Discretionary Fund Managers question

Because_I_Can

Just a bit of an update in terms of my potential move to an IFA from my current FA/DFM arrangement (refer my current charges and the views of others above).  I had an initial exchange with another (confirmed) IFA today and their starting charging position is:

1. Full DFM (1.38%)
2. Model Portfolio DFM (0.96%)
3. Advised Portfolio (0.95%)
4. All above excluding additional adviser charges of 0.5%

What I don’t know yet is whether or not these fees include/exclude things like fund, currency, platform and trading fees. I suspect not but my goodness, I can’t believe how high they are - I will check mind.

dunstonh

Because_I_Can said:

Just a bit of an update in terms of my potential move to an IFA from my current FA/DFM arrangement (refer my current charges and the views of others above).  I had an initial exchange with another (confirmed) IFA today and their starting charging position is:

1. Full DFM (1.38%)
2. Model Portfolio DFM (0.96%)
3. Advised Portfolio (0.95%)
4. All above excluding additional adviser charges of 0.5%

What I don’t know yet is whether or not these fees include/exclude things like fund, currency, platform and trading fees. I suspect not but my goodness, I can’t believe how high they are - I will check mind.

The fund charges and transactions costs would be built into the advised portfolio option.   And possibly the platform too.

Typically, for a hybrid portfolio, you would have a platform charge of around 0.25%. fund charges of 0.35% and the adviser charge of 0.50%.  So, about 1.10%.       A fully active portfolio would have charges around 0.7% for the funds.  A fully passive portfolio around 0.1%

Because_I_Can

dunstonh said:

Because_I_Can said:

Just a bit of an update in terms of my potential move to an IFA from my current FA/DFM arrangement (refer my current charges and the views of others above).  I had an initial exchange with another (confirmed) IFA today and their starting charging position is:

1. Full DFM (1.38%)
2. Model Portfolio DFM (0.96%)
3. Advised Portfolio (0.95%)
4. All above excluding additional adviser charges of 0.5%

What I don’t know yet is whether or not these fees include/exclude things like fund, currency, platform and trading fees. I suspect not but my goodness, I can’t believe how high they are - I will check mind.

The fund charges and transactions costs would be built into the advised portfolio option.   And possibly the platform too.

Typically, for a hybrid portfolio, you would have a platform charge of around 0.25%. fund charges of 0.35% and the adviser charge of 0.50%.  So, about 1.10%.       A fully active portfolio would have charges around 0.7% for the funds.  A fully passive portfolio around 0.1%

Thanks again dunstonh,

in an earlier post you said “if you really have to use a DFM then there are plenty of options around the 0.2x% range and don't have VAT”.  I assume this equates to the model portfolio DFM option above - 0.96%.  If so, I’d appreciate any pointers as to where I can find such advisers offering a service in the 0.2x% range.  Is it just a case of shopping around (and I do appreciate its more about the value rather than the cost)?

dunstonh

in an earlier post you said “if you really have to use a DFM then there are plenty of options around the 0.2x% range and don't have VAT”.  I assume this equates to the model portfolio DFM option above - 0.96%.  If so, I’d appreciate any pointers as to where I can find such advisers offering a service in the 0.2x% range.  Is it just a case of shopping around (and I do appreciate its more about the value rather than the cost)?

If you use a DFM, it's normal for the DFM charge and the fund charges to be shown separately.  Effectively you would expect the following breakdown:
Platform charge
Adviser charge
OCF (or TER if ITs/ETFs)
Transaction charges
Incidental/other charges
DFM charge
Total

It is possible that some clustering of the charges may occur.  e.g. a DFM may have marketing that shows the OCF, TC, IC and DFM charge combined.     It is also worth noting that DFMs that market direct to consumers often to have higher charges than their same offering via IFAs.