Category Archives: Investment Charges

Investment Charges – Watch your fund get smaller.

Invest In Unit Trusts? Like millions of others, perhaps you have OEIC’s or pension funds, managed insurance funds. There are many names for them, and many providers. One way the industry helps itself – by adding in some complexity. Bit like trying to compare mobile phone charges etc.
Have you checked the fees? Think you’ll be shocked or even annoyed to find out how high they really are. The Economist run an article a few weeks back. It makes for an interesting read.
Following on from a report by the Financial Services Regulator the FCA even the bastion of the middle class writing seems be concerned about what is actually happening to their own readership when it comes to investment fund charges.

Not Sure How Much You Pay In Charges – template letters are available.

  It’s something I have been concerned about for many years, yet something various regulators have been refusing to address. Indeed most of the popular ‘personal finance’ columns have been willing to ignore the problem but the Economist saves the day as it’s the same high charging fund managers that pay for large scale advertising in the same mediums that these columns appear in. No vested interested I’m sure.

Some of my (well old) post’s are linked below.
High Pension Charges
Investment Charges
In all fairness the Economist has a right to be concerned. Some years ago the Blair Government got all stroppy about investment charges, nothing happened. Then Cameron and co got all besides themselves, nothing happened.
“Please don’t make us lower our charges just to benefit the consumer” the industry wailed. Ok said Blair/Cameron – and they  kicked it down the road. That’s one a future administration will have to sort out.
This is what Blair and Steve Webb had to say

Blair and Steve Webb On Pension Charges

Only it never really happened.

And Cameron

David Cameron promises to tackle fee transparency


Don’t hold your breath for any of these changes to arrive at most pension schemes anytime soon. Despite  the fact that pension charges are the only thing that you really have any control over. Your money, and industry deliberately do their utmost to obscure what you actually pay.

Let me ask, what are the charges under your pension plan?

Didn’t think you’d know!

You should be concerned, with some twenty percent of your investment being deducted in charges every ten years, you’ll be lucky to make money from many of these investments.
Reality is, as an investor you are likely to end up paying…
.50%  – 1% Adviser charge

1.5% – 2.5% Investment Charge

.3% – .50% Wrap or Platform Charge.
Annually

That’s 2.3% on the lowest side and 4% on the highest side. Do that maths and on that and you’ll note that the total costs of investment of £100,000 are £23,000 every ten years [lowest] £40,000  on the higher amounts.

Factor in most financial advisers initial charges (circa 3%) and these become £26,000 and £43,000 respectively.
With average fund performance [Pensions] across the industry over the last ten years being less than 6.5% (Source Trustnet) you’ll be lucky to be making more than inflation  if you end up investing in one of these products.
For most consumers of financial products you’ll find that these charges are buried under a pile of information that is designed to throw you off the scent, if you are thinking about investing in number of funds, you’ll have to look at at least one document, or possibly even five or more before you can work out what your costs are.
It’s bloody complicated and I think the fund management industry does it’s utmost to make sure you consumers don’t fully understand how these things work in practice. Let me ask you the question now, how much are the charges on your ISA, your Pension or your other savings?

How much does your adviser charge?

How much is the wrap or platform charge?

If you can find out the answer to the that you’ll be part way to solving the high charges problem.
I have a templated letter you can use in order find out the truth, all you need do is drop me a line, ask for the letter, please tell me if it’s for a pension or a non pension investment and I’ll get it back to you. Once you have the information back, get in touch and I’ll tell you what to do next.

Get in touch today for your copy.

Two IFA’s In A Pub.

 

On Friday of last week I was standing in the King and Queen pub [Brighton] with one retired Independent Financial Adviser and one currently authorised by the @FCA.

MoneyTrainers - FIdelity

I have known these two people for over twenty years and had in the past supervised them both, this meant that I had to check their advice and comment accordingly. Certainly both of them are what you would call experienced and competent advisers.

We’d had a very nice lunch and were now enjoying large rum and coke’s in order to round of the afternoon – a great time was had by all.

Despite having enjoyed a few drinks the talking became more and more serious when I was explaining to them one of the investment strategy’s I teach over here at MoneyTrainers.

Of course both of them explained that neither of them could do what I do because of the regulator.

That was interesting to me – both of these experienced financial advisers were not able to do the best thing for their clients because of the regulator.

 

Effectively the regulator is more concerned about regulating than consumers getting the right investment planning in place.

But I think it’s deeper than that. I think that the wealth management industry which includes many independent financial advisers don’t do the things I teach because they either can’t be bothered or they refuse to understand. Of course thirty years ago their approach would have been understandable, but in 2015 something is terribly wrong.

Importantly the one thing that we kind of agreed on – the investment returns from one fund had been good. The fund in question was the Fidelity Special Situations fund.

Indeed it is a good fund. But just one of my suggested funds has ‘knocked it into a cocked hat’ over a consistent period of time and for two reasons.

  • It is not trying and failing to be a better performer than the respective indexes.
  • Nor does it  make you pay for the attempt to beat the respective index.

You can continue to pay your fund managers and IFA’s for the privilege of having under performing investments or you can take control yourself and benefit in knowing that your path is a right one.

Even if you only get the same investment returns as the star manager from one of my strategies you will still be better of because charges will be at least ten percent lower every ten years.

MoneyTrainers – teaching you the truth about money.

Just so you know my Be Your Own Pension Adviser training is available now. Get in touch for more details.

For your Free Online – Money Course send me your details below.




MoneyTrainers – The Truth About Financial Advice

MoneyTrainers.

Since 1988 when Financial regulation first started to have an impact in the UK consumers have struggled to find genuine impartial and independent financial planning advice. And despite the promises made via government departments and the financial regulators not much has changed since then.

I think it’s fair to  say that the effect of regulation has been just to give us more regulation and has added little value to the consumers of financial products. Financial services mis-selling and wholesale mis-selling by the banks has further damaged trust in the sector.

For consumers getting access to high-quality financial advice and information has been and difficult in recent years. Nearly all financial advisors have to operate on a strict fee basis which means you have to pay per hour for advice and guidance. Despite the fact that the advice industry is contracting the information and knowledge you require in order to manage your own finances is now widely available to everybody.

Information that was once only available to a few insiders is now available publicly via the Internet. MoneyTrainers has been set up by an ex industry professional in order to ensure that you can get access to the right information to be able to manage and plan your finances by yourself, along with providing the tips and tricks you need to be able to make the most of what you have.

Do it yourself financial planning has never been easier, and importantly by taking control of your own finances and learning about how money really works is now easy – you just need to be aware of a few tricks.

Let’s consider pension planning as a starting point. If you are unlucky enough to have one of the highest charge providers in the market place you could see some 40% of your pension fund disappear in charges over the next ten years. Even with a low charging plan – you could see 15% go, and that’s before you have considered the other downsides to pensions.

1. No access until age 55.
2. Limited choice of investment funds.
3. Myth of Tax Relief.
4. High charges.

These are just a few of the downsides.

No matter what financial product you choose to invest in there is an entire industry waiting to rip you off. Which is why this training is so valuable.

MoneyTrainers – teaches ordinary people to do extra ordinary things with their finances.

For your Free Online – Money Course send me your details below.




Personal Debt and Small Business Debt.

So how is it for you? Are things going great?

Money flying in through the door – you need to open another bank account because the first one you opened is full!

Or are things a bit desperate with funds a bit depleted?

I work with small firms and individuals to help them manage money. I bring over twenty years of hands on experience  covering all aspects of financial planning

Debt and Borrowing Managing Investments Balancing Budgets Divorce Financials

Nothing complicated just a range of financial planning  that is kept hidden from most consumers by the industry.

We leave you with a plan, knowing what works and what doesn’t – teaching you how to extraordinary things with your finances.

Contact  us today, you will find us a bit less stuffy than your average IFA with a few more ideas  and  no products to sell. Only an education to get, and a vastly reduced cost with no ongoing charges.

 
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Money Trainers – Teaching You How To Manage Your Money – Charges.

When any price war starts there are rarely any winners, however I think I have found one that is good for consumers that want to invest.

 

During my 26 years providing financial advice to individuals there has never been a better time to manage your own investments, quite simply you as a consumer can now get the same information that was once hidden from view. Importantly with traditional investment fund managers getting things so badly wrong, now is the best time in history to start making your own investment decisions.

 

One thing I have always focused on is the issue of charges, an annual charge of 2% may not seem large  – but 20% of your fund being deducted every 10 years should be unpalatable for many. Yet there are still a good number of investment options that are charged at even higher rates than this (still).

 

Recently I have been having a close look at pension funds, with poor investment performance and charges conspiring  to make most pensions just about the worst investment you could make. Now with a change of rules they are a little more palatable, but I am even less convinced about the use of conventional pensions for many, and given my own problems with pensions not fitting my lifestyle I am even more sure than ever.

 

The good news – with a kind of price war going on between managers of index tracking funds and ETF’s (these are pooled investments – similar to a unit trust but purchased and sold like a share) we can now all get access to investments with charges  so low we should be buying them in droves.

 

Todays news that Fidelity have matched Vantage and Blackrock by reducing charges across as range of funds is fantastic news. It is now possible to obtain access to a fantastic and well performing tracker fund with charges of .10% (you read it correctly) noting that the FTSE 100 index beat just about all other pension and insurance investments and nearly all unit trust investments over the last ten years or so.

 

The world has changed, and you no longer have to accept the things that are placed in front of you by your bank or adviser.

More information about ETF’s

 

ETFs are funds that are traded on a stock exchange like shares. They are a pooled investment fund, where an individual can gain exposure to a particular index or commodity, providing the investor with the same returns as the underlying market.

 

There is an extremely wide range of ETFs available to the investor, who can invest in things as diverse as soy beans, forestry and timber, as well as a FTSE 100 tracker or corporate bond fund ETF. They are a type of passive investment, meaning there is no asset-selecting fund manager supported by an active management team. Instead, as the process is highly automated ETF fees are very low – less than 0.5% in most cases.

 

If you want to invest in the overall FTSE 100 Index, you can buy an ETF that will mimic the movements of the FTSE 100. When the FTSE 100 goes up, your ETF will increase in value.

 

When the FTSE 100 goes down, your ETF will decrease in value. – See more at:http://www.morningstar.co.uk/uk/news/122230/what-is-an-etf.aspx#sthash.8chHjkSM.dpuf

 

For your Free Online – Money Course send me your details below.