Investment Fees are 'Unsustainable' and Will Fall

The catalogue of fees paid by investors who use financial advisers is too high, says one asset manager, who calculates post-regulation transparency costs 2.4% a year

Emma Wall 26 November, 2013 | 2:08PM
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Investors who use financial advisers are being hit with a catalogue of fees, eating into profits and leading to underperformance. Some investors are losing as much as 2.4% a year in fees, thanks to regulation which requires advisers to be up-front about their charging structure.

Most IFAs now charge an annual fee as well as an hourly rate for advice. Dependent on the size of the investor's portfolio, a typical annual charge could be made up of 0.75% of the value of the client's assets to pay for the advice, 0.35% for portfolio management, a further 0.25% in platform fees and then an average fund management charge of 1.05%. In total this means a shocking 2.4% in annual fees.

Schroder's head of UK intermediary Robin Stoakley said that this was unsustainable.

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Emma Wall  is former Senior International Editor for Morningstar