New rules from the Financial Conduct Authority are changing how investment services firms apply their charges. In the past the fund manager applied a fund management charge of, typically, 1.5% pa and then rebated part of that, say 0.5%, to the introducer to pay for their services so the client did not receive a separate bill.
The new rules mean that the fund manager’s fee and the introducer’s fee must be paid separately.
So, using the example from the Hargreaves press release, the annual charge for the Artemis Strategic Assets Fund was 1.5% pa. The new class of fund will have a management charge of, typically, 0.75% ( 0.69% for Hargreaves clients) to which must be added the fee for all the services provided by the Vantage service of 0.45% producing a total cost of 1.14%. An annual saving of £900 for a fund of £250,000. Over £250,000 the savings really grow with a fund of £750,000 saving £3,700.
What is really strange is that the change in Regulations have forced Hargreaves Lansdown to cut fees and take a hefty profits hit (£8 million?) whilst most Independent Advisers have substantially increased fees. How come?
Independent Advisers would point to substantially increased regulatory costs and, yes, they would be right but those costs only apply to regulated advice. The question is do you really need regulated advice or with all the online support can you now make good decisions for yourselves?
With that same fund of £250,000 regulated advice would now, quite typically, set you back £2,850 pa more than the Hargreaves route.
Even if you pay for some help, support and guidance from someone like me, Richard Cook, The Investment and Retirement Coach, you will still be quids in.
Not only that but with access to online real time valuations, the monthly Investment Times magazine, regular investment research and access to the Wealth 150 list of top funds, the chances are that you will feel far more in control of your money.
Yes, some people will have complicated financial situations which will still need the advice services provided by a regulated financial adviser, but it really is time to take a long hard look at the services you get and whether they are value for money.
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This document and our on going services are not personal advice. We'll give you all the help and guidance you need to make your investment and retirement decisions, but we can't advise you. If you're not sure whether you need regulated financial advice we can put you in touch with a suitably qualified and experienced regulated adviser. Because we are not regulated by the Financial Conduct Authority you will not have access to the Financial Ombudsman Service in respect of any complaints. If you use one of the "no advice" on line services to handle investment transactions they will be Regulated and you will have access to the Ombudsman and The Financial Compensation Scheme in respect of their services. The value of investments/pension plans can fall or rise depending on market performance. The Retirement Team and The Investment and Retirement Coach are trading names of Capture Success Ltd Reg No 01825075 Tel 07770575122