I’ve been thinking about what would incentivise me to pay for Freetrade and I thought it would be interesting to get a discussion going in the community.
For me, the following three points are crucial but what are the key barriers for you?
Costs: In the interests of accessibility, I think the annual Isa fee needs to be priced as a percentage and capped at £36. Otherwise, the very smallest investors lose the biggest amount of their investment to costs. If, for example, I want to buy one share of a Ftse 100 tracker, such as VUKE, to get started – I’m down more than 100% already which can’t be right. To my mind, anything over 1% is obscene and acts as a major barrier to newbie investors. I think there’s a very strong case for percentage-based fees all round – especially as Freetrade’s supposed to be all about equitable access.
Features: Assuming I have enough capital for £7/10 a month to be competitive as a percentage with the likes of HL and Vanguard, what’s going to make me pay for Alpha is features. For starters: I wouldn’t sign up if I had to pay extra for an Isa, extra for instant trades, extra for US trades, Euronext trades, et cetera. A premium account should include as many as premium services as possible. I’d want all the bog standard broker features such as stop-loss/limit orders and a web interface too. I also think Freetrade’s offer needs to go beyond traditional brokers’ wherever possible. The more innovative and exclusive features that Freetrade introduces, the more likely I am to pay for the privilege.
Range: Third and finally, if I’m going to pay for Freetrade, I want access to as many securities as possible. Competitors offer thousands of choices compared with 300-odd in the so-called securities universe. This is a dealbreaker: after all, what good’s a platform that doesn’t offer the stocks I want?
*The above is not intended to be overly negative, it’s meant to be an honest critique. It’s early days, I know, but I think it’s important for Freetrade to iterate fast. As an investor, albeit with one with 20 shares, as well as a customer, I want Freetrade to succeed.
I think all you points have been covered on other threads except premium access to stocks. There should be equal access for all to the stocks, it shouldn’t be a paid for add on.
The isa is included in alpha pricing. Web interface is going to happen, stop loss is going to happen. They’re just not priorities
New investors or those who don’t invest much could just use the basic account until they build up their portfolio, if they wish. I don’t see it as a barrier
That’s a fair point. I just thought it would be interesting to spark a discussion in one place.
To clarify, I’m not advocating that. I’m just saying that I could not even consider paying for Freetrade until it has a comparative offer in terms of securities.
You may not but I firmly believe that the three points above present a very real barrier for many.
Because Freetrade is targeted at new investors with small amounts and claims to offer equity of access. I accept the point, I’m doing precisely that with my GIA but I’d like to move my Isa too.
Just to counter this point too (sorry, I like to play devil’s advocate:): shouldn’t they be priorities seeing as they’re the most requested features? It’s disappointing that neither seems to even be on the roadmap.
Spot on across all your points here. Not sure why you can’t discuss things that have been raised elsewhere in a concise, thought provoking post tbh…
I agree that the current low number of stocks available relative to the total listed on LSE/AIM is a problem in justifying a premium monthly subscription. Although I can understand why this is the case at present, as the basic trades function only works if a share has good liquidity and relatively low volatility.
I don’t agree with Emma’s point on all users getting the same access. I could imagine something like;
Basic users could get access to a list of very liquid, household names which are perfect for building a beginners portfolio (much as the “universe is at present”.
Premium users get access to all stocks on the LSE/NYSE; otherwise investors will not be willing to commit to a monthly subscription and will just use a competitor if they want to buy shares in a smaller company that isn’t listed on the app (everything listed at present has a market cap well in excess of £1billion if I’m not mistaken).
It’s a really crucial point & far from straightforward, definitely worthy of a dedicated thread to discuss it (along with the other points raised)
Just to counter this point too (sorry, I like to play devil’s advocate:): shouldn’t they be priorities seeing as they’re the most requested features? It’s disappointing that neither seems to even be on the roadmap.
Yeah I must admit I was really confused to see Apple Pay and Android Pay being so high priority that the former has arrived even before Android ISA’s, improved Discovery, and a revamped chart design - especially when the team then goes and tells us it costs Freetrade more money compared to regular top ups so they would appreciate us not using them! Looking in the Ideas forum, I don’t think anyone requested Apple/Android pay either!
The reason Apple Pay launched before ISAs on Android is that we have two separate teams working on each feature & one was quicker to build than the other. In other words, just because we launch something for iOS, that doesn’t mean that Android users have lost out.
We will still be launching ISAs for Android this month
I think ring fencing off certain equities behind a pay wall would be a bad idea. The risk would be freetrade becoming people’s side account rather than main account.
I think freetrade has a powerful advantage already on their road map that could really drive subscriptions. Fractional shares. This is a game changer worth paying for.
They would, however there is a middle ground. If you have a modest amount to invest per month you are locked out of a large section of the market anyway.
You might believe a certain stock has great potential, but the high price of the share means you are unable to participate.
Also, fractional shares will have some overhead for freetrade as it is a broker feature not an exchange feature. They are on the hook for the remaining fraction of the share at the close of the day.
Voting isn’t used as a way to decide the order to introduce features, just to see how much demand there is. They have their own vision for the product and sometimes, as with Apple Pay, they see a particular issue that needs addressing quickly.
That’s not to say voting is pointless, but it’s just one of many considerations
I wouldn’t want to pay for additional stocks, however, I would maybe accept it for early access for X period, such as IPOs and new stocks. Providing the volume and relevance was met. But I’d definitely expect that after X period they’re given to everyone. Probably something like 7 days.
The main thing I’d pay for is features, unlimited instant orders, free bank transfers, stop losses and limit orders, better graphs, analytics, news, portfolio management etc. As those I would consider those fairer opt in services. And would be offset by any costs I use other platforms to perform those duties.
I have to say what drew me to Freetrade was the fact that it is FREE. I think Freetrade should stay as free as possible - it’s in the name and it’s the big pull for most people.
To get me interested in considering a subscription Freetrade is going to have to go well beyond the other platforms out there. At the moment, Freetrade doesn’t even offer all of LSE. I can get access to all of LSE/AIM/NEX, the U.S. markets, European markets and some Asian markets on platforms like Degiro or Interactive Broker.
The only market that Westerners don’t seem to get access to is Shenzhen. I suspect China has put up barriers to foreigners trading there. Shenzhen is a market I would like access to.
I suggest that Fairtrade not try to run before it can walk. Also, better to honour the free aspect of the platform and promote community and the wisdom of crowds.
Sadly, when it comes to middlemen, there’s really no reason not to go with the cheapest.
As long as Trading 212 (or any other upstart competitor that turns up) is offering everything a long term investor needs for free, there’s only 1 sound reason to pay a different middleman to do the same work: trust.
I’m personally a little wary of T212, but it’s hard not to recommend them over Freetrade on an objective basis.
People on the larger traditional platforms have a similar trust issue with Freetrade.
When the only reason to use a particular middleman is that they’re cheaper than the others, no add-on feature is going to make you want to pay that middleman.
As unethical as it may be, at least T212 can still make money from their free offering by “upselling” CFDs. Freetrade can make money from fans, investors and the ethical, but I don’t see any way for them to make money from the general long term investor market with less than £20k or so to invest.
If they pivoted and became a day-trader app, then there’s scope for innovative or unusual features to justify a premium. Every day investors don’t need much more than a buy and sell button.
I feel much the same, perhaps to my detriment but things like transparency matter to me. You’re right to point out that others might have similar trust issues with Freetrade. Due to a couple of delays/bugs I’ve experienced buying and topping up, I’m hesitant to recommend it yet as much as I’d like to.
While I’d agree that cost is the primary consideration, I think I would pay a premium for a critical mass of add-on features, particularly game-changing ones such as a Lisa, fractional shares and so on.
That may well be the case, sadly. I hoped Freetrade would solve the perennial problem of fees presenting a barrier to small investors. To be fair, it solves the problem with its GIA and perhaps it’s too much to expect it to do so across the board.
However, I’d argue that Freetrade should target volume by taking the hit for small investors and clawing the money back from those with more to invest. That way, you can grow the biggest userbase possible and, over the long term, the number of users is going to prove key to Freetrade’s success.
Customers are quite sticky, esp once they start an isa. They’ll come for free trades, fractional shares on a gia and stay for great customer service and cheap ISAs. I also think they’ll make the experience much smoother for all users - I’ll invest £500 in x rather than I’ll invest £1234.45 in x or whatever the share price is.
Yes I totally agree, they should find a way to do this - either offer a simpler ISA product with low % fees on a global etf alongside their most sophisticated options, and/or no flat fee below x, or this idea of a capped percentage. I hate percentage fees as they are so insidious, but they do help when you have very little.
The trouble with less sophisticated investors without much money is most of them will want an ISA - everyone has heard of ISAs and trusts them, and nobody really wants to have to worry about the complex tax rules in a GIA, and £3 a month seems like a lot at that level, though it’s a bargain for those with more.
I do love that they don’t charge percentage fees on large deposits though so whatever they do I hope they don’t change that.
Very important to note though that freetrade should not and will not only compete on price - trust, ease of use, accessibility, customer service are all more important.
I disagree that everyday investors just need buy and sell - they need a good UI, guidance (without straying into advice) to buy appropriate investments (i.e. not costly funds), fractional shares to make it more transparent, guard rails against common mistakes (trying to day trade), clear and predictable flat fees etc etc. There is so much freetrade can offer here and they’re just getting started. Their main competitors are ii and hl, and maybe roboadvisors, not robinhood.
Looking in the Ideas forum, I don’t think anyone requested Apple/Android pay either!