Cheapest way to buy funds discussion

Anybody else buy funds through a discount broker ???. If so your comments would be appreciated.

Surely somebody else has somthing to say on this subject.

I don't know why Martin got the Cavendish stuff so wrong.
There is a maximum initial charge of 0.25% with any fund since you'd buy a fund with no initial charge then *switch* to the fund you really want. Switching costs only 0.25% regardless of the fund's normal initial charge. and the £10 is taken off the 'renewal commission', not the 'dividend' as Martin says.
The £10 fee applies once per account, not per fund so the more PEP's/ISAs with cavendish you have, the more renewal commission you get refunded - again this is different from what Martin seems to be suggesting unless he means products other than collective investments.
At the next tax year, if you apply though the fidelity website, then there is no fee payable to Cavendish to taking out further investements for the new tax year.

I've had occassion to phone and email Cavendish a number of times over the last year and so far they've been helpful and prompt if a little terse sometimes.
I've also received my first renewal commission refund cheque.

It's all a bit strange at first and requires a bit of head scratching and form filling but it's ultimately worth it.

No particular connections apart from a slightly worrying affection for helping me making the most of my money.

Chippy_Minton wrote:

Could someone please explain the annual management charge and renewal commission. Are they the same thing? Is the renewal commission % rate included in the AMC % rate? E.g. if AMC is 1.5% and broker's renewal commision is 0.5%, does the 0.5% come out of the 1.5%?

Thanks for any explanations!

amc and renewal commission are not the same thing.

the renewal commission, comes out of the annual management charge and is not additional.

blinko wrote:

the renewal comission i think is based upon the funds beliving that your advisor is still providing a service to you and he gets a little bit of a percentage and hence discount brokers etc will pass a little saving on to you !

Not necessarily. You can choose to take full upfront commission or a lower amount and trail commission. It usually takes 4-5 years for the trail commission to break even with full initial. Either method has no impact on charges to the client but obviously could impact on discounts given back.

I would think that most employed IFAs or those attached to a firm would take full initial whilst owner/partner IFAs would be inclined to take the lower intial and the trail commission.