Full Transcript

Dr James: 0:41

Fans of the Dentists who Invest podcast. If you feel like there was one particular episode in the back catalog in the anthology of Dentists who Invest podcast episodes that really, really really was massively valuable to you, feel free to share that with a fellow dental colleague who’s in a similar position, so their understanding of finance can be elevated and they can hit the next level of financial success in their life. Also, as well as that, if you could take two seconds to rate and review this podcast, it would mean the world. To me, what that would mean is that it drives this podcast further in terms of reach so that more dentists across the world can be able to benefit from the knowledge contained therein. Welcome, welcome to the Dentists who Invest podcast. What’s up everyone? Welcome back to the Dentists who Invest podcast. First and foremost, apologies on my behalf, because it’s been a whole month since we shot a podcast. I don’t know if you could hear that noise just then. That was me slapping myself on the wrist. I’m really, really, really sorry. I’ve just been really busy. We had a few guests. Well, for whatever reason 50% them, 50% me. We had to rearrange and had a very busy month, so we’re just getting back into the swing of things now and I’m really, really, really excited because we’ve got some killer episodes coming up this month, and this one is one I’ve been looking forward to and I think is massively needed. We have the man with the knowledge, who frequently pops up on the group, luke Hurley, with us today, and he’s going to be sharing with us what he believes is the best ISA, sharing information on which platforms have which benefits, so that we can decide which one is the best for us and move forwards, and we’re very excited to learn more. Luke, how are you today?

Luke: 2:25

Very well, thanks, james. Glad to be here.

Dr James: 2:28

Oh, mate, it’s been a pleasure to have you on the show before and I’m looking forward to learning more, as I always do when you come on the Dennis who Invest podcast. So, look, let’s jump straight in ISAs, and I know that you wanted to say a little bit about the philosophy of ISAs first of all.

Luke: 2:48

Yeah, I think, just for some of the people that are starting out on their investment journeys, I wanted to just touch on the role they play in an investment portfolio to begin with. So for me, the bottom layer of your investment portfolio is the underlying chosen investments themselves. That might be individual shares or funds. Whatever you’ve decided you’re going to invest into, that’s really at the bottom layer of your portfolio. It’s your investment strategy. Then you’ve got the middle layer, which is the type of account you’ve chosen in order to buy your investments. Now that could be an ISA, a SIT, an ISA. It could be a general investment account. We really refer to that middle layer as your rapper or your tax rapper, and that’s really because the difference between those accounts boils down to the taxation of the money when it’s in those accounts and also when you can access them. So the rapper or the chosen account is not responsible for the underlying investment growth. And yet I’ve heard many a person over the last 10 years or so say things like I don’t really rate ISAs. But the truth is that’s like saying I don’t really rate wine bottles. They’re both receptacles. At the end of the day, that’s not really what you should be getting. So ISAs were introduced to allow savers and investors to set money aside tax efficiently. They’re government backed tax shelters and they’re there for your benefit. The government is trying to encourage people to save long term and they’re giving those tax advantages for doing so. So, to recap, you’ve got layer one, which is your underlying investments or the instruments that you’re using. You’ve got layer two, which is your chosen tax rapper. You can hold multiple investments through the same tax rapper account. But then, at the top layer, you’ve got your chosen platform or provider that you use. Some fund managers will allow you to invest directly with them, but the most common way to invest now is via a platform, and a platform is really just there to provide custody over the assets and it’s the admin framework for investors. So platforms will allow you to open a number of different tax wrappers all in one place and in some instances you could have an ISA, a lifetime ISA, a SIP and a general account all on the same platform and you can have exactly the same investment or investments in each of them. They’re just really going to differ according to their tax treatment and the rules around accessibility. So money going in and out of an ISA, for example, is treated very differently to money that’s going in and out of a pension. And then you’ve got the difference in terms of the accessibility. An ISA can be accessed easily and quickly. A pension the money is locked away until you’re in your late fifties. So really you need to know what you’re investing for to make that decision over which account is going to be most suitable.

Dr James: 5:46

Tremendous. Thank you so much for explaining that really clearly, and your little workflow, your linear pathway there of the three tiers, I think, was really helpful. Look, I know as well we should probably make it extra clear today that this is not financial advice. We had a little bit we wanted to say on that as well, didn’t we? Yeah, so it’s not.

Luke: 6:04

it’s not financial advice, because financial advice really involves getting somebody’s detailed personal circumstances and objectives and making a personal recommendation, and clearly this is just a chat and a podcast, so hopefully the obvious disclaimer is this is not personal financial advice and you should do your own research.

Dr James: 6:23

Absolutely Always best to be extra clear on that one. So, look, I almost said podcast providers. Then Podcast is just ready to point out of my mouth in any one second, because it’s what I seem to spend a lot of my time focusing on. Let’s keep it focused on Issa. That’s what we’re here to talk about today. So Issa providers what should we be looking for? How do we help decide what’s best for us? How do we make that decision? What should we know before we jump in to setting up an ISA?

Luke: 6:58

Yeah, well, the first decision really is which ISA. So we’ll focus purely on stocks and shares in a moment. But there are, you know. You’ve got cash ISAs, which is really just a bank account where the interest is tax-free, so you’re wrapping your tax wrapper around a savings account. You’ve got stocks and shares ISAs, which, as the name suggests, allows you to invest in stocks and shares, either directly or through funds. You’ve got something called an innovative finance ISA, which is really to do with peer-to-peer lending. You’ve got a lifetime ISA, which is where you get a 25% incentive or bonus and it’s really designed to buy a first-time property or retirement. And then you’ve got a junior ISA, which is where you can put money aside for children. So once you’ve made the decision over which account you’re going to use, then you’re going to really go and work out which provider In terms of just to give you a very quick overview in terms of the stocks and shares ISAs, the real benefits for those that don’t know that are listening in terms of the money that’s going into the ISA, it’s coming out of your net income. There’s no tax breaks for money that you pay into the ISA, but whilst it’s in the ISA it’s growing through capital gains tax and income tax, so it’s rolling up tax-free and there’s then no tax when you draw the money out of the ISA. And in terms of accessibility, there is no lock-in period, so you’re not tied in. You can get the money out at any point in the future. You can pay £20,000 into ISAs during a tax year and that’s split across the different types of ISA. In terms of drawbacks, I’d say well, first of all, there is a limit in terms of how much you can pay in and it’s a use it or lose it allowance, so it doesn’t roll on to other tax years. You can only pay into one stocks and shares ISA per tax year. Again, that trips lots of people up. So if you pay into a Hargroves-Larsdown ISA in one tax year, you can’t then go and pay into a Vanguard ISA. For example, they sit inside your estate for inheritance tax Again, that’s worth knowing and you can’t have a joint ISA or put it in trust. To be honest, the advantage is far, far outweigh the disadvantages. To actually answer your question, James, in terms of when we look at comparing platforms, I talk about the two Fs, that’s, fees and functionality. In terms of fees, we’ll look at those when we look at the four providers you’ve asked me to discuss today In terms of functionality. Really, what that pulls down to is you need to know what your investment strategy is in order to pick your preferred provider. We’re all playing different games. I’m using my ISA, for example, because I’m a long-term buy-and-hold investor. I’m not trading, I’m not making regular trades on a monthly or even weekly basis. I’m simply investing and paying in each month on DirectDeb into an account to save my long-term future. My strategy and my chosen provider might be very different to somebody that is making regular movements in and out of positions or somebody that’s buying shares, for example, on a regular basis. The first thing you need to do is work out what game you’re playing. That’s then going to help work out what’s going to be the best platform for you in terms of the functionality that you need and also in terms of the fees that you’re going to pay. Feeds for me, in terms of investing in general, are a huge part of your decision-making process, because it’s really about opportunity cost. If you’ve got high fees, then that’s money that’s not working for you. It’s not compounding for you, it’s compounding for some company elsewhere. Rule number one keep your fees as low as possible, but also that really is going to boil down to what you’re using the platform for.

Dr James: 11:42

Brilliant. We will come on to those four providers in just one second. I have an even more fundamental question about ISA. Who is an ISA for, and who would you recommend an ISA to? Should each and every one of us be thinking about an ISA if we’re savers?

Luke: 11:59

I think an ISA should really be the bedrock of an investment portfolio, without straying into making huge generalizations. I think an ISA and a pension with those two tax wrappers you can achieve most things you want to achieve as a long-term investor. They’re really your two go-to tax wrappers. A private pension is only going to be suitable to those that have capacity to use it if they’re in the NHS Pension Scheme, for example, those two accounts on a platform, or your two main accounts. My daughter’s got an ISA and she’s nine months old. I really do think that everybody should be making the most of the tax advantages of saving into an ISA.

Dr James: 12:45

Just to confirm you, daughter, is that a JISA or stocks and shares?

Luke: 12:51

It’s a JISA. They’re basically the same thing. It just means that the money is legally going to be hers, or is hers already. I can’t get the money back out. She can take control of it at 16 and then she can actually start using that money at 18. She’s also got a pension, for the record as well those that don’t know you can do that Even though she’s not a taxpayer. She’s getting basic rate tax relief from the money I pay into pension for her, and I can just see that compounding over the next 57 years. So you can do both.

Dr James: 13:19

That’s awesome Lots of people listening with kids, who will find that very useful. I just have a quick question. I’m just curious this is a little bit of an aside Can someone who’s that young have a stocks and shares ISA?

Luke: 13:31

No, most of the time a stocks and shares ISA. The terms and conditions it will be 18 plus. If you want to put money into an ISA for a child, it’s the junior ISA, which is the product that’s been designed specifically for children.

Dr James: 13:49

Real quick guys. I’ve put together a special report for Dentist entitled the Seven Costs in Potentially Disasters Mistakes the Dentist make whenever it comes to their finances. Most of the time, dentist are going through these issues and they don’t even necessarily realise that they’re happening until they have their eyes opened, and that is the purpose of this report. You can go ahead and receive your free report by heading on over to wwwDentistInvestcom forward slash podcast report or, alternatively, you can download it using the link in the description. This report details the seven most common issues. However, most importantly, it also shows you how to fix them. Really, looking forwards to hearing your thoughts. Awesome, thank you so much. And you know what, just listening to you speak these JISOs, sips, things like that definitely things we could flesh out on a podcast. A discussion for another day. We’re going to keep it hyper focused on ISOs today because we’ve got plenty to say on those. Okay, so Luke and I have decided that we are going to discuss. Luke, would you agree that these are the four most prominent ISO providers? Would you say that’s fair to say?

Luke: 15:00

Yeah, I mean. The first thing I’d say is we’re talking about DIY platform ISOs, so somebody that goes to a financial advisor may see their advisor recommend something completely different. That’s not going to be the focus of today. We’re just focusing on four platforms. To be honest, I’d say these four are the ones I see crop up the most on your forum, so they’re probably a good forward to have a chat about.

Dr James: 15:25

Excellent, that’s what we want, stuff that’s going to hit home with people and stuff that’s going to resonate. And look, just one more thing before we jump into these four ISOs. Let’s say hypothetically, somebody’s listening to this podcast and they think to themselves oh actually I fancy being a Vanguard customer rather than an interactive investor customer. How do they go about transferring their ISO? Is that a straightforward thing to do?

Luke: 15:50

Yes, it’s usually quite easy and it applies to cash ISOs as well. If you want to transfer a cash ISO into a stop share ISO with a provider, it’s a similar process. So once you’ve set up your ISO whoever it might be with normally they have an option on the platform to say transfer in existing accounts. You go through that. It’s usually a wizard or some description where you tell the new provider that you’ve got that you’ve got these existing ISO accounts elsewhere and you want to move them on to the new platform. You then give the details, the account details, and you might have to sign something. Sometimes it’s done through the platform, so the new provider will then write with your authority, write to the old providers and say we’ve had this request, please send us this money, and they will then organise what’s known as an ISO transfer between the two institutions. Things to consider. One are there any exit charges or of any sort in terms of that process? Often there’s not. More often than not there’s nothing on that front, but it’s well worth checking the terms and conditions. If you do a cash transfer, which is where your existing provider sells the money, if they’re investments, they sell down to cash and move the cash to the new providers to then buy the new investments. Well then you’ve got to factor in the fact that the money is going to be out of the market for a period of time. That could work for you, it could work against you, but the money could be disinvested. There is an option for a number of providers to do what’s called an in-species transfer, which is, as long as the new platform allows it and has the same investments as options. On that platform, you can actually re-register the investments you’ve got in your existing ISO onto your new ISO without the money being sold down into cash, and that can help remove that element of being out of the market. But to be quite honest, it’s a straightforward process. You should just be doing it for the right reasons, which is if you think you’re going to save money on fees or if you want greater investment choice. Whatever the reason, it should be easily facilitated through your chosen platform.

Dr James: 18:00

Great and this might be a super obvious question to you, but I think that there may be some listeners who could benefit from us just spelling it out and making it extra clear. That applies if you have over £20,000 worth of assets. So over the ISO limit you can transfer as much as you like and it doesn’t affect your ISO limit for that tax year. Is that correct?

Luke: 18:21

Exactly that. Yeah, so you could have £500,000 in an ISO and you could move that as an ISO transfer to your new platform provider and it’s not going to impact on the £20,000 that you’re allowed to pay in the current tax year.

Dr James: 18:37

Really, really good to know that is gold dust. Okay, brilliant, let’s crack on with the matter at hand. As ISO providers, which one is the best? Well, that’s going to be a hard question to answer. What should we know when we’re deciding which ISO provider we need?

Luke: 18:54

Yeah, okay. So again it comes back to that question of fees and functionality. The four that you mentioned to me that we’ll have a chat about were Hargreaves, lansdown, aj Bell, interactive, investor and Vanguard. They are what we call direct to client platforms, so you can go straight to them. They’re DIY platforms. I think if we start with Vanguard as a starting point, the first thing to say about Vanguard is limited investment choice. So we’ll start with a negative. If you go to Vanguard, you can only invest in Vanguard funds, so you’re not going to be able to access anybody else’s investments. You’re not going to be able to invest into shares or any other types of securities or investments. It’s purely Vanguard funds. I think there’s about 70 or 80 funds that they offer. They have a mix of active and index funds, but they’ve made their name primarily in the index fund space, so that’s what they’re really well known for. But they do have some active fund solutions available to them. They do run a really well-known multi-asset range called the Life Strategy portfolios, which vary according to the weighting in equities. So that’s how you can control the volatility of your investment and they’re really good for people starting out, really worth knowing and researching, but you are limited in terms of the choice, and that’s the first thing to say, I think. Secondly, though, it move on to positives low cost 0.15% is their platform fee that’s capped at £275 for accounts over £250,000. That makes it extremely good value and extremely right at the top end in terms of low fees. I think the average fund cost on their platform because they’re primarily passive or index funds is 0.2%, which really means you can get a portfolio up and running for about 0.4 to 0.5% per annum, which is exceptional. It really is great in terms of the cost savings. If you buy into the whole philosophy behind passive index fund investing, which we haven’t got time for today, but if you buy into that, then this is a great option. It’s got a really nice, clean site, easy to use, clean and clear, very easy to get going. You’ve got a straightforward wizard to get started that takes you through the process. Extremely easy to set up. Really good for beginners, in my view. Really good also for those that just want to keep something simple Go into index fund funds, pay into them, say monthly, or pay in lump sums, and allow the money just to be on autopilot and build up in the background with very little intervention from yourself because if you buy, it’s very nature. If you’re going into index funds, you’re buying into that. I’ve not really heard many complaints from a customer service perspective Again, all positive on that side. Have you picked up on anything on the forum in relation to them? I certainly haven’t heard any complaints.

Dr James: 22:10

Things. No, most of the feedback is would call it with what you’re saying in that low fees but not much variety. I also just wanted to quickly touch upon one thing that you said just then. There is a dogma out there, or received wisdom, that active funds equal bad and passive funds equal good, but it’s not quite as black and white as that. I’m right in saying, look, but that might be a really good podcast for another day. There are certain instances where active funds are actually well. The properties of those can be beneficial, based on the geographic region, for example, that we’re investing in Again, something we’re going to touch on another day.

Luke: 22:47

Yeah, definitely. It’s not a straightforward answer to that, but if you buy into the passive approach, then Vanguard, given the fees, is a great place to start, with the platform costs included, where you can get platform and funds for a really, really competitive price. The other thing I would just say on Vanguard is actually they’ve got quite a unique structure which quite a few people don’t realize. The Vanguard funds and the investors in those funds effectively own Vanguard. What that means is they’re not looking to extract maximum profit to please shareholders, for example. What they’re doing is they’re trying to operate at cost and passing on any profit, if you like, to their investors to keep fees low. They really are trying to align themselves with their investors’ interests, which I really like in terms of matching what I think should be the right philosophy to go about things. Not a lot of people know that. It is, for me, a really big selling point.

Dr James: 23:54

Really interesting. Thank you for sharing that.

Luke: 23:58

The next platform that we see a lot, I’d say, is Hargreaves-Lansdale Massive platform, really well known. So people know Hargreaves-Lansdale, aj Bell and Interactive Investor are what we would call open architecture. That’s really jargon, for you can invest in lots of different investments from a variety of different investment providers. You can buy shares, oics, etfs, investment trusts. There’s huge amounts of choice, ie you’re not tied, like you are with Vanguard, to just one provider’s funds. So there’s thousands of choices that you can look at and research before making a decision over what you’re investing to. If anything, I’d say there’s in those providers. There’s too much choice and that becomes quite daunting for lots of people. But that’s the difference You’ve got one Vanguard that’s tied and fixed to their own funds and then you’ve got someone like Hargreaves or Interactive Investor or AJ Bell with our open architecture. So the key message there is enormous choice of investments and you can actually research those before you commit to investing on a platform to check that the investment you’re looking for is available on that platform. If we go in the same order that I dealt with Vanguard fees, well, the conventional wisdom is they’re expensive compared to a lot of other options out there. Headline figures it’s actually tiered their charging structures. The first £250,000 that you invest, you pay 0.45% per annum, or the value of your portfolio on funds. If you’re investing in shares or investment trusts or ETFs, then that’s actually capped at £45 a year. Lots of people don’t know that and it’s worth knowing. So where people make the comment around the high cost of investing, it’s actually slightly less applicable if you’re investing in shares and investment trusts. I personally quite like investment trusts or ETFs, so that’s also worth knowing. There’s also the dealing charges. So if you’re investing in shares or investment trust ETFs, then you’ll pay a dealing fee. I think that starts at £11.95 and goes down depending on how active you are. Again, so that’s worth knowing. But if you were to compare that against some of the other providers out there, it’s generally accepted that Hargreaves-Lazdowner towards the higher end of the price scale. You’ll see lots of comments to that effect, I think. To go back to some positives, I mean that the site itself is I think probably I actually say it’s probably my favourite in terms of usability. It’s really clear, really easy to use. They’ve laid it out very well. It’s good when you log in. They’ve got a very attractive app. All of that sort of things is on point. It’s impressive. It’s quick to get going to set some account. It’s very quick. There’s the same sort of process as Vanguard there’s a wizard to take you through the whole process. It’s quite easy for beginners. They’ve got a really good reputation for customer service I can’t emphasise that enough, which ties in with if you’re a beginner and you need some help, they’ve got a really good customer service team there to help people out. I’ve probably been quite critical of Hargreaves in the past on the pricing front, but I think to add some balance to it. In truth, I think, particularly for those that are starting out and they’ve got smaller amounts of investment portfolios, whether you’re paying 0.15% or 0.45% on £20,000, when you put that in pounds and pents is not a big difference. When you’ve got £500,000, it’s a significant difference, and that’s just to add some balance to that argument. So for people starting out, the fee question is less relevant, I think, potentially when you put it in pounds and pints, and sometimes maybe it’s better off just to go to a platform that’s going to give you that service, that functionality, make things as easy as possible when you’re starting out and learning how to get these things going, and then you’ve always got the choice, as we’ve discussed earlier, of transferring between different providers, so hopefully that’s a balance to crazy of hard groups.

Dr James: 28:35

Yeah, it’s not set in stone, and that’s why I really, really, really wanted to ask that question about how simple it was and straightforward it was to transfer ISIS, because I know a lot of people out there they’ll be listening to this and that will be on their mind, and I wanted to ask it at the start as well, because that means that we could refer back to it. Anyway, Hargreaves Lansdine super interesting. Thank you for that. Who’s Upnext?

Luke: 28:58

Upnext’s interactive investor. So first one, same as Hargreaves open architecture, enormous investment choice really is vast. You can go into US stocks, for example. That there’s a massive array of choice. Where they stand out and where they fit in for me in this overall discussion is in relation to fees. They offer fixed fees, which is great for large portfolios. So if you set up an ISA with them, you will pay £9.99 a month on a subscription and that’s going to give you access to an ISA wrapper, a junior ISA or junior ISA wrappers if you’ve got all the one child and trading accounts. So you can open up quite a number of different accounts and just pay £9.99 a month. That’s their starting subscription level at the moment. You also then get a free trade every month in terms of the dealing fees, and if you want more than one trade a month, then I think it’s £7.99. And if you’re a frequent trader, you can pay a higher subscription to reduce the cost of trades. So the more active you are, there’s different options for you.

Dr James: 30:12

For people who have a one index portfolio. How good is that, though?

Luke: 30:17

Well, yeah, valid point. I think it’s the size of the portfolio. So if you think about it, if somebody’s got £80,000 invested in a Vanguard index fund, over and above that point, it’s actually cheaper to invest in that index fund via interactive investor than it is through Vanguard. So, on their 0.15% charging model with Vanguard, they’re actually more expensive to invest into Vanguard than interact to invest on a £9.99 subscription model. So it is definitely relevant. But it all boils down to size of portfolio when you’re assessing the benefits. So for larger pots, this definitely needs to be considered and, as I said, the larger your portfolio, the bigger the impact is on all those fees in pounds of pens. To go on to the negatives and again to provide a balanced view, there is no getting away from the fact that the interactive investor site when you log in is what I can describe as clunky. You know it’s a long way from what Hargreaves have produced. Their app actually interactive investor has just been redone and it’s actually quite reasonable. But the site when you log in is not the most slick looking operation. But for me, once you’ve got a larger pot of money there, that’s, and especially if you’re a long-term buy and hold investor and you’re not needing to log in that often. You can just check up on things through your app. That’s once you’ve set the thing up and you’ve got it on autopilot. That shouldn’t be a massive consideration. If you’re a frequent user, if you’re trading, if that’s the game you’re playing, then maybe that’s more of a more of a consideration for you, because you might get a bit frustrated with the layout and the clunky feel of it. Pretty easy to get going again. You know they’ve got the whole the same. They’re all the much the same. They’ve all got wizards to get you started. I would say it’s not the best option for beginners. If you’re starting out on your investment journey probably requires a little unless you’ve got somebody helping you with it. It requires a little bit of knowledge to work out where things are and what you need to be worrying about. So that would be my honest appraisal Great on fees, clunky sites and probably not where you’re going to start off if you’re a beginner.

Dr James: 32:38

Nice and concise and look. Just as we were saying earlier, there’s nothing to stop us playing the system as such, starting out on a provider which is cheaper for a smaller account and then thinking about moving to Interactive Investor when we hit whatever threshold. We’ve calculated it to be as the tipping point, when it becomes cheaper to pay a flat fee.

Luke: 33:00

Yeah, and that really that requires you to know your portfolio, requires you to know what your costs are all of your costs and work out what’s going to be the most effective for you from a cost perspective. And that’s going to boil down to again how active you are and so on and so forth. The other thing I didn’t mention actually, with Interactive Investor, if you’re paying in monthly, there’s what they call a free regular investing service, so you don’t actually pay the dealing fees on your regular investment, so you get the one free trade a month. But also, if you set up the account on autopilot and just pay a fixed amount in each month into your ISA, you can choose the funds that you want to invest into and there’s then not a dealing fee if you’re going into investment trust or anything else for that matter. So again, that’s worth knowing so you can really control your fees on that platform.

Dr James: 33:49

So good to know. This podcast is full of gold dust and it’s got me rethinking my ISA strategy as well. And finally we have. I’ll let you take the reins, look.

Luke: 33:59

Yeah, we’ve got AJ Bell. They probably sit somewhere in between hard-greaves and Interactive Investor. I’d say, again, large investment choice. They’re open architecture like the other two, so there’s not really too many constraints on what you go into. Their fees are good as well. The headline fee is 0.25% for funds, I think for regular investing it’s £1.50 per deal. Again, to give you a comparison on that, the annual custody if you’ve got investment trust and ETFs like hard-greaves is capped, so you’re not going to pay the 0.25% if you’re just sat on shareholdings or investment trust or ETFs. So again, fees, really really quite well. It’s keenly priced. It’s cheaper than hard-greaves Offers the same or very similar investment choice. I would say it’s probably not as user-friendly as hard-greaves. There’s a couple of elements to it that you need to be familiar with, but it’s definitely a worthy option. It’s actually the witch in terms of the consumer website, the witch recommended platform at the moment, or one of their chosen platforms, so it ticks a lot of boxes. It’s good for beginners. They’ve got quite a few of their own investment options on there to help people make investment choices. I should say all three of those providers Interactive Investor, aj Bell and Hard-greaves all three of them have their own version of a research center, but that’s not open just to investors on those platforms. So if you really wanted to do your research, you can make the most of all three of their research hubs and go through quite a lot of data without needing to be an investor on those platforms. So that’s worth consideration. Overall, I think it’s a really useful platform. It’s good for beginners, it’s sort of midway between on fees and it’s definitely in there as a consideration. One thing that I wanted to mention is and where I see some people go wrong all of these platforms there’s DIY platforms. It’s almost like a two-step process. So the first step is to get money onto these platforms, and that can be through a direct debit, a regular monthly payment onto them, or it can be through ad hoc lump sum payments onto the platform. And sometimes where I see people go wrong is they add the cash. They click the button. It’s got a nice button on there that says add cash. You click that, you make your debit card payment or whatever it might be, put the money onto the platform. You’ve then got to tell the investment platform usually what you want to do with that money. On of the four, I’d say Vanguard and Hargreaves make that process as simple and straightforward as possible and automate it and build it within their system. There’s still some times, especially with Vanguard, there’s a way of going wrong with that, but it is easier to stay on the right track With the other two. You need to be more careful. It really is a two-step process. So load the money on, then go in, make your investment instructions, say what you want to invest that money into. If you don’t do that process, the money is going to sit in cash, it’s not going to grow and you’re going to revisit in a few months and wonder why your money’s sat there in cash when the market’s gone roaring away. Or it could go the other way, obviously. But well worth knowing, and that is something that I always stress to people.

Dr James: 37:46

A little bit of a pitfall there. I almost said you’re practically using it like a cash-eiser, but you’re not, because you’re not even getting the interest and the cash-eiser is even worse than a cash-eiser. Is it just a bank account at that point, isn’t it?

Luke: 37:57

Yeah, some platforms will offer a very small interest rate, but it’s going to be absolutely next to nothing and you’re probably going to be losing money because you’re going to be paying the fees of the platform, so definitely not worth doing On all of them. You’ll need to keep some form of cash float to pay the fees of the platform provider, whatever the priority are you. So you will need some cash in the cash account section of the platform. But the key there is not to be sat on large amounts of cash and forget about it for a few months and then go in and wonder why it’s still sat there, languishing when your gains are.

Dr James: 38:36

This podcast is aimed at dentists, of course. Is there anything unique to dentists? They should be aware of it with these ISO platforms. That’s a little bit of a curveball of a question, or does it pretty much just stand as it would do for every other profession? I just thought I’d ask.

Luke: 38:53

It’s the same, regardless of professional rate. For me, that would definitely be relevant if you’re assessing the pensions on these platforms, but for me it doesn’t feature from an ISO perspective. One thing I would say, though again, that’s just reminded me of something when you’re making the decision over your chosen accounts so we’re talking about the middle layer here, layer two which account am I investing through? Lots of people will prefer, possibly, to have them on one platform if possible, so they’d like to log in and see their ISO, their LISA, their dealing account, their SIP, ie their pension, all in one place. Interactive Investor does not offer a lifetime ISO, just so people know. That’s just not an option but the others and Nord as Vanguard actually. So those two don’t offer a LISA, but they do offer a SIP, they do offer an ISO and they do offer a general investment account. Aj Bell and Hargreaves offer the LISA, the ISO, the SIP and the general investment account. A general investment account, for the record, is really just an unwrapped investment account. So, where you’ve got your SIP, your LISA, your ISO, if it hasn’t got one of those tax factors around it, it’s just a general investment account and they’ll call it different things. I think Hargreaves call it a fund and share account, I think Interactive Investor call it a trading account, aj Bell call it a dealing account. So they’ve all got slightly different phrases, but it all means the same thing. It just means it hasn’t got a tax record around it. But it’s just there for as a general investment account.

Dr James: 40:30

And look, you’ve actually just caused something else to pop into my head. There’s no third party app in which we can individually type in the various totals we have in certain accounts that will independently moderate, it will kind of keep track of, like, let’s say, we have a GIA with Hargreaves Lansdown and a ISO account with Interactive Investor. There’s no app that we can go to that we can type in the GIA account on one platform, the stock share is ISO on another platform and it will tally them all up, because I know in the crypto world there’s a very useful app that does that, called FTX. I just thought if there would be something like that in the traditional finance world as well.

Luke: 41:12

Not really. The problem is and I think it will come in the same way you’ve got open banking. I think it will come. There’s a big problem with getting the platforms to talk to each other and to make that as simple as possible In terms of the APIs and what’s necessary to allow that. There are a couple of personal finance bits of software out there that I think might have relationships with some providers, but I’d be very surprised if they’ve got the full range on the platform. It tends to be. They’ve got one or two and in which case you’re just really restricted there. Some advisor software will allow you to pull things through, and that’s a service they’ll provide to their clients. There are various bits of financial planning pieces of kit that will allow you to keep track of all of your finances in one place, but nothing really that’s going to provide the solution that you’re referring to. I think it will come. I just don’t think it’s there yet.

Dr James: 42:12

No problem, just thought I’d ask. Look, you’ve done a smashing job of drawing a line under the various types of ICES that are available to us. Thank you so much for your time today.

Luke: 42:24

No problem, no problem at all.

Dr James: 42:25

Awesome. Looking forward to shooting some future podcasts about some of the things that we’ve touched upon just today. I definitely think there’s some more content out there. First and foremost in my mind is pensions, and perhaps one about fees as well, because I don’t think that’s talked about often enough. But you’re the man with the knowledge. You’ll know whether or not we can get 45 minutes out of fees, or even if that would be interesting I suppose anybody’s listening reach out and let me know if that’s interesting. Fees maybe not the most sexy subject, but something that’s super important in the long run. Anyway, look, we’re going to draw a line under proceedings today. Once again, thank you so much for coming on the show. It’s been an absolute pleasure having you. I hope you have a tremendous weekend, my friend.

Luke: 43:05

Cheers, james, take care.

Dr James: 43:07

See you later. Well being and investing knowledge. I’m looking forward to seeing you on there.