Typical investment fees

50Twuncle

We have a bit of money invested in a large (reputable ?) Investment company who are (I feel) overcharging us for their services - management fees with the intermediary fees - works out at about 2% pa - is this average or are we being ripped off ?
Especially when the investment itself is reducing in value ....

Reaper

Probably. That certainly sounds high but it is hard to say without details. If they are unusual investments with high charges (eg VCTs) then the broker might not be making very much on top. But certainly I would not invest in anything that had to grow by 3% pa just to break even.

EDIT: I see you have changed your post from 3% to 2% since I wrote the above which make quite a difference. In which case it depends what you invested in and how much advice you need (i.e. could you DIY?)

50Twuncle

Reaper wrote: »

Probably. That certainly sounds high but it is hard to say without details. If they are unusual investments with high charges (eg VCTs) then the broker might not be making very much on top. But certainly I would not invest in anything that had to grow by 3% pa just to break even.

EDIT: I see you have changed your post from 3% to 2% since I wrote the above which make quite a difference. In which case it depends what you invested in and how much advice you need (i.e. could you DIY?)

Yes - on closer inspection, it is closer to 2%
The intermediary fees is what gets me - every quarter, we get management fees which are matched £ per £ by the intermediary fees, who has simply introduced us to the company and makes annual visits to see us - I doubt whether we can go straight to the company either !!

50Twuncle

Reaper wrote: »

Probably. That certainly sounds high but it is hard to say without details. If they are unusual investments with high charges (eg VCTs) then the broker might not be making very much on top. But certainly I would not invest in anything that had to grow by 3% pa just to break even.

EDIT: I see you have changed your post from 3% to 2% since I wrote the above which make quite a difference. In which case it depends what you invested in and how much advice you need (i.e. could you DIY?)

Yes - on closer inspection, it is closer to 2%
The intermediary fees is what gets me - every quarter, we get management fees which are matched £ per £ by the intermediary fees, who has simply introduced us to the company and makes annual visits to see us - I doubt whether we can go straight to the company either !!
We paid about 4% set up fees as well

Reaper

It is hard to comment when you have given no details. You say "I doubt whether we can go straight to the company" but I am not sure why. Are the investments only accessible by IFAs perhaps?

If you feel the broker is no longer giving value for money then (depending on the nature of the investments) you can transfer them to another broker, even a cheap execution-only (i.e. no advice) broker like Cavendish if you want.

It's unusual to be charged set up fees these days but without knowing more we can't really say if you have been overcharged.

dunstonh

What are the breakdown of the fees. It should be
x% to adviser
y% to platform/provider
z% to investment fund

gadgetmind

50Twuncle wrote: »

works out at about 2% pa - is this average or are we being ripped off ?

Achieving 1% even with an IFA on board is pretty easy. If you DIY, then 0.5% or below is possible, but it doesn't depend on what you want to invest in and the sums involved.

2%pa is going to be a serious drag on performance given the low return environment that many predict we face for some time.

50Twuncle

We were charged an eye popping £7920 during the first 10 months of holding the investment account
Just worked it out - with almost £4,500 introduction fees and an ongoing fee of around £900 per quarter (half to the FA and half to the investment company) - resulting in an overall loss of approx. £1500 - I am guessing that the advice will be to pull out asap ?

eskbanker

50Twuncle wrote: »

We were charged an eye popping £7920 during the first 10 months of holding the investment account
Just worked it out - with almost £4,500 introduction fees and an ongoing fee of around £900 per quarter (half to the FA and half to the investment company) - resulting in an overall loss of approx. £1500 - I am guessing that the advice will be to pull out asap ?

What does the FA advise?! The wisdom of pulling out will obviously be heavily influenced by what you plan to do with the money next, but doing so now will ensure a loss rather than giving the investment the opportunity to recover the intro fees....

50Twuncle

Thanks - we have a meeting with our FA in a few days
No plans at the moment- the money is for long term plans