The Wealth Wingwoman Audit
Audited by Valerie Vance"If Hargreaves Lansdown is the legacy private bank charging private-client rates for basic custodial plumbing, AJ Bell and Interactive Investor (ii) are where the real cost war is fought. Both platforms target self-directed wealth builders who refuse to hand over thousands of pounds in bloated platform rent. But behind the marketing, their fee architectures represent two totally opposing financial philosophies: a percentage fee with a share cap versus a flat-rate monthly subscription. Choosing the wrong one isn't a cosmetic mistake—it can cost you hundreds of pounds each year in unforced compounding drag. Let’s run the institutional numbers to see where your capital actually belongs."
The Tale of the Tape
AJ Bell is the hybrid operator. It uses a traditional percentage-based model for mutual funds (0.25%) but slaps an aggressive cap on exchange-traded instruments like ETFs, investment trusts, and individual equities. It’s engineered for disciplined index investors who want scalable custody at low absolute carrying costs.
Interactive Investor is the flat-fee subscription powerhouse. It treats investment custody like Netflix: you pay a flat monthly rate regardless of whether you have £50,000 or £5,000,000 on the books. Even better, it bundles your Stocks & Shares ISA, Trading Account, and SIPP under a single monthly subscription.
The Fine Print Reality Check
Don't let 'low custody fees' distract you. The actual math depends entirely on what securities you hold and how your accounts are split.
- The Fund Trap (OEICs/Unit Trusts): If you invest in traditional open-ended mutual funds, Interactive Investor runs rings around AJ Bell once your pot scales. AJ Bell charges 0.25% on fund holdings up to £250,000. On a £100,000 fund portfolio, that’s £250 a year; on a £250,000 pot, it’s £625 a year. With Interactive Investor, a £100,000 portfolio on the Core plan (£5.99/mo) costs just £71.88 a year, while an unlimited portfolio on the Plus plan (£14.99/mo) costs £179.88 a year. Holding £250,000 in funds on ii saves you nearly £445 every single year compared to AJ Bell.
- The ETF & Share Cap Reversal: If you build your wealth strictly using exchange-traded funds (ETFs) or individual equities inside an ISA, the math flips. AJ Bell caps its 0.25% platform charge on shares and ETFs at £3.50 a month (£42 a year). Interactive Investor’s cheapest tier (Core) is £5.99 a month (£71.88 a year). For an ETF-only ISA, AJ Bell is almost £30 a year cheaper than ii Core, and over £137 cheaper than ii Plus.
- The SIPP + ISA Bundle Calculation: Here is where ii plays an offensive institutional move: its monthly subscription covers both an ISA and a SIPP under the same fee. AJ Bell bills each wrapper separately. If you hold an ISA and a SIPP in shares/ETFs at AJ Bell, you pay the £42 ISA cap plus the £120 SIPP cap—totaling £162 a year. On ii Core (for combined pots up to £100k), you pay £71.88 total for both accounts. If your combined pot exceeds £100k, ii Plus costs £179.88.
- The Foreign Currency Skim (The Stealth Tax): AJ Bell forces an automatic currency conversion on every overseas trade (0.75% on the first £10,000). Interactive Investor offers a genuine institutional cheat code in its general Trading Account: multi-currency wallets across 9 global currencies. You convert GBP to USD once, hold USD cash, buy and sell US tech stocks freely, and skip the FX conversion haircut on every round-trip execution.
- Dealing Costs: Interactive Investor charges £3.99 per trade on UK and US shares (and funds on Core). AJ Bell charges £5.00 per share trade (dropping to £3.50 for frequent traders) and £1.50 on funds. Both platforms offer completely free automated regular investing via Direct Debit for recurring ETF or fund contributions.
The Fine Print Translation
AJ Bell subsidizes cheap ETF ISA custody (£42/yr cap) by charging uncapped 0.25% fees on mutual funds. Interactive Investor operates on a software subscription model: it treats large multi-wrapper portfolios (ISA + SIPP) and fund holdings to massive economies of scale, making up its margins on monthly subscriptions and dealing fees.
The Daily Driver Test
Execution efficiency and account versatility separate the good platforms from the great ones.
Interactive Investor feels like an institutional consumer terminal. Its multi-currency cash balances, curated Super 60 fund selections, and smooth account switching between your ISA and SIPP make managing an entire household’s wealth streamlined. You can also vote on shareholder resolutions directly through the platform. However, ii does not offer a Lifetime ISA (LISA), which is an immediate deal-breaker for first-time homebuyers hunting for the government's 25% bonus.
AJ Bell provides a complete suite of UK tax wrappers: SIPP, Stocks & Shares ISA, Junior ISA, and a Lifetime ISA (LISA). Its web portal is clean and data-rich, offering solid stop-loss triggers, dividend reinvestment tracking, and deep fixed-income access (including direct UK gilt purchases). While it lacks multi-currency accounts, its operational stability and corporate action handling are top-tier.
The Wingwoman Allocation
Don't guess which platform is cheaper. Look at your asset mix and pick the mathematical winner:
- Go with AJ Bell if: Your portfolio is built primarily with ETFs, investment trusts, and UK shares inside an ISA, where the £42/year fee cap is virtually unbeatable. You need a Lifetime ISA (LISA) to extract the 25% annual government bonus.
- Go with Interactive Investor if: You hold active mutual funds (OEICs) worth more than £30,000, where ii’s flat fee saves you hundreds compared to AJ Bell’s 0.25% percentage rake. You are consolidating a combined SIPP and ISA worth up to £100,000, where ii Core’s £5.99/mo bundled price beats paying two separate caps at AJ Bell. You actively trade US-listed stocks in a taxable account and need multi-currency accounts to avoid repeated 0.75% FX conversions.
Your Wingwoman Move
Open your portfolio right now and check two things: your asset types (funds vs. ETFs) and whether you hold both an ISA and a SIPP. If you are sitting on £100k+ in mutual funds at AJ Bell, transfer them to ii to slash your custody bill immediately. If you hold a pure global index ETF inside an ISA, leave it at AJ Bell and milk the £42 annual cap. Let the math work for you, not the platform. Go get paid.