Wealth Manager - the site for professional investment managers

Register to get unlimited access to all of Citywire’s Fund Manager database. Registration is free and only takes a minute.

Discretionary fees under the spotlight: how do yours compare?

11 Comments
Discretionary fees under the spotlight: how do yours compare?

Research by Numis has revealed the divergence in pricing between some of the country’s leading discretionary managers.

The average total cost imposed by the three firms – Brewin Dolphin, Investec Wealth & Investment, and Rathbones – is 1.31% per year for clients with a £500,000 portfolio.

According to the modelling, Rathbones came out as the cheapest house with a 1.12% total cost for its fee-only proposition, while Investec was the most expensive at 1.42%.

The calculations are based on a portfolio of £500,000, and factor in 24 transactions involving funds or listed securities each year. They exclude VAT and the fees paid to the underlying fund managers.

The findings are:

Rathbones Discretionary (fee only)
Account fixed charge £100
Charge on first £1 million 1.00% £5,000
Transaction charge £20 £480
TOTAL £5,580
1.12%

Brewin Dolphin Discretionary (fee only)
Charge on first £1 million 1.30% £6,500
Transaction charge £20 £480
TOTAL £6,980
1.40%

Investec Portfolio Management Service
Charge on first £1 million 1.25% £6,250
Transaction charge £35 £840
TOTAL £7,090
1.42%

When the portfolio size is increased to £1.5 million, the rankings remain the same:

Rathbones Discretionary (fee only)
Account fixed charge £100
Charge on first £1 million 1.00% £10,000
Charge on next £500,000 0.50% £2,500
Transaction charge £20 £480
TOTAL £12,980
0.87%

Brewin Dolphin Discretionary (fee only)
Charge on first £1 million 1.30% £13,000
Charge on next £1 million 0.90% £4,500
Transaction charge £20 £480
TOTAL £17,980
1.20%

Investec Portfolio Management Service
Charge on first £1 million 1.25% £12,500
Charge on next £1.5 million 1.00% £5,000
Transaction charge £35 £840
TOTAL £18,340
1.22%

Brewin Dolphin, Investec Wealth & Investment, and Rathbones are among the few wealth managers to publish unified rate cards publicly.

Killik does so too, although comparisons are less clear because its transaction charges are based on a 1% dealing commission structure (with a £40 minimum) rather than a flat fee.

However, Hargreaves Lansdown’s portfolio management service stands to undercut the current market, with total costs of 0.35% on £500,000 portfolios and 0.23% on those of £1.5 million.

Hargreaves Lansdown Portfolio Management Service
£500,000 portfolio £1.5 million portfolio
Charge on first £250,000 0.45% £1,125 £1,125
Charge on next £750,000 0.25% £625 £1,875
Charge on next £1 million 0.10% £500
Transaction charge None
TOTAL £1,750 £3,500
0.35% 0.23%

There are several important caveats to all this, of course. The full cost to the end investor will be influenced too by the fund prices negotiated by the wealth manager, as well as by allocations to cheaper passive products.

The costs will also be shaped by the degree to which the wealth manager turns over the portfolio.

And perhaps most importantly, the research takes no account of the performance delivered for the client, or the overall value of the service to the client – including ease of use, communication and so on.

Leave a comment!

Please sign in or register to comment. It is free to register and only takes a minute or two.
Citywire TV
Play Where A-rated Pattullo is finding the best bond opportunities

Where A-rated Pattullo is finding the best bond opportunities

Henderson Global Investors head of retail fixed income explains how he is managing his fund against the surprise current monetary policy divergence.

1 Comment Play Taxicab Tenner: Allianz Global Investors' AA-rated Simon Gergel

Taxicab Tenner: Allianz Global Investors' AA-rated Simon Gergel

Our much anticpated new series is here! We hand a black cab driver a tenner and grill the manager of the 125-year Merchants trust until the meter runs out.    

Play Europe bulls, a retail boost and why a little inequality can be a good thing

Europe bulls, a retail boost and why a little inequality can be a good thing

This week’s Investment Pulse looks at whether investors should be bullish on Europe, the surprise rise in UK retail sales and if a little inequality is a good thing.

Your Business: Cover Star Club

Profile: meet the duo at the heart of Hargreave Hale's succession plan

Profile: meet the duo at the heart of Hargreave Hale's succession plan

For the first time in the company's history a non-Hargreave is now at the head of the north west broker and asset manager

Wealth Manager on Twitter