What Investment Platform Fees Really Cost Over 20 Years

Take a UK investor with a £20,000 starting pot, adding £500 a month, earning 5% a year in real (after-inflation) terms for 25 years, and holding a typical global tracker fund with a 0.22% ongoing charge (OCF). We modelled the same journey on three real fee structures, using the rates in force as of July 2026:

• Hargreaves Lansdown: 0.35% a year on fund holdings up to £250,000, then 0.25% to £1m (cut from 0.45% on 1 March 2026)
• Vanguard Investor: 0.15% a year, capped at £375 (with a £4/month minimum below £32,000)
• interactive investor: flat £5.99/month (Core plan, portfolios up to £100,000), then £14.99/month (Plus) above that

With no fees at all, this saver finishes with £361,161. Here is what each route actually delivers:

Every figure includes the 0.22% fund OCF, which on its own accounts for £12,817 of drag - more on that below. The gap between the dearest and cheapest platform here is £13,330 of terminal wealth, for holding identical investments with identical returns. The only difference is the fee structure.

Note that the drag is not the same as the fees paid. HL collects £20,878 in fees, but the saver ends £31,981 behind the frictionless benchmark: the missing £11,103 is growth those fee payments would have earned had they stayed invested. That is the compounding penalty working against you.

The crossover logic is simple: a flat fee is a fixed number, a percentage fee is a line that rises with your pot. Divide the annual flat cost by the percentage rate and you get the pot size where the two lines cross. Above it, flat wins - and keeps winning by more every year your pot grows. Here is the annual platform cost (excluding fund OCF) at different pot sizes:

*Vanguard's £4/month minimum applies below £32,000.

The crossovers fall out directly:

• ii's Core plan (£71.88/year) beats HL's 0.35% from about £20,500
• ii Core beats Vanguard's 0.15% from about £47,900
• Above £100,000 you need ii's Plus plan (£179.88/year), which beats HL from £51,400 and beats Vanguard's percentage from about £119,900
• Vanguard's cap makes it a de-facto flat fee of £375 from £250,000 - still more than double ii's flat rate

Notice the honest wrinkle at the small end: on a £10,000 pot, HL's percentage fee (£35) is actually the cheapest of the three. Percentage fees are genuinely fine for small pots. The problem is that they do not stay fine, and most people never revisit the decision as their pot grows.

As of July 2026, for a fund-based portfolio on the three structures modelled here:

• Under £32,000: percentage fees are cheapest, and the differences are small (£35-£72 a year). Pick on features and fund range, not fees.
• £32,000 to £48,000: Vanguard's uncapped 0.15% is the value zone (£48-£72 a year), if its fund-only range suits you.
• £48,000 to £120,000: flat fees start to win and the gap widens every year. ii Core at £72/year undercuts everything up to its £100,000 ceiling.
• Above £120,000: a flat fee beats even a capped percentage. The bigger the pot, the more a percentage structure costs you for the same service.

The general principle: re-run the crossover check every time your pot roughly doubles. A platform choice that was right at £15,000 is often costing you three figures a year by £80,000 - a classic case of a decision that was positive expected value when made, silently turning negative because the inputs changed.

In our 25-year model the 0.22% fund OCF alone cost £12,817 - comparable to the entire platform bill on the cheaper routes. Unlike platform fees, the OCF has no cap, no flat-fee alternative and no crossover point: it is a pure percentage on the whole pot, forever. That has two practical consequences. First, the gap between a 0.12% developed-world tracker and a 0.50% (or 1%+) active fund dwarfs most platform-fee differences - if you are optimising costs, the fund line usually deserves attention before the platform line. Second, quoted 'all-in' comparisons that bundle the two can hide which lever you actually control. Keep them separate: platform structure is a crossover decision, fund OCF is a minimisation decision.

Flat platform fees often come with per-trade dealing charges, and percentage platforms are adding them too: from March 2026 HL charges £1.95 per fund deal unless you invest via a regular monthly plan. A £500/month saver dealing ad-hoc would add roughly £23 a year; set up the regular-investing option and it is £0. ii's plans include monthly trades on the Core plan and more on Plus, so a monthly saver typically pays nothing extra either. There is also a newer generation of platforms with no platform fee at all - Trading 212 and InvestEngine both charge £0 for a DIY stocks and shares ISA. The catch is range and packaging rather than headline cost. We compare them directly in Vanguard vs InvestEngine and Trading 212 vs eToro if a zero-fee route suits your portfolio.

You cannot choose next year's market return. You can choose your cost structure. Returns arrive as a distribution - some sequences kind, some brutal, and as we cover in ergodicity, you only get to live one path through them. Fees are different: they are deterministic. Cutting 0.3% of annual drag raises your growth rate on every possible path, good or bad, with zero risk attached.

That is what makes fee optimisation the rare free lunch in investing: a guaranteed improvement in expected value with no offsetting downside. Almost everything else you can do to a portfolio trades expected return against risk. This does not.

Sources

• Vanguard UK: fees and charges
• MoneyWeek: Vanguard's £4 monthly minimum fee
• Hargreaves Lansdown: Fund and Share Account charges
• Kepler Trust Intelligence: HL cuts ISA and SIPP fees, January 2026
• interactive investor: new price plans announcement

All worked examples and terminal-wealth figures are our own calculations from the fee schedules above; they are illustrations of the arithmetic, not financial advice or a personal recommendation.