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Interactive Investor has boosted its offering for those on its family subscription plan, which allows customers to ‘gift’ subscriptions to relatives.
Family members with a gifted subscription were previously limited to opening just a general investment account and stocks and shares Isa.
Now, Interactive Investor has given them the ability to open the full range of investing accounts.
The flat subscription fee makes the investment platform the Spotify of investing, with its family accounts working in a similar way to Spotify’s Premium Family subscription.
If you’re on the investment platform’s £14.99 a month Plus plan, you can gift five free accounts to family members.
Then they can open a general investment account, stocks and shares Isa, and self-invested personal pension (Sipp) for themselves, and junior Isas for their children.
The addition of junior Isas to family accounts makes this a more valuable deal, because they don’t count towards one of your five free subscriptions.
Family boost: Gifting an account can overcome investing procrastination
Camilla Esmund, senior manager at Interactive Investor, said: ‘Family members across generations will have different financial pressures and goals. A family-led investment strategy can be a great way to manage these.
‘Plus, it helps encourage open conversations about money and engage the whole family on investing.’
> Find out more about family accounts at Interactive Investor*
How does the family subscription compare with other options?
If you want to encourage your family to start investing while keeping fees low, you could do worse than Interactive Investor.
Holly Mackay, chief executive of personal finance website Boring Money, said: ‘Too many people don’t start because they don’t know how to begin or where to go.
‘Having a family member remove this procrastination point for you is a wonderful boost to get.’
Bear in mind that Interactive Investor is a full-fat investing platform, so we’re comparing it against the likes of AJ Bell*, Hargreaves Lansdown* and Fidelity*, which all charge account fees.
Newer providers like InvestEngine* and Trading 212* don’t charge account fees. However they often can’t match more established players on features like customer service and investment research. Read more in our guide to the best investment platforms.
If you made full use of the deal and gifted accounts to five family members, each one would effectively cost £2.50 a month, as a proportion of the £14.99 monthly cost. This reduces further if those family members then open junior Isas for their children.
This is Money says: In our view this is a good way to get family members – who might be starting to invest with smaller amounts – into the investing habit.
Holly Mackay of Boring Money references research the website conducted that suggests family influence is an ‘important trigger’ which gets people to start investing.
‘This is more pronounced for women. Twelve per cent of women say they started to invest because of help and encouragement from a family member compared to 6 per cent of men.
‘The impact of family increases once someone has taken the first step. 62 per cent of all investors say they would trust information on investing from family members.’
As with Spotify, each member has their own account and log in details even though the plans are linked to a primary one.
As a simple example here’s a parent who gifts accounts to their partner and two children in their twenties, both with modest sized portfolios:
| Account | Main account | Partner | Child 1 | Child 2 | Total | Difference |
|---|---|---|---|---|---|---|
| Isa | £30k | £100k | £10k | £20k | ||
| Gia | – | £5k | – | – | ||
| Sipp | £70k | – | – | £25k | ||
| Cost | ||||||
| Interactive Investor | £180 | £180 | N/a | N/a | £360 | – |
| Hargreaves Lansdown | £350 | £342.50 | £35 | £157.50 | £885 | +£525 |
| AJ Bell | £250 | £179.50 | £25 | £112.50 | £567 | +£207 |
| Fidelity | £265 | £273.75 | £35 (with regular savings plan) | £157.50 | £731.25 | +£371.25 |
| Assumptions: holdings – 50/50 shares/funds. Trades – excluded. Sources: This is Money, based on initial data from Interactive Investor and The Lang Cat | ||||||
If the two children above have their own kids, they can open junior Isas for them with no further account fees to pay.
Keep in mind however that some platforms don’t charge account fees for junior Isas anyway, including Fidelity*, Hargreaves Lansdown*, IG* and Freetrade*.
These platforms also allow you to open a standalone junior Isa, whereas you can only open a junior Isa with Interactive Investor if you’re on the Plus plan.
What should you watch out for?
If a family member’s portfolio grows beyond £100,000 they face a steep fee cliff edge, because they move onto the Plus plan at £14.99 a month. You can see this illustrated in the ‘partner’ column in the table above.
At this point it’s likely they’ll be more experienced, so they may want to check whether they can save money on fees by choosing a different provider.
Calculating charges based on their exact mix of assets is important, because platforms usually cap account fees when holding shares.
AJ Bell* caps account fees on shares in an Isa and general investment account at £3.50 a month. The partner’s portfolio size in the example above would actually work out cheaper with AJ Bell. But if their fund holdings grow, then Interactive Investor would start to work out better again, so it may not be worth switching.
A flat £14.99 a month charge is cost effective especially for growing portfolios when compared with rivals such as Hargreaves Lansdown*.
But if they don’t need all the bells and whistles that these platforms offer, it’s worth considering the likes of Freetrade*, Trading 212* and Prosper*, none of which charge account or dealing fees.
Another cost your family members should look out for on the family plan is the £3.99 standard trade cost. It’s worth considering setting up a free regular investing plan to avoid this fee.
How do we rate Interactive Investor as an investment platform?
Interactive Investor* is a good all-round investment platform, but its fee structure is what makes it stand out among major rivals such as AJ Bell and Hargreaves Lansdown.
Rather than charging account fees as a percentage of your investments, Interactive Investor charges a set monthly fee.
The Core plan is £5.99 a month for portfolios of up to £100,000. Above that investors step up to the Plus plan at £14.99 a month.
Flat fees are cost effective for investors with growing portfolios because they don’t scale with the value of your investments – you just need to be aware of the £100,000 cliff edge.
You can read more in our Interactive Investor review.
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