Investment brokers fail to get the basics rightWhich? investigation reveals lack of product knowledge
22 November 2014
Investment brokers are failing to provide full and accurate information about the products and services they sell, an undercover Which? investigation has revealed.
We tested 11 of the UK's biggest investment brokers on their knowledge of the products and services they sell, asking common questions around funds, charges and tax, and many struggled with basic queries.
Specialist investment brokers Fidelity, Hargreaves Lansdown, Bestinvest and Interactive Investor came top with their in-depth expertise.
HSBC and Halifax scored the least, suggesting we seek answers online on a total of 14 occasions.
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Staff confused about stocks and shares Isas
All providers scored badly on the tax rules around stocks and shares Isas, with Alliance Trust Savings incorrectly suggesting that these products are 'tax free' in every call.
Some brokers were better at explaining that dividend income is still taxed at source in Isas, but not one company mentioned the significant tax advantages of holding corporate bonds and gilts in tax-efficient wrappers, such as Isas.
Find out more: Stocks and shares Isas explained - learn the facts
Staff struggle with investment jargon
Staff fell down when asked to explain the difference between actively managed and passive funds. Many also failed to explain fund terms like 'inc' and 'acc', short for 'income' and 'accumulation' units, with Halifax faring the worst.
HSBC was the worst performer for information on the charges for investing, while Hargreaves Lansdown and Fidelity Personal scored the highest.
Commenting on the findings, Gareth Shaw, money editor at Which?, said: 'It's unacceptable that some brokers are failing to get even the basics right, and that phone staff are telling people to search for answers online. Our findings suggest investors risk making important investment decisions based on the wrong information.
'With DIY investing becoming increasingly popular we expect to see all of the biggest names in the business demonstrating a good level of knowledge on the products and services they offer.'
Investment brokers put to the test
Our researchers asked five questions that investors might be expected to ask while researching their investment options. They made 12 calls to each broker, asking about the costs of investing, three technical questions about investment funds and, finally, about stocks and shares Isa tax benefits.
Each question had different numbers of points available, plus a discretionary bonus point for excellence. Our questions were designed to testing, so we weren't expecting perfect scores.
The results of the test appear in the table below.
|Investment broker||Test score|
|Fidelity Personal Investing||60%|
|AJ Bell (Youinvest)||37%|
|The Share Centre||37%|
|Alliance Trust Savings||28%|
|Halifax Share Dealing||23%|