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  • FIRST POST
    • howticklediam
    • By howticklediam 6th Feb 18, 4:08 PM
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    howticklediam
    Fees for liquidating a managed portfolio on death
    • #1
    • 6th Feb 18, 4:08 PM
    Fees for liquidating a managed portfolio on death 6th Feb 18 at 4:08 PM
    A relative of mine has died and I am the beneficiary of the will. Some of the estate is in a portfolio managed by a well known wealth management company.

    I don't want to continue with the management firm, so I want to sell the shares and other investments. As selling the shares now is on an execution-only basis, i.e. I am not asking for investment advice, can they charge me the very high commission rate that they charged my relative for an advisory service?
Page 1
    • dunstonh
    • By dunstonh 6th Feb 18, 4:54 PM
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    dunstonh
    • #2
    • 6th Feb 18, 4:54 PM
    • #2
    • 6th Feb 18, 4:54 PM
    can they charge me the very high commission rate that they charged my relative for an advisory service?
    Commission has been banned since 2013 on advisory services. They can only charge fees.
    I am an Independent Financial Adviser (IFA). Comments are for discussion purposes only. They are not financial advice. Different people have different needs and what is right for one person may not be for another. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
    • howticklediam
    • By howticklediam 6th Feb 18, 5:02 PM
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    howticklediam
    • #3
    • 6th Feb 18, 5:02 PM
    • #3
    • 6th Feb 18, 5:02 PM
    That's very interesting because I have seen the last statement and the "dealing commission" on a couple of trades was ~£270. When I questioned it, the manager said that was their discretionary dealing commission. (I will however check that it was for an equity and not some other investment)

    When I look at the fund managers website, as you indicate, there is no mention of dealing fees, it's just a straight percentage.

    My relative was quite old and had the portfolio for a long time, certainly before 2013, I wonder if they just didn't get round to changing the T&Cs?
    • dunstonh
    • By dunstonh 6th Feb 18, 5:27 PM
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    dunstonh
    • #4
    • 6th Feb 18, 5:27 PM
    • #4
    • 6th Feb 18, 5:27 PM
    That's very interesting because I have seen the last statement and the "dealing commission" on a couple of trades was ~£270.
    That is not advice or advisory services.
    That is a transaction charge. Commissions are still possible in non-advised areas.
    I am an Independent Financial Adviser (IFA). Comments are for discussion purposes only. They are not financial advice. Different people have different needs and what is right for one person may not be for another. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
    • Thrugelmir
    • By Thrugelmir 6th Feb 18, 5:46 PM
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    Thrugelmir
    • #5
    • 6th Feb 18, 5:46 PM
    • #5
    • 6th Feb 18, 5:46 PM
    A relative of mine has died and I am the beneficiary of the will.
    Originally posted by howticklediam
    Who are the executors of the estate?
    Financial disasters happen when the last person who can remember what went wrong last time has left the building.
    • howticklediam
    • By howticklediam 6th Feb 18, 9:46 PM
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    howticklediam
    • #6
    • 6th Feb 18, 9:46 PM
    • #6
    • 6th Feb 18, 9:46 PM
    The executor is a family member.

    The actual wording is "dealing charges" and it is a percentage, round about 0.6%. Both transactions I have in front of me are for exchange traded funds, and are large, so the fee is probably appropriate, but rather high in my opinion. I haven't seen a straight equity transaction yet, but I imagine it will be the same.

    But if all I want to do is liquidate on a certain day and there is no other service being provided, shouldn't they do it at cost, or close to, which as we all know is considerably less.
    • dunstonh
    • By dunstonh 6th Feb 18, 9:57 PM
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    dunstonh
    • #7
    • 6th Feb 18, 9:57 PM
    • #7
    • 6th Feb 18, 9:57 PM
    But if all I want to do is liquidate on a certain day and there is no other service being provided, shouldn't they do it at cost, or close to, which as we all know is considerably less.
    But that would mean doing something that takes time, creates costs and future liability as well as reporting for free. Why would any business want to take on all that for free?
    I am an Independent Financial Adviser (IFA). Comments are for discussion purposes only. They are not financial advice. Different people have different needs and what is right for one person may not be for another. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
    • howticklediam
    • By howticklediam 6th Feb 18, 10:18 PM
    • 317 Posts
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    howticklediam
    • #8
    • 6th Feb 18, 10:18 PM
    • #8
    • 6th Feb 18, 10:18 PM
    Thanks for the reply. I thought there might be some legal standard practice for fees chargeable under these circumstances. It would seem not.

    I understand why they would not want to do it cheaply, but as we beneficiaries didn't sign up for a discretionary service, why should we pay higher charges for what is essentially a disposal, which costs the management company very little indeed.
    Last edited by howticklediam; 06-02-2018 at 10:21 PM.
    • bowlhead99
    • By bowlhead99 6th Feb 18, 10:38 PM
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    bowlhead99
    • #9
    • 6th Feb 18, 10:38 PM
    • #9
    • 6th Feb 18, 10:38 PM
    Thanks for the reply. I thought there might be some legal standard practice for fees chargeable under these circumstances. It would seem not.

    I understand why they would not want to do it cheaply, but as we beneficiaries didn't sign up for a discretionary service, why should we pay higher charges for what is essentially a disposal, which costs the management company very little indeed.
    Originally posted by howticklediam
    You havent signed up for any service. The service that the dead person had signed up for may have mentioned what fee schedule they would charge for services to his estate in the event of his or her demise (probate valuation, transfer out, liquidation etc).

    If they don't offer an execution-only non-advised service to personal representatives / executors of the estate, they will surely offer re-registration or transfer to someone that does.
    • howticklediam
    • By howticklediam 6th Feb 18, 10:54 PM
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    howticklediam
    This follows a phone call today with the management company. There was no discussion of what was agreed in the T&Cs upon death, maybe they were errant in not dealing with that considering the age of the client (and presumably the age of many of their other clients).

    Anyway, there was, at the end, a brief mention of transferring the assets, but no indication of the cost. Maybe that is the way to go, but they were a bit slow in making the suggestion.
    • Tom99
    • By Tom99 6th Feb 18, 11:25 PM
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    Tom99
    Transferring to a cheap platform may save money. I did this a few years ago, there was a transfer out charge of £20 per holding but that was a lot less then the original firm would have charged to sell the shares.
    • kidmugsy
    • By kidmugsy 6th Feb 18, 11:28 PM
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    kidmugsy
    I don't want to continue with the management firm, so I want to sell the shares and other investments.
    Originally posted by howticklediam
    That makes no sense. Why would you sell the shares just because you don't like the management company?
    Free the dunston one next time too.
    • howticklediam
    • By howticklediam 6th Feb 18, 11:59 PM
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    howticklediam
    Transferring to a cheap platform may save money. I did this a few years ago, there was a transfer out charge of £20 per holding but that was a lot less then the original firm would have charged to sell the shares.
    Originally posted by Tom99
    That sounds more like it. I'll see if I can do something similar.
    Last edited by howticklediam; 07-02-2018 at 1:21 AM.
    • howticklediam
    • By howticklediam 7th Feb 18, 12:01 AM
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    howticklediam
    That makes no sense. Why would you sell the shares just because you don't like the management company?
    Originally posted by kidmugsy
    Because I'm not impressed with the investment mix or its returns.
    • Malthusian
    • By Malthusian 7th Feb 18, 10:31 AM
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    Malthusian
    This follows a phone call today with the management company. There was no discussion of what was agreed in the T&Cs upon death, maybe they were errant in not dealing with that considering the age of the client (and presumably the age of many of their other clients).
    Originally posted by howticklediam
    You said that your relative was quite old and opened the portfolio at least 5 years ago (so slightly younger than quite old). Nothing there suggests they didn't have mental capacity to understand the charges they signed up to.

    Anyway, there was, at the end, a brief mention of transferring the assets, but no indication of the cost. Maybe that is the way to go, but they were a bit slow in making the suggestion.
    If I try to buy a bag of potatoes in Sainsbury's for £1 they're not obliged to tell me I can get the exact same thing for 80p down the road.

    Transferring the portfolio may well be the way to go, but the current manager is doing nothing wrong.
    • howticklediam
    • By howticklediam 7th Feb 18, 10:47 AM
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    howticklediam
    You said that your relative was quite old and opened the portfolio at least 5 years ago (so slightly younger than quite old). Nothing there suggests they didn't have mental capacity to understand the charges they signed up to.

    If I try to buy a bag of potatoes in Sainsbury's for £1 they're not obliged to tell me I can get the exact same thing for 80p down the road.

    Transferring the portfolio may well be the way to go, but the current manager is doing nothing wrong.
    Originally posted by Malthusian
    My relative's mental capacity was excellent until the end, but I would expect as a client's age advances that a highly-paid portfolio manager looking after 'long term strategic investments' might have raised the subject of what you want to happen after death. Although not strictly in their remit, I'm not sure where the boundary lies between IFA and full-blown wealth management, it would seem the ethical and at least thoughtful thing to do.

    I don't think the management company are doing anything wrong, but again, it seems to me that they are trying to squeeze another ounce out of those who might be less wary. That, more than anything, puts me off staying with them.

    At the end of the day it's up to them how they are perceived by their clients.
    • howticklediam
    • By howticklediam 7th Feb 18, 11:18 AM
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    howticklediam
    @dunstonh
    That is not advice or advisory services.
    That is a transaction charge. Commissions are still possible in non-advised areas.
    Originally posted by dunstonh
    Can you expand a bit on this please? What is the difference between a dealing charge, if that charge is a percentage of the consideration, and commission.

    I thought they were the same thing but I think I am getting my terms mixed up. Thanks
    • bowlhead99
    • By bowlhead99 7th Feb 18, 11:41 AM
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    bowlhead99
    My relative's mental capacity was excellent until the end, but I would expect as a client's age advances that a highly-paid portfolio manager looking after 'long term strategic investments' might have raised the subject of what you want to happen after death. Although not strictly in their remit, I'm not sure where the boundary lies between IFA and full-blown wealth management, it would seem the ethical and at least thoughtful thing to do.
    Originally posted by howticklediam
    Right, and you haven't any evidence that they didn't communicate with your relative about what he/she wanted to do after their death or what their goals and objectives for the portfolio were.

    For example, the portfolio might have low returns precisely because it was deliberately in low risk assets to avoid falls in value before it was given away to / inherited by the next generation. Or it might have a higher risk profile because the deceased was not bothered about being to spend the money and wanted to maximise potential growth to set the heirs off on a good path. There's no suggestion from what you've told us that the wealth manager / advisor didn't have those conversations.

    And as part of that conversation, your relative might well have said "so, in practice,, if I die which I'm not planning on doing just yet, what will happen to the investments?".

    And the advisor / relationship person may well have said, "well, the investments will still exist and remain invested in accordance with your existing strategy with all the future benefits, rights and obligations of those assets accruing to your estate, and the existing charging structure will continue. If your personal representatives decide they'd like to change the strategy, we can work with them to adjust the portfolio and manage the funds in a different direction. Of course, the executors or beneficiaries might not want to continue the relationship and if they want to take the assets elsewhere we'll let them do that, charging £x00 per line of stock to facilitate a transfer".

    And to that, your relative probably thought, fine - if I'm dead I don't need it and what has been proposed doesn't seem unreasonable.
    I don't think the management company are doing anything wrong
    No, me neither. But your complaint seems to imply that they are not being ethical, and they should have considered the person's age when coming up with a portfolio and a charging structure, and they are probably ripping off their other clients who are also old. Whereas you don't have any reason to believe that they did not fully discuss with their clients what happens, or that the clients are unhappy that the default position on the event of death is that the assets remain invested until transferred out.

    You mention your relative had "excellent mental capacity until the end". So, I have reason to doubt that they would have been unaware what the firm was doing. The relative may not have inquired whether at some unspecified point in future their heirs could take over the management of the assets and trade on specific dates and times on an execution-only basis via their service. But probably neither your relative nor the asset management firm thought that option needed discussing, if the options of keeping the investment as is, or signing up to advised services with a new strategy, or transferring it elsewhere, all exist. They probably didn't brainstorm every "what if" scenario because they can't predict what you are going to want to do.
    At the end of the day it's up to them how they are perceived by their clients.
    True. But if you are not their target market as you have your own ideas on what you want to do, and don't like their advice, service offering or pricing, it's no skin off their nose if they don't bend over backwards to please you.

    If you come onto a DIY investment site and tell others that you don't like them because they didn't sell you an execution only service and didn't offer you a transfer until they'd ascertained you wouldn't be convinced to stay, again that is no major loss to them. Some (like me) won't perceive them badly for it ; others might, but weren't going to appoint them anyway...

    I realise that bereavements are not pleasant so apologies if this doesn't come over as overly sympathetic. Similarly, don't shoot the messenger if we're just trying to give you some feedback on how this stuff might legitimately work. We're not employees of the firm concerned.
    Last edited by bowlhead99; 07-02-2018 at 12:41 PM.
    • dunstonh
    • By dunstonh 7th Feb 18, 11:51 AM
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    dunstonh
    Although not strictly in their remit, I'm not sure where the boundary lies between IFA and full-blown wealth management, it would seem the ethical and at least thoughtful thing to do.
    And IFA provides advice on financial planning. They will recommend products and services and investment funds. They do not carry out the investment management. That is left to the various fund houses and fund managers.

    it is also worth noting that on notification of death, any ongoing remuneration paid to the IFA ceases. So, the contract ends at death on the advice side. The executor can employ the IFA but it would be a new agreement with a new charge. Product providers/fund houses have to continue due to their nature.

    Can you expand a bit on this please? What is the difference between a dealing charge, if that charge is a percentage of the consideration, and commission.
    The commission is paid to someone that is factored into the overall charges but may have no relation to the actual charge made. i.e. charge maybe 1% but they pay a commission to someone for 0.5%. A fee is an explicit charge that you pay.

    Sometimes terminology is mixed up. However, on advisory services, it is clear cut. On transaction charges, not so much.

    Its not clear from your posts whether this is a managed portfolio service from a discretionary manager or a selection of funds/investments held on a platform. (or a hybrid where you can turn the DFM side off with a button press.
    I am an Independent Financial Adviser (IFA). Comments are for discussion purposes only. They are not financial advice. Different people have different needs and what is right for one person may not be for another. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
    • howticklediam
    • By howticklediam 7th Feb 18, 1:14 PM
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    howticklediam
    Thanks #dunstonh. It's a managed portfolio service from a discretionary manager.

    #bowlhead99, don't worry I'm not getting upset, I'm grateful to see your side of the argument. It may well be that those conversations took place, but my initial request was a very simple and unbiased one that seems to have taken on a life of its own.

    I'm not trying to accuse anyone of anything, if it's come over that way it's inadvertent, and I have deliberately not named the company in question. I didn't ask for an execution-only service, I asked how I could liquidate the funds with least fuss. But I was a little dismayed when the conversation basically was, 'yes of course you can have your legacy but we'll charge you 0.6%.' I would have expected the conversation to go more like, 'in your circumstances the best thing we can do is...'

    Maybe I just want to see the best in everyone and it's useful to see how you've framed it from the perspective of the manager.
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