The City regulator is to examine whether savers get value for money from so-called investment "platforms" – otherwise known as fund supermarkets.
Between 2008 and 2016 investors quintupled the amount of money they put into such platforms, the Financial Conduct Authority (FCA) said.
Companies such as Hargreaves Lansdown, Nutmeg and Interactive Investor now manage £592bn of savers' money.
The FCA will examine whether such firms help investors make good decisions.
It follows a previous inquiry into those who manage the funds that are sold on investment platforms, which found high levels of profitability.
The study found typical profit margins in the industry of 36% – and concluded that investors should be quoted a single fee, rather than a complex mix of charges.
Savers putting money into investment platforms pay a fee to each fund manager, as well as to the platform itself.
"With the increasing use of platforms, and the issues raised by our previous work, we want to assess whether competition between platforms is working in the interest of consumers," said Christopher Woolard, the FCA's executive director of strategy and competition.
"Platforms have the potential to generate significant benefits for consumers, and we want to ensure consumers are receiving these benefits in practice."
The FCA will look at:
- the impact of platforms on overall charges
- whether platforms use their bargaining power to negotiate good deals for consumers
- whether they compete effectively with each other
- whether their commercial interests are in conflict with the interests of consumers
AJ Bell, which operates an investment platform, said it welcomed the inquiry.
"Platforms have helped revolutionise saving and investing in the UK by creating more efficient ways to hold and invest money," said Billy Mackay, marketing director at AJ Bell.
Hargreaves Lansdown said the study recognised the vital service platforms now provide to millions of people.
"This paper is not simply about the price charged by retail investment service providers, it is about the value they deliver to investors," said Tom McPhail, head of policy at Hargreaves Lansdown.
Hargreaves Lansdown saw its share price hit in May when US firm Vanguard announced a cut-price service for UK investors.
Vanguard plans to charge investors a maximum fee of 0.15% on its tracker funds, capped at £375 a year.
Hargreaves Lansdown charges 0.45% to hold investments in its Vantage service.
The FCA will also look at investment platforms' "model portfolios" where they suggest recommended funds to their clients.