We have always promoted the view that our clients should be able to see exactly how much they pay, and for what, in respect of their pension and investment plans.
A simplistic but realistic way to consider this is that there are generally three parties involved in modern pension and investment products; the product provider, the investment fund manager and the adviser.
Where the product provider is a “platform” (sometimes called a wrap provider) there is usually a fee expressed as a percentage of the investment assets held on that platform.
There are sometimes transaction fees involved for the buying and selling of investment assets as well.
However, these charges tend to be totally transparent and detailed in the terms and conditions of the platform provider.
In respect of the adviser, and we are no different to many other advisory firms, there should be absolute transparency with advice, implementation and review fees all expressed as a monetary amount (even if they are calculated as a percentage of assets).
Our regulator the Financial Conduct Authority (FCA) requires full monetary disclosure to retail clients by their financial adviser.
When it comes down to the fund manager it is often very easy to establish the annual management charges, again expressed as a percentage of the investment assets.
However, there are sometimes other costs to add to the annual management charge and these are not always as transparent as we would like.
A recent investigation by the Office of Fair Trading has apparently identified as many as 18 separate transaction costs many of which are hidden from the easy sight of the investor.
In this day and age any hidden costs are frankly unacceptable.
As guardians of our client’s financial well being we object as much as they do to any lack of transparency – the fund management sector needs to remember whose money it actually is!
