A platform that looks like excellent value for a first-time investor putting away £100 a month can turn out to be one of the more expensive options once that same investor's portfolio has grown to £250,000 over a couple of decades. Because UK platform charging structures vary so widely — some scaling with portfolio value, others fixed regardless of size — there is no single "cheapest platform" that holds true at every stage of an investing journey. Understanding why the right structure depends on portfolio size is central to keeping costs under control over the long term.
Why portfolio size changes the calculation
Platform custody fees generally fall into two broad camps: percentage-based fees, which charge a proportion of assets held, and flat fees, which charge a fixed pound amount regardless of portfolio value. A percentage fee of 0.25% costs £25 a year on a £10,000 portfolio, but £2,500 a year on a £1,000,000 portfolio — the pound cost scales directly with wealth. A flat fee of £120 a year, by contrast, costs the same whether the portfolio holds £10,000 or £1,000,000. This structural difference means the "cheapest" platform, in pounds and pence, is highly sensitive to how much is actually invested.
Small portfolios: percentage fees usually win
For an investor just starting out, or with a portfolio in the low tens of thousands of pounds, a low percentage-based fee is usually far cheaper in absolute terms than a flat fee designed with larger portfolios in mind. A platform charging a flat £120 a year effectively charges 1.2% on a £10,000 portfolio — a rate that would look expensive if described as a percentage — whereas a platform charging 0.25% would cost just £25 a year on the same sum.
Other features that matter more at small scale
- A low or nil account minimum, since some platforms require a minimum initial deposit that can be a barrier for a new investor.
- Free or low-cost regular investment dealing, since a beginner contributing modest monthly amounts benefits disproportionately from cheap, automated dealing.
- Access to a reasonably broad range of low-cost index tracker funds, since a simple, diversified starting portfolio is often built from just one or two such funds.
Large portfolios: flat and capped fees usually win
Once a portfolio grows into six figures, a percentage-based fee with no cap can become disproportionately expensive compared with a flat or capped fee. A platform charging 0.25% with no cap costs £1,000 a year on a £400,000 portfolio and £2,500 a year on £1,000,000 — figures that a flat fee of, say, £200 to £400 a year would undercut by a wide margin.
Features that matter more at larger scale
- A fee cap, or a flat fee structure, that stops costs rising indefinitely as the portfolio grows.
- Access to a wide range of direct shares, investment trusts, and ETFs, since larger, more experienced portfolios often diversify beyond a small number of pooled funds.
- Household or family account linking, which can push a smaller platform-level fee tier further by combining balances (see the separate discussion of family and junior account discounts).
- Robust customer service and estate/inheritance handling processes, which become more materially important as the sums involved grow.
A worked hypothetical example across portfolio sizes
Consider two hypothetical platforms: Platform X charges a flat £150 a year regardless of size, while Platform Y charges 0.35% a year with no cap.
| Portfolio value | Platform X (flat £150/year) | Platform Y (0.35%/year) | Cheaper option |
|---|---|---|---|
| £5,000 | £150 | £17.50 | Platform Y |
| £40,000 | £150 | £140 | Platform Y (marginally) |
| £43,000 | £150 | £150.50 | Platform X (roughly the crossover point) |
| £150,000 | £150 | £525 | Platform X, substantially |
| £500,000 | £150 | £1,750 | Platform X, very substantially |
In this hypothetical, the crossover point sits at roughly £43,000 — below that, the percentage-based Platform Y is cheaper; above it, the flat-fee Platform X becomes progressively more advantageous, and dramatically so at larger portfolio sizes. Real platforms rarely use such simple structures (many use tiered percentages, caps, or hybrid rules for funds versus shares), so this example is illustrative only and not a comparison of any specific platforms.
Tax wrappers add another layer to the calculation
Because the ISA annual allowance is £20,000 and the pension annual allowance is £60,000 (or 100% of earnings if lower, tapered for high earners, with unused allowance carried forward from the previous three tax years available in some circumstances), many investors accumulate substantial combined ISA and SIPP balances over a working life. A platform that suits a £15,000 portfolio held only in an ISA may not remain the best-value choice once a SIPP built up over 20 years of contributions and employer pension consolidation pushes total platform holdings past £300,000. It is therefore worth periodically reassessing platform choice not just against current portfolio value, but against a realistic trajectory of expected growth over the years ahead.
Practical approach to reviewing platform fit over time
Estimating the crossover point
Investors can estimate, for any two platforms under consideration, the approximate portfolio value at which a flat-fee structure becomes cheaper than a percentage-based one, using each platform's published fee schedule, and use this as a rough guide for how long a given platform is likely to remain competitive as the portfolio grows.
Weighing switching costs against fee savings
Moving platforms can involve exit fees, administrative time, and potentially a period where investments are held in cash during an in-specie transfer (a transfer of investments "as is", without selling and rebuying). Any potential annual fee saving from switching should be weighed against these one-off costs, and against the value of features beyond price — such as research tools, customer service quality, or a wider fund range — that may justify staying with a slightly more expensive platform.
Reviewing periodically rather than once
Because portfolio size changes gradually, a platform review is best treated as a periodic exercise — perhaps every few years, or whenever a portfolio crosses a fee-tier boundary or a significant life event such as a pension consolidation brings a large lump sum onto the platform — rather than a single decision made once and never revisited.
How fund choice interacts with platform structure at different sizes
The platform's custody fee is only one layer of total cost; the ongoing charges figure (OCF) levied by the underlying funds sits alongside it, and this interacts with portfolio size in its own way. A smaller portfolio invested in a single low-cost global tracker fund, with an OCF perhaps around 0.10% to 0.20%, keeps overall costs low and simple. As portfolios grow larger and more diversified — perhaps spreading across several regional equity funds, a bond fund, and some direct shares — the blended average OCF across the whole portfolio becomes a more significant figure to calculate and monitor in its own right, separately from the platform's custody fee. Investors with larger, more complex portfolios may find it worthwhile to periodically calculate a single blended cost figure combining platform custody fee, average fund OCF, and any dealing costs, to get a genuine sense of total annual cost as a percentage of the whole portfolio.
Behavioural considerations alongside pure cost
It is worth acknowledging that cost is not the only factor relevant to platform choice, even though it is the focus of this article. A new investor with a small portfolio may place a high value on a simple, encouraging user interface and educational content that builds confidence and good habits, even if a marginally cheaper alternative exists elsewhere. An investor with a large, complex portfolio may place a high value on sophisticated tax reporting tools (for example, capital gains tax reports that help track the £3,000 annual exempt amount usage across many individual holdings), phone-based support, or estate planning features, even at a somewhat higher cost than the cheapest available option. Cost should generally be one important input into platform choice rather than the only one, particularly once a portfolio and its associated administrative needs become more complex.
The cost of doing nothing
Perhaps the most common outcome, in practice, is that investors simply stay with the platform they opened years earlier without ever recalculating whether it remains competitive for their current portfolio size. Given how the crossover points illustrated above can shift the balance of advantage by hundreds or even thousands of pounds a year once a portfolio grows substantially, the "cost" of inertia — never reviewing platform fit as circumstances change — can in some cases exceed the cost of any individual fee itself. A periodic, calendar-triggered review (for example, once every two or three years, or whenever renewing other annual financial arrangements) is a simple discipline that can help avoid this, and is generally far less time-consuming than the initial platform research most investors undertake when first opening an account.
Key takeaways
- Percentage-based custody fees tend to be cheapest for smaller portfolios, while flat or capped fees tend to become considerably cheaper once a portfolio grows into six figures.
- There is a calculable "crossover point" between any two fee structures, above and below which one becomes cheaper than the other.
- Features beyond headline cost — regular investment discounts, fund range, and account minimums — matter more for smaller portfolios, while fee caps, share/trust dealing ranges, and service quality matter more for larger ones.
- Growth of ISA and SIPP balances over a working life means a platform well suited to a small portfolio today may not remain the best-value choice indefinitely.
- Switching platforms has potential costs and administrative friction, which should be weighed against any calculated fee saving before making a change.
- Periodically reviewing platform fit against current and projected portfolio size, rather than choosing once and forgetting, tends to keep long-term costs under better control.