Am paying 1.7% charges on large investment pot. Is this too high?

mattwill

I have a pension pot of just over £1m and some other investments. These are all managed by Smith & Williamson. They tell me that their charges are 1% of the total value of the investments and that the funds they invest the money in typically charge around 0.7% so a total cost of around 1.7%. I guess this means that my total return is reduced by around this amount?
Anyone know if this is the right amount to pay? Or am I being an idiot?
Thanks

Andrew31

Could find a lot cheaper if you were so inclined. 

Prism

The fund charges of 0.7% are about right assuming these are active funds - you could get them down much lower if you preferred passive ones. The 1% includes the platform charge I assume - probably also a bit on the high side.
For reference my DIY charges are about 0.9% for the funds and 0.2% for the platform.

[Deleted User]

Yes. Anything over 0.5% is too high in this day and age. And yes, your pot of money gets charged 20 thousand pounds every year again and again and again whether you gain or lose. 

Sailtheworld

With A J Bell ETFs are around 0.2% and £100 (plus trading) for the platform. I know this is comparing apples with oranges but as the OP is paying £17k/ year in charges maybe apples could be considered.

What does £17k/ year in charges buy? I'd be requiring someone scattering rose petals under my feet.

IvanOpinion

Two years ago I was in a similar situation and decided to take control myself.  It was daunting at the time but you learn a lot by reading.  I consider 1% to be at least double what I would expect from an IFA. I transferred to Interactive investor and now pay £20 per month (to II for platform fees) plus a calculated 0.57% in fees (based on the funds I hold). I suppose it depends on what funds you hold and where they are held.  In my case it was very easy to transfer to II - but check if you have to transfer platform and, more importantly,  if you might lose 'valuable benefits'
Also keep in mind that if you need specific financial advice then you will have to pay separately for that.

SonOf

With £1m you would expect adviser charge to be around 0.5%, platform charge to be around 0.15% and investments will be what they will be but a hybrid portfolio could be around 0.35%.  An active portfolio would be around 0.7%. A fully passive portfolio around 0.1%.

JoeCrystal

mattwill said:

Anyone know if this is the right amount to pay? Or am I being an idiot?
Thanks

You are not an idiot. You are right to question such expensive charges and being pro-active about it. You already got useful replies regarding what kind of charges you can expect and thus can shop around.

MarkCarnage

As a benchmark, I DIY for a total cost of around 0.75%, of which platform costs are about 0.04% and fund costs around 0.7%. Portfolio is largely in actively managed investment trusts, mix of global equity and wealth preservation.  with a few other more specialist bits and pieces. Some of the latter have a higher management charge but generally worth it IMO. 

green_man

I don’t think these are ‘such expensive’ charges, and it’s unfair to compare charges on a DIY portfolio with a fully advised alternative.   Having said that you could do better. If you don’t fancy (or don’t feel knowledgable enough for) DIY, then talk to Smith and Williamson and see if they can reduce that 1% to something in the region of 0.5-0.6%, at that level you should be getting decent value (assuming you are generally happy with their advise and service.

mcooke999

Crikey so they are taking over £17k/yr in fees from you? I hope they are providing good value for money (I suspect not!). The shocking thing is that at that rate, over a period of 20-30 years you could have quite comfortably paid them £1m+ in fees!!!! Money you could have kept for yourself / family... I'd swap straight away (assuming no / low transfer charges) to Vanguard and you'd just pay £375/yr in platform fees + say around 0.2% (£2k) in fund charges if you're happy managing yourself (not difficult).