Cavendish online and Fidelity

ViksB

Could some one tell me where I can find out what initial charges and annual charges I will be paying for a fund.
I can find out the official intial charges on the fidelty fund finder, but I can't see how to find out what will be rebated through Cavendish and what the annual charges are, or are they all rebated bar the £10??
I am sure the information is there but I just can't find it.
Viks

oldfella

depends on the fund - email Cavendish to ask them - they dont rebate the initial charge, you buy at the lower price - they rebate the 0.5% annual commission

Mike

ViksB

Thanks Oldfella,
Is the annual commission the same as the annual management fee charged by the funds?
Is the only way to find out the lower price is to email Cavendish?

Viks

oldfella

Is the annual commission the same as the annual management fee charged by the funds?

---

no - the annual fee tends to be around 1.5% - 0.5% is refunded

Is the only way to find out the lower price is to email Cavendish?

---

the only way I know to find out how much Cavendish discount the initial charge is to ask

moneyandmountains

oldfella wrote:

- they dont rebate the initial charge, you buy at the lower price -

Can you clarify what you mean here?

Do you mean that the Initial charge (say 5%) is reduced on purchase to say (2%)?

It is fairly easy to work out what the fund charges / rebate will be with Fidelity.
If you go to https://www.fidelity.co.uk and select 'I am an advisor', you can generate your own Key Features Document and Illustration. You select the fund, the amount and how much commision reate you want. Press the magic button and voila there you have a nice PDF of a KFD.

On the client side:
Once you have a Fidelity Fundnetwork account with Cavendish as the registered advisor, when you go to buy or switch funds in the client online site, then a Key Features Document with the appropriate Initial Charge etc. for Cavendish will be generated.

oldfella

the OP was implying the initial charge discount was rebated as a cash sum - this is incorrect, you buy the funds at the lower price

as far as I remember, the Cavendish discount isnt visible when you buy online - but when the info arrives its discounted back to 0% initial charge.

Mike

dunstonh

Is there any point using Fid Fundsnetwork through Cavendish? Whats their fee now? £35 (I dont know but dont they rebate initial commission for a flat fee?)

In which case an IFA may be cheaper on execution only as they can just submit the application for you and take no initial commission and not charge you the £35 (or whatever it is).

Chrismaths

Do you mean that the Initial charge (say 5%) is reduced on purchase to say (2%)?

It might do, but that's still rubbish. None of my client's have paid an initial charge on a unit trust or OEIC in years. So that basically means that you could go to an advisor who charged 2% upfront and rebated the trail, and still be better off than with Cavendish.

ViksB

Surely an IFA would take comission or atleast a fee? I doubt any IFA would buy some funds for me out of the goodness of their own heart?? (no offence dunstonh!!!)
I was under the impression that buying through selftrade, Cavendish etc would be cheaper than buying direct from Jupiter, Neptune etc, as you would get a proportion of the fees rebated.
I understand that there are initial fees (which are often rebated through discount brokers such as selftrade, Cavendish) approx 5%, then an annual management fee approx 1.5%. It appears from Martins article that approx0.5% of this is rebated.
So would buying through an IFA be cheaper? I don't understand how this can be possible.
Viks

Chrismaths

It depends on the fund. If there is an initial charge on a fund of 5%, then 3% of this is commission for the person selling it, and 2% goes to the unit trust company.

If you go to Cavendish, they will rebate you the 3%, (for a fee of £35), and then rebate you the 0.5% trail commission (out of an annual management charge of usually 1.5% on a retail fund). However, as an IFA or in my case investment manager, it is possible to get rid of the initial charge entirely, and even to get an increased trail (quite often we get 0.75%). In the case of a NMA like dh, he will probably keep 1% commission up front (still beating the likes of Cavendish by 1%), and then keep the 0.5% trail. In my case, I don't take commissions from unit trust companies, and rebate trail. But then we charge an annual management charge of around 1%, and provide a different service, so you can't really compare.

If you want a cheap broker, Hargreaves lansdown tends to be a better bet, as they will usually have negotiated the initial charge to between 0.5% and nothing, and usually rebate a part of their trail. But they won't provide you with advice or ongoing management. If you want a service you pay for it. If you want something cheap, you don't get a service. It's up to you.

dunstonh

Surely an IFA would take comission or atleast a fee? I doubt any IFA would buy some funds for me out of the goodness of their own heart?? (no offence dunstonh!!!)

I've done load of execution onlys with no initial commision. Its not done for goodness of heart. We still get paid for the funds under management upto 0.5% p.a. In advice cases, Its 1% commission and 0.5%p.a. for the funds under management.

The 0.5% is the natural commision that is paid from the annual management charge. That is the real income source for NMA advisers and discount IFA/brokers. Take HL and their SIPP. They must have over 100 million in that now and they are getting 0.5% on the bulk of it.

I do it slightly differently on pensions though with the hybrid SIPP/fund supermarket pensions over £100k and no advice given taking 0.1% fund based and rebating the rest and that means I beat HL. However, I cant do that on ISAs but they can (i wouldnt do it on ISAs anyway as it wouldnt be cost efficient).

So, yes, IFAs can do it but not all will and most old model or employed IFAs wont because they wont be the ones earning from it. It basically depends on their business model and the type of adviser (IFA covering a wide range of roles).

In my case, I don't take commissions from unit trust companies, and rebate trail. But then we charge an annual management charge of around 1%, and provide a different service, so you can't really compare.

For the service an investment manager offers, thats good value and money well spent. Advice, ongoing servicing, rebalancing and reporting can be worth the little extra it costs.