Investors throughout the UK are counting the cost of charges applied by stockbrokers and wealth managers.

The cost of managing investments and pensions varies widely between managers. Therefore, to get the best returns, it is vital to compare cost before deciding what to investment in. In other words, comparing charges is just as important as where to invest. There is also an opportunity for those with existing portfolios to review their investment affairs, potentially shaving thousands off the cost.

The table below shows a typical investor with £200,000, invested between different wealth managers. An investor may be paying £30,000 extra in charges over 10 years by not shopping around for the best deal. Some providers may appear cheap, but exit penalties mean they may be stuck paying higher fees for years to come.

By reducing charges and comparing cost, allows greater opportunity for investment growth. The Whitehall Partnership provides a service called ‘Valueplus’ which is a written report showing investors everything they need to know.

St. James Place Towry Wealth Management LLoyds Wealth Barclays Wealth Alexander Forbes The Whitehall Partnership
Initial Charge Nil 1.80% 2.50% 1.20% 3.00% 1.08%
Commision paid to adviser £10,000 Nil Nil Nil Nil Nil
Total Annual Management Charges (TER) 2% plus 2.71% 1.99% 2.28% 1.76% 1.76%
Other known charges Fund switches £40.68 0.08% of portfolio value Unclear Unclear £68.50 p/a to Skandia Nil
Exit Charge Sliding scale over six years; 6% in year 1 to 1% in year 6, nil thereafter Nil £500 Nil Nil Nil
Online service & valuations No Yes No No Yes Yes
Negative points worth mentioning Advisers are not independent Difficulty understanding charges being taken by adjusting units Very disconnected client service Customer complaints are high Over-reliance on Skandia Investment Solutions Only accepts clients with £150,000 plus

Notes:

  1. Charges schedule based on data available as at 12/06/2012
  2. Charges are based on an initial investment of £200,000
  3. Portfolio is a balanced risk asset allocation
  4. Charges include all known expenses and should be considered a fair approximation

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