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.

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.

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