Recent research by wealth manager Bancroft Wealth found that most investors pay more than they need to for advice and that fees based on a percentage of funds under management are unfair.
Only 12% of investors feel that percentage-based fees are the fairest way to charge for advice and yet that is the fee model used by the vast majority of advisers.
Do you know how your fees are calculated and are you satisfied that they are truly value for money? There is no direct relationship between the size of the portfolio and the input from the adviser. A portfolio of £500,000 cannot possibly cost five times as much to support as a portfolio of £100,000. It is just vastly more profitable for the adviser.
A total fee of in excess of 2% pa, when you add in the advisers fee, platform fee, dfm fee, and fund manager fee, all based on funds under management, is not unusual – a huge drag on performance particularly for the larger portfolio.
It is no surprise that the online “no advice” platforms such as Hargreaves Lansdown and A J Bell are gaining market share. Using them will not totally avoid fees based on funds under management but it should reduce overall fees considerably and supporting “guidance ” fees are available on a fixed fee basis.
Many investors will need and can benefit from, financial advice. The problem is that paying for advice as a percentage of investable assets can become hugely expensive and it is not necessary for everyone.
If you would like to discover whether you are paying too much or would be better served by one of the non-advice platforms just use this link to arrange a complimentary 30-minute Zoom discussion.
Retirement Risk Zone: If you are in what I call “The Retirement Risk Zone“ – the three years before retirement and the three years after – this is a particularly important time for you, so do please get in touch. Just use this link to book your Zoom chat. Paying unnecessary fees could have a major impact on your lifestyle for the rest of your life.
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