Trust fund management fees. What's reasonable?

sfwood1

Hi all

My mother-in-law and her sister have two trust funds that were left to them by their parents. She told me yesterday what fees she's paying: 1.5% pa of the capital plus a percentage of the interest and the stock broker also gets a fee. It's extortionate!

Does anyone have any advice as to what I should do to help my mother-in-law receive better value for money? Should we just ask for a reduction in fee? Can we complain? Can we switch the trust to be managed by someone more reasonable?

dunstonh

She told me yesterday what fees she's paying: 1.5% pa of the capital plus a percentage of the interest and the stock broker also gets a fee. It's extortionate!

Have you checked to see what she is saying is correct as those figures are not normal. 1.5% all in would be in the ballpark.

Or it could be a broker that is explicitly charged and whilst the funds have a 1.5% retail cost, you then have to consider the commission rebates as that is what happens on fees.

Does anyone have any advice as to what I should do to help my mother-in-law receive better value for money?

First of all is to check what she is paying and not assume what she has told you is correct. I suspect that there is some misinformation here.

1 - if the adviser/broker is on fees then that means they are not paid commission. So, commission paying investments would get commission rebates back into the investment.
2 - when you say trust fund do you mean unit trusts of that the money is held in trust?
3 - when you say stockbroker do you mean stockbroker or adviser or discretionary fund manager (stockbrokers tend to deal with direct investment, not funds)

There is no point making any decision without actually knowing the facts.

sfwood1

Thank you for replying and so quickly!

I am sure that she's paying 1.5% plus additional fees as I reviewed the paperwork.

I'm not familiar enough with the roles people play to answer all your points. The money is being held in trust. The people that write to her are Lloyds Private Banking and they take two fees; the 1.5% of the capital, plus an additional percentage of the interest (not sure how much but it's a much smaller number). The 'stockbroker' is Rathbone and they also take a fee.

Thanks again.

xylophone

Who are the Trustees of the Trusts?

bigadaj

I'd agree that we need to confirm all teh facts but woudk it be really unusual to be charged those fees, particulalry as they might well have been in place for decades; let's be honest, no one in financial services would voluntarily reduce their fees without competition or the threat of losing business, and considering these could have been in place since the seventies or earlier then those fees were probably quite normal then.

grizzly1911

sfwood1 wrote: »

Thank you for replying and so quickly!

I am sure that she's paying 1.5% plus additional fees as I reviewed the paperwork.

I'm not familiar enough with the roles people play to answer all your points. The money is being held in trust. The people that write to her are Lloyds Private Banking and they take two fees; the 1.5% of the capital, plus an additional percentage of the interest (not sure how much but it's a much smaller number). The 'stockbroker' is Rathbone and they also take a fee.

Thanks again.

How did the money come to be held in trust?

Was there money invested by them or for them and as such simply an investment or was it set up by a relative, perhaps as the beneficiary of a will, to provide them with an income and stewardship of the assets until a certain date/life event?

Is the trustee acting as a surrogate guardian of the investment making decisions on things like when paymernts can be made and to whom or simply the "managing agent" for investment products?

dunstonh

The people that write to her are Lloyds Private Banking and they take two fees

Lloyds Private banking is a discretionary fund manager. Not a very good one as they are biased towards Scottish Widows products and known to be expensive but that is normal with banks. You used to get double layered fees on these where funds are used. Typically, most discretionary managers would rebate the commissions and charge an explicit fee. Most would use direct assets although some would use OEICs.