UK Discount Brokers

The last task in the exercise to remodel the portfolio of a UK relative, described in yesterday's post, was to find an easy way and low cost way to purchase and administer the required new holdings of Exchange Traded Funds and OEICs. The list of factors I considered:

• account administration fees
• interest rate on cash balances as a minor factor due to the intended buy and hold strategy
  
• trading cost as a secondary factor since the intent is to buy and hold over the long term, and making purchases only to re-balance the portfolio once a year
• online trading and account access in a self-managed (no advice) relationship with the broker
  
• ability to hold ISAs, PEPs and regular with one company to simplify statements and facilitate transfers amongst accounts (since the move of investment funds into the tax-exempt ISA will take several years due to the annual £4000 contribution limit)
• account closure and transfer fees in case a change might be needed
• customer service - tested by phoning and asking for details; here there was a pronounced difference between the best and the worst (HSBC); another factor was the ease of finding info on their websites
  

In doing my investigation, all of it initiated through the Internet, one useful source for the traditional brokerage firms was the website of The Association of Private Client Investment Managers and Stockbrokers, which has a search / selection tool to narrow the list to brokers. However, it doesn't cover all possibilities - I discovered the Motley Fool and Etrade UK. Who knows there may be others.

The result came out in favour of Selftrade by a hair over E*trade and Motley Fool, which actually have lower trading fees of £8.95 and £10 per trade, respectively, vs Selftrade's £12.50. However, Selftrade has a single annual £25 account admin fee for any number of ISAs and PEPs, the lowest going and lower transfer out fees. Motley Fool pays nothing on cash balances and has higher transfer out fees while the killer for E*trade was poor customer service - being disconnected on one call, ring-no answer on another call and a long wait to finally get through on the third call. Selftrade phone answering was prompt, the phone triage menu tree short and the person who answered was knowledgable and patient. The big banks and brokerages like Barclays, Lloyds TSB and HSBC all were a bit more expensive on both trading and account admin fees.

If anyone has any experience, insights or other sources of info, your comments would be most welcome.