My £250,000 stocks and shares Isa is with Hargreaves Lansdown – should I switch to beat fee rise?

I’m considering transferring my stocks and shares Isa from Hargreaves Lansdown to a lower-cost provider as my portfolio grows. 

I’ve been very happy with the service, but the percentage-based fees are becoming harder to justify.

I recently came across Freetrade, which appears to offer the investments I need, lower charges and even a 1 per cent cashback incentive for transfers.

It sounds attractive – but perhaps almost too good to be true?

Am I putting my life savings at risk by moving to a platform I’ve never heard of? Are my investments held safely? What would actually happen to my investments if the provider were to go bust? And how should investors weigh up cost savings versus platform security?

It feels like a question many long-term investors and readers might be quietly grappling with as their pots grow.

My stocks and shares Isa is currently around £250,000, built up over the past 15 years through regular saving since I started working.

I also have a Lifetime Isa with HL, which I would need to keep there as Freetrade doesn’t offer one.

Based on my calculations, Freetrade would pay around £2,500 cashback on the transfer, and I’d save approximately £500 per year in platform charges compared with HL. J.S, via email.

Tanya Jefferies, of This is Money, replies: You are far from the only investor pondering whether to stick with Hargreaves Lansdown since it announced a revamp of its fees from the start of this month.

The annual platform charge was cut from 0.45 to 0.35 per cent, and the online share dealing charge reduced from £11.95 to £6.95.

But the firm also made buying and selling funds more expensive. It introduced an online fund dealing charge of £1.95, and those who own shares, trusts or ETFs in a stocks and shares Isa have seen the annual charge cap rise from £45 to £150.

This prompted a backlash from Hargreaves customers threatening to quit and reports from rivals that at least some have followed through and moved their funds elsewhere.

Decisions about what DIY investing platform is best for you are typically down to some combination of level of charges, how they are structured – percentage-based, flat, or no account fees – and set on what you want to invest in, customer service levels, and the tools and other resources provided.

Investors with smaller funds are often more relaxed about percentage fees, while those with bigger portfolios tend to prefer flat fees.

We have a full overview of DIY investing platforms, which features both Hargreaves and Freetrade and many others in case you want to look beyond them.

We wanted to get an outside take as well though, so we asked a money expert from a financial planning and advice firm, Ascot Lloyd, for his view of your dilemma.

He also looks at how investing platforms are regulated, and the usual transfer process should you decide to make the switch.

Aaron Banasik, an independent financial adviser at Ascot Lloyd, replies: Cost is an important factor when choosing an investment platform, and it is sensible to review fees periodically as your portfolio grows.

A saving of around £500 per year, alongside a cashback incentive, is understandably attractive.

However, cost should not be the only consideration particularly when the Isa represents 15 years of accumulated savings.

Before switching, it is important to understand the key differences between providers, not only in terms of price but also in relation to service standards, financial resilience, investment functionality, and each firm’s operational history.

While some investors may be comfortable prioritising lower fees, others may place value on the stability and track record of a long established platform.

Providers such as Hargreaves Lansdown, for example, have many years of operational history behind them; however, this does not mean they offer a greater level of investor protection.

A key point to note is that all mainstream UK investment platforms offer the same statutory protection under the Financial Services Compensation Scheme (FSCS) for eligible investments, up to £85,000 per person, per firm.

This ensures that, from a regulatory protection perspective, investors receive the same level of cover regardless of which Financial Conduct Authority-authorised platform they use.

When weighing up a move, investors should therefore consider platform security, financial resilience, service quality, the range of available investments and tools, and their own comfort with the provider, rather than focusing solely on headline charges or cashback offers.

A one off bonus can be appealing, but it should not override the importance of choosing a platform that aligns with your long term priorities for a £250,000 Isa.

With regard to the transfer process itself, moving a stocks and shares Isa is typically straightforward.

Transfers are completed directly between providers, ensuring the tax advantaged Isa status is fully preserved.

This can be done either ‘in specie’, where existing investments are moved as they are, or via a cash transfer, where holdings are sold and then repurchased on the new platform.

Ultimately, the starting point is to be clear about your priorities: whether your focus is cost efficiency or whether you place greater importance on long term stability, established service standards, and the operational strength of the provider you choose to entrust with your savings.