assets and construct portfolios and ethical and ESG overlay something which is becoming ever more important to investors who want to make their money grow but to also do good at the same time.

As you might expect the II flat fee charging structure applies here as well

Interactive Investor App

Interactive Investor lives up to its name and offers a mobile trading app alongside its desktop portal. The app can be download from both the Apple and Android app stores and has biometric security and login features and secure messaging as standard.

You can trade directly from the app in any of the 40,000 instruments that II offers. You can also review pending executed and cancelled orders, view quotes and account balances you can deposit new funds via the app but withdrawals must be made via the desktop portal/

Using the app you can also access II research, market news and overviews. The app compares favourably with the desktop portal but of course somethings will just always look better and feel more accessible on a bigger screen.

Richard Wilson, Interactive Investor CEO on the evolution of the ii investment platform

If you've ever tried to look for info and tips on smaller cap stocks, one of the places you will have no doubt ended up at some point is the Interactive Investor discussion forum.

Interactive Investor, in my mind anyway, has always been an aggregation of what one looks at when dealing stocks. Gossip, market data, multi-sourced news flow (RNS, Stockopedia etc.) and of course share dealing.

As well as Stocks, Interactive Investor offers SIPPs, stocks & shares ISAs, bonds and fund investing. So you have your high-risk/low-risk diverse portfolio all in one place.

I've known Interactive Investor for a long time. When I was at Investors Intelligence, we did supply bond data from ORB to Interactive Investor along with our yield comparison tables and charts. In fact, I loved the Interactive Investor forum, that when I took over the running of fixedincomeinvestor.co.uk from Mark Glowrey I installed a discussion forum, which is now a thriving resource for those looking to invest in bonds.

Anyway, should you switch your investment account and invest through Interactive Investor?

We spoke to Richard Wilson, CEO of Interactive Investor to find out.

Having previously lead professional and institutional brokers, what was the appeal of joining a private client-focused investment platform and do you think there is much of a cross over?

This is an exciting, changing sector with the potential to bring significant direct benefits to our customers.

There are always new things to learn, but having spent many years in related industries what strikes me as constant is the need to focus on the customer - they are why we exist – to embrace technology to deliver services in better, easier ways and to support a team of great professionals to do it.

With lots of single product focused fintech companies entering the market. What would you say were the main benefits for clients dealing through a multi-asset provider like Interactive Investor?

The difference is we are customer not product focused. That is about choice, being better informed and delivering value.

Our platform gives access to tens of thousands of equities across the world’s leading exchanges in multiple currencies. We also provide access to the broadest range of funds, investment trusts and ETFs.

Equally, we want to give investors the tools to help them achieve greater financial independence.

We are proud of our impartial, asset agnostic, expert news and analysis, with tools to help investors identify the best in class. Our Super 60 list of funds, investment trusts and ETFs is the start of that journey.

One of the things that sets interactive investor apart is its lively and active discussion forum. How much value do you place on the interactive investor community of investors and any plans for expanding the forum in the future?

We value our community, it produces a lot of interesting comment and views on various companies and investment opportunities. In addition, we regularly listen to feedback.

Over the years you must have dealt with pretty much every sort of investor. What would you say are the main investing mistakes clients make and what can you suggest investors do to improve their strategies?

We’ve all made investment mistakes, and some are more painful than others. The biggest mistake is investing without a strategy, and without knowing your risk profile and long term versus short term objectives.

Perhaps the worst mistake is not doing your homework and relying on word of mouth, or hype (remember Bitcoin?).

Knowledge is power – and that comes to fees too.

The financial services sector loves to talk about the power of compounding but handily forgets to talk about the compounding of charges. They really do add up. So my advice would be know your risk profile, stick to your strategy, and remember costs – they do add up.

And finally, what would be your top three online resources investors looking to get an edge on investments?

I would have to say ii.co.uk, Money Observer and MoneyWise, which are all available online at no additional charge for ii customers.

What else could I possibly say..:-)

Richard Wilson is CEO of Interactive Investor, an online investment platform