Fee transparency and relative fund performance are front of mind for our users this month, but they are also thinking about tangible assets that might contribute to their wealth plan too.
The tide has turned fee transparency
Most readers of the financial pages will know that one of the UK’s biggest wealth managers was recently forced to reduce its fees across the board and scrap exit fees in their entirety amid a furore which attracted significant negative coverage and hammered its share price.
At the heart of the affair are new Consumer Duty rules requiring that firms prove they are providing fair value and the explain the value exchange for each element of their fees. It could be seen as a warning shot across the bows of any market participants who aren’t doing their absolute best on this front, but more important in our view is how these events have highlighted to clients the need for complete fee transparency – and knowledge of what they all mean.
At the heart of the affair are new Consumer Duty rules requiring that firms prove they are providing fair value and the explain the value exchange for each element of their fees
Private clients can only weigh up potential providers if they have a sense of how fees are likely to weigh up against performance, and if they are comparing like for like as far as possible. We can help with both elements of making a true comparison: our Knowledge Centre will let you know What to expect from wealth management fees and we can set up meetings with a shortlist of best-matched providers fast and free.
Fund outperformers list spurs a hunt for value
Real fund outperformers were highlighted in a recent study by Citywire based on ARC, and it seems that those figures have sparked real frustration among some HNWI investors.
The research looked at fund returns over the past tumultuous three years and the fees which bought that performance, finding that it was possible for savvy investors to have made gains of 30% or even more over the period – and to have paid fees in the region of just 0.3% a year in some instances.
The problem for the DIY investor is that past performance is of course no guarantee of future performance, and there are thousands of funds of all types to choose from too
As you might expect, the stellar performers were in the aggressive category, investing predominantly in equities, but balanced and even cautious funds were found to have delivered 15-19% in some cases. All this goes to underscore just how important it is to pick the right funds to populate your portfolio – ones which offer strong performance and also reasonable fees that won’t negate returns.
The problem for the DIY investor is that past performance is of course no guarantee of future performance, and there are thousands of funds of all types to choose from too. You might find that letting a professional wealth manager take the strain for you is actually a more economical choice, since they will be hyper focused on sifting the investment universe on the basis of institutional-grade research; wealth managers are also able to access institutional and therefore cheaper share classes as an additional bonus for clients.
Top Tip
Helping our users to secure better value wealth management relationships is one of the best parts of our job. While leading providers of the type we feature on our panel work really hard to be competitive, it’s clear that there are less scrupulous firms out there which may have been layering on fees in ways which clients often didn’t fully understand.
We can have a very illuminating conversation with users about fees and performance comparisons. Simply take our
short wealth manager matching questionnaire to meet a shortlist of leading providers fast and free or get in touch for an informal chat.
Lee Goggin
Co-Founder
‘Tis the season for tangible assets
While we pride ourselves on offering our High Net Worth Individual users a Knowledge Centre which covers every aspect of managing, and this certainly includes lifestyle/leisure topics; sometimes those cross over nicely as well.
We recently published a piece by Brego, a vehicle valuations and data company, which illustrated how luxury cars can be a high-powered investment too, and this proved to be very popular. However, the impending gifting season has got users thinking about tangible assets of many forms: recently, we’ve spoken to users about wine, whisky, art and jewellery (although we’re certainly more fans than advisers in any way!).
Tangible assets can certainly be a sound investment, as well as a great gift to loved ones or even yourself. But clearly, picking the right items to buy at the right time is a highly esoteric matter where it pays to get truly expert advice
Tangible assets can certainly be a sound investment, as well as a great gift to loved ones or even yourself. But clearly, picking the right items to buy at the right time is a highly esoteric matter where it pays to get truly expert advice. A good wealth manager will be able to look at your portfolio in the round to determine what kind of passion investments are feasible for you; the best, however, may well have experts in house who are able to advise on the ‘classic’ types of tangible asset, and possibly the more unusual collectibles too! Tapping into specialised expertise (and passion) is one of the lesser-appreciated benefits of having a dedicated adviser.
Verifying value judgements
The nature of our matching service of course means that we encounter plenty of wealth management clients who are seeking better performance or lower fees (and very often both). Yet recent weeks has seen a really noticeable uptick in people wishing to verify that they really are getting good value.
We have over a decade of experience in helping people to optimise their wealth manager relationships and can provide oral or written guidance to help clients weight up providers no matter what their level of experience.
Dive straight into our free matching service if you are already sure what you need. Alternatively, get in touch to speak to our friendly, unbiased team.
Important information
The investment strategy and financial planning explanations of this piece are for informational purposes only, may represent only one view, and are not intended in any way as financial or investment advice. Any comment on specific securities should not be interpreted as investment research or advice, solicitation or recommendations to buy or sell a particular security.
We always advise consultation with a professional before making any investment and financial planning decisions.
Always remember that investing involves risk and the value of investments may fall as well as rise. Past performance should not be seen as a guarantee of future returns.
