Barclays Smart Investor and Fidelity International have been crowned the top investment platforms for self-invested personal pensions (Sipps) by the consumer group Which?.

Which? compared charges across 18 platforms for seven different sizes of pension pot, from £25,000 to £1 million. It also asked about 3,000 customersto rank firms on their customer service and value for money.

Sipps give savers control over how their retirement savings are invested, with a broad range of options to invest in, including regulated and unregulated products. Since their introduction in 1989, Sipps have soared in popularity, particularly since 2015, when it became possible to leave your pension money invested after you retire.

The Financial Conduct Authority, the City regulator, said more than 1.7 million people held a total of £205 billion in Sipps in 2023.

However, with dozens of platforms providing Sipps, each with its own fee structure, level of service and choice of investments, deciding which to use can be a daunting task.

Which? calculated that a Sipp with an initial value of £250,000 would be worth £13,400 more over ten years if held with the cheapest investment platform in its study, Freetrade, than if it was with the most expensive, Hargreaves Lansdown, assuming 3 per cent investment growth each year. Extend that timeframe by five more years and the difference balloons to £23,300.

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Jenny Ross from Which? Money said: “When it comes to investments, loyalty can cost you. Slight differences in fees between platforms can easily seem inconsequential at first glance, but they’re anything but — and can make tens of thousands of pounds of difference over the long term. Fees are just one part of the picture though. Excellent customer service and functionality are also essential components.”

Why fees matter

Choosing the right Sipp platform hinges on understanding their charges. Typically, these come in two forms: a fixed administration fee or a percentage of your pot. This could be the same percentage fee across the whole pot, or it may decrease above certain thresholds.

Barclays Smart Investor, for example, charges 0.25 per cent on the first £200,000, reducing to 0.05 per cent on anything above that.

Those with low fixed fees, including Interactive Investor, Halifax Share Dealing and iWeb, prove cost-effective for all pot sizes, Which? found. Those that cap or reduce charges at certain thresholds — including Aegon, Barclays Smart Investor, and Charles Stanley Direct — become better value for larger pensions of more than £500,000.

Which?’s top picks

To be recommended by Which? the company must achieve a customer score of at least 70 per cent, not be in the top 25 per cent of the most expensive across all pot sizes, and not score lower than three stars out of five for customer service, communication, ease of use, investment information or value for money.

Which? recommends six firms in this year’s report, with Barclays Smart Investor and Fidelity having the highest customer score at 82 per cent.

Fidelity proved marginally cheaper for smaller pots, with an annual cost of £350 for a £100,000 pot compared with Barclays’ £400. However, Barclays gained the edge for larger pots, with an annual fee of £800 for a £500,000 portfolio compared with £1,000 with Fidelity

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AJ Bell and Halifax Share Dealing came next with a customer score of 81 per cent, followed by Interactive Investor with 80 per cent and Vanguard at 79 per cent.

Different fees for different assets

The Which? analysis assumed that investments were held entirely in funds. However, charges can vary significantly for other assets such as individual shares, investment trusts, exchange-traded funds (ETFs) and bonds.

AJ Bell, Aviva, Fidelity, and Hargreaves Lansdown all apply lower charges for individual shares. Hargreaves Lansdown, for instance, caps fees at £200 a year for shares. This compares with fees of £1,125 for a £250,000 portfolio invested solely in funds.

Transaction fees for buying and selling investments are also worth taking into account for frequent traders. While fund transactions are often free or low-cost (AJ Bell charges £1.50 per transaction, for example), trading investment trusts, shares and ETFs typically incurs fees of £6 to £12 per transaction, Which? found.

It is also important not to overlook the underlying fees of the investments themselves. Passively managed funds, which track market indices, generally have lower charges, averaging between 0.15 per cent and 0.2 per cent a year. Actively managed funds, where a human stockpicker is in charge, can cost closer to 1 per cent.

Choice and customer service matter too

While charges are important, the breadth of investment options and quality of customer support are also worth factoring into your decision.

Vanguard, for example, only gives customers access to its own funds, which means that the choice is far narrower than many of its rivals — 86 funds and 29 ETFs. However, Which? found that many customers readily accept this limited choice in exchange for exceptional customer service and value for money.

The Barclays Smart Investor sipp has a choice of more than 8,000 investments, spanning funds, shares and bonds, while AJ Bell has more than 4,400 funds, 3,800 ETFs and 15,000 individual shares.

The quality of information, tools and support should also inform your decision about which platform to pick. While Hargreaves Lansdown may have higher fees for holding funds, Which? said its customers consistently praise its comprehensive research tools, curated fund shortlists and educational resources.