Online advice business evestor has pledged to create competition on 'expensive' investment and advice fees ahead of its launch this month.
The company, which was started by Paradigm founding partner Anthony Morrow (pictured left) and MoneySupermarket founder Duncan Cameron (pictured right), will be available to clients from Monday 24 April.
Charges have been set to be no higher than 0.5% a year. This includes a 0.25% annual management charge paid to evestor, a 0.1% ISA or pension product fee and investment portfolio charges which range between 0.11% and 0.13%. There is no upfront fee for advice.
Morrow said he hoped evestor would create competition in the market to push down charges.
'Hopefully this will bring some competition into it. Our focus is highlighting to people they are paying too much, and that's not because we're cheap but because other people are too expensive,' he said.
Earlier this week the Financial Conduct Authority highlighted concerns about the value for money of advice charges. It particularly highlighted how low levels of competition may be keeping prices higher.
The regulator also highlighted concerns about the overall cost of investing and charging structures in its asset management review last year.
Morrow said he agreed a lack of competition was stopping firms from pushing prices down.
'The big thing the industry suffers from is the fact there is so little competition to change what is a very profitable way of life for everyone apart from the consumer. That's why there are all these competition reviews coming out,' he said.
'If you can get away with charging 2.5%, and out of that everyone does well, why change it? Why invest in something that is going to make your business less profitable? There's no chief executive in the world who will say "we need to make less money" in their five year tenure.'
Other online investment businesses such as Nutmeg have been criticised because they have not made a profit.
However, Cameron said he was not worried about the profitability of evestor because it has what he called the 'internet business model' to keep costs low.
'We don't have armies of advisers, we don't have branches in every town,' he said.
'We are an internet business, that is the difference between us and the other robo-advisers. They're not really applying the internet business model yet because they are keeping most of the profit for themselves by charging higher fees.'
Before a client can invest with evestor they must go through an advice process, which has been built by the company to offer a suitability report at the end. There is no initial charge for this advice process.
Morrow said the suitability report would only recommend people to invest if it was in their interest.
'What differentiates us is that our system will recognise that while people may think they have spare cash, that cash would be better used to pay off their debts,' he said.
'Even for those people who just do not want to put any of their money at risk we will say "equity investing is not for you", but we will also say they should be saving in some way because saving is a good thing. That's more important than where people are saving.'
If it is suitable for an individual to invest they will be recommended one of three portfolios. Each portfolio contains a maximum of 12 funds, which have been picked from asset managers Vanguard, BlackRock and Fidelity.
From launch evestor will have ISA, Sipp and a general investment wrapper.