are they up to scratch?

A good mobile app has become an important way for asset managers and brokers to give investors a positive experience. Most online investing services offer one and their functionality is much more comprehensive than a few years ago.

But there are big variations in these apps. While some investment platforms only offer the basics, others are starting to offer new types of engagement that feels, dare I say it, exciting.

Vanguard held out on launching an app to UK investors for far too long, finally unveiling its offering two months ago. Its investors were crying out for it: close to a third of Vanguard’s UK client base downloaded the app in the space of under two months, around 200,000 people.

Why the delay? Liz Waldron, head of client experience for UK personal investors at Vanguard, says: “We wanted to do things the right way, so we were considered in our approach, ran a thorough, comprehensive testing phase and took our time to ensure all input was reflected.”

Nevertheless, by sticking to basic account overview information, Vanguard’s app is way behind those provided by rival platforms, where account opening through a handset and dealing capability are ubiquitous, along with the ability to monitor and manage accounts.

Jeremy Fawcett, head of Platforum, a research and analysis firm, says: “The likes of Hargreaves Lansdown, Interactive Investor and Fidelity are many releases into their current app generation and their clients benefit from the full breadth of their services including [for] self-invested personal pensions (Sipps).”

Hargreaves Lansdown, the largest platform with almost 1.9mn customers, reported just 0.6 per cent of its clients were using the app in 2014. 

But after the pandemic prompted locked-down consumers to turn to trading as a new hobby, 44 per cent were using its app by 2021. By contrast, trades via the website dropped off sharply, from 95 per cent in 2014 to 54.8 per cent in 2019.

So if you’re an investor and haven’t yet used or transacted on an app, are you something of a dinosaur?

It’s possible you’re just too old and too rich. Holly Mackay, founder of finance website Boring Money, says: “The two key determinants of the importance of apps are wealth and age, which are, of course, positively correlated.”

Boring Money’s research found that investors with less than £100,000 in assets use an app, primarily, while those with £100,000-plus prefer a website and desktop. For the under-45s, apps are a key driver of platform selection, whereas they are almost the least important consideration for the over-55s.

Analysts are not yet convinced that apps can be everything to all investors.

Fawcett says: “A genuine mobile-first philosophy attracted a new cohort of first-time investors to neo-brokers like Trading 212 and Freetrade during the pandemic. Some have fallen away as surging stock markets have steadied and others may have found that slick user experience isn’t the only ingredient of successful long-term saving and investing.”

It’s fair to say reliability is a key downside of apps. Online trading platform Investingoal.com looked at customer reviews for 30 popular investment apps and found substantial numbers of the negative keywords, such as “glitches”, “freeze”, “crash”, “not working”, “slow” and “lag”. In an environment where trust and seamless access to financial markets are critical, recurring issues of this kind can weigh heavily on users’ confidence.

No wonder most of the leading services closely maintain their app review scores of four or above. But app reviews show those at the sophisticated end of investing still claim the functionality isn’t good enough.

ShareSoc, which represents UK investors, says essential elements remain missing from apps, such as the total of all your investments in a share across trading, Isas and Sipps. Or the facility to access a spouse’s investments, subject to their permission, when held on other platforms.

Social trading has the potential to suck you in for hours. We tell off our teenagers for “doom-scrolling” on TikTok. Now we have “doom-investing” to waste our time too

It’s on the content side where there’s been most innovation, with investment tips, ideas and videos gaining prominence. Moneybox stands out for its “Academy” that created a series of educational resources on managing money (without offering formal personalised advice).

Social trading, a form of investing that allows private investors to share information, is now becoming more mainstream. EToro pioneered this innovative way of trading and investing, combining financial markets with social features. And this week, Interactive Investor launched a mobile social trading app that’s free for its 400,000 customers.

On “ii Community”, users, who I advise to use pseudonyms and shun portrait photos, can chat with like-minded investors on groups such as “Roast my portfolio” or “Tracking the FTSE 100”. They can see all the investments that top-performing investors are holding, and benchmark their portfolio’s performance against others.

If you’re curious to find out how other investors invest their money, it is a fascinating development. Information is power, as they say. But social trading has the potential to suck you in for hours. We tell off our teenagers for “doom-scrolling” on TikTok. Now we have “doom-investing” to waste our time too.

I’ve always thought investing should be like watching paint dry. So, even if an app can provide services above and beyond, is it wise to trade from the palm of your hand? There’s inevitably a danger of translating what you see into too much action.

Cliff Weight, a policy committee member at ShareSoc, doesn’t hold back: “The ease of use of apps creates an illusion and a desire for instant gratification. The similarity to apps for gambling (betting and crypto) sends the wrong message.”

When it comes to investing, our behaviour is one of only three things that are within our control — the others being asset allocation, and the fees we pay. Wealth managers warn against a short-term investor mentality and the risk that “gamifying investing” by promoting different investment themes can lead to a portfolio without a meaningful strategy.

Interactive Investor’s “community” app rates portfolios by giving them up to five stars. But this is just based on performance, not structure or asset allocation, potentially leaving investors with a false sense of comfort.

Weight says he would never use an app for serious, detailed, analytical research into a stock before buying or selling. “The mobile phone screen is not big enough to show 10 years of financial data. You need a desktop PC with a big screen to see all the data you need to review,” he says.

So treat time spent on investment apps as a fun hobby and don’t make the mistake of turning your “engagement” with the app into a glut of ill-researched transactions. Just as we limit our children’s screen time, investors would be wise to do the same with their apps.

Moira O’Neill is a freelance money and investment writer. Email: moira.o’[email protected], X: @MoiraONeill, Instagram @MoiraOnMoney