Higher fees for investors without intermediaries

Bostonerimus1

wmb194 said:

Bostonerimus1 said:

Hoenir said:

zacchaeus_2 said:

I note that there are some investment products that charge higher fees for investors without intermediaries/advisers.  For example, the Octopus Investments AIM ISA has the following fee structure:


I find this outrageous, especially the "justification", but Octopus is not alone.  My question is: has anyone had any luck with haggling over this sort of nonsense (with any providers; again, I'm just using Octopus as an example)?

Free market. Find an alternative product. Pricing is structured to recover the cost of servicing the respective client bases. 

Yes, you are usually free to go elsewhere. Where you don't get such choice is with a workplace pension scheme and it's important to understand the charges and make sure your employer is using a sensible provider.

I've never seen the utility of putting extra intermediaries between me and my money so I use Vanguard in the US and limit myself to Vanguard funds (in the US Vanguard is also a full service brokerage) as they have no initial fee, transaction fees or platform fees for most accounts and all I get charged is the fund fees. I wouldn't consider something like Octopus because of the fees and how they are structured - 1.5% plus advisor fees sounds totally ridiculous to me.

The point of this Octopus AIM fund is to avoid/minimise inheritance tax - certain AIM companies are exempt - so paying a fee might be worth it.

Limiting yourself to a small part of the UK market is definitely not a good investing strategy, but I suppose for those looking at a 40% IHT charge above the threshold it might seem attractive when tax planning is paramount. I'd certainly want to look at the impact of the fees and the volatility and other ways to invest in AIM stocks inside my ISA and other IHT strategies before forking over 2% to Octopus.

Bostonerimus1

wmb194 said:

I realise it's only an example but when you have something that only invests in between "20 and 30" companies you could just copy it and own the companies directly. From a cursory look it appears to be picking the more stable, lower risk AIM companies. Otherwise, there are plenty of funds available on execution only platforms/brokers that don't charge these fees.



https://media.octopusinvestments.com/m/3c62e61c6fafc9df/original/Octopus-AIM-Inheritance-Tax-Service-factsheet.pdf

I see Gooch & Housego on there. I've worked with them and bought some of their components. I wouldn't invest in them. Stable is a relative term when it comes to AIM, but I'd be interested to learn about the other AIM funds available that you mention.

PS. I just looked at various other companies offering AIM ISAs for IHT (Investec was one) and fees are similar to Octopus. I suppose they can charge that when people are anxious to avoid IHT.