View the article online at http://citywire.co.uk/wealth-manager/article/a754587
Wealth managers hit back over claims of ‘murky’ costs
by Robert St George on Jun 04, 2014 at 08:09
Leading discretionary fund managers (DFMs) have rejected a report’s insinuations that their costs are excessive and opaque.
Analysis by the Lang Cat, a consultancy, on behalf of Skandia, highlighted apparently wide disparities in costs between several DFMs.
For example, the paper claimed that an ISA of £250,000 managed for 10 years by Brooks Macdonald through Novia would incur a total cost of ownership of 1.75% compared with 1.12% for an equivalent investment in the WealthSelect 5 portfolio through Skandia.
Over the same timeframe and with the same ISA, the research reported total costs of ownership of 1.54% for Brewin Dolphin’s service and 1.41% for London & Capital, both through Novia.
Mark Polson, principal at the Lang Cat, observed that ‘below the surface in the murky world of fund costs’ he had found ‘much higher usage of passive and ETF instruments’ among DFMs.
Gareth Johnson, head of managed investment services at Brewin Dolphin, insisted that there was nothing murky about his firm’s costs.
‘Our managed funds service via platforms has always had transparency at its heart,’ he told Wealth Manager.
‘Our total fee, 0.36% inclusive of VAT, is the same across all platforms, the same across all wrappers and is not dependent on the level of investment. The fee is deducted monthly and is shown on client statements via the platform. The TERs are clearly listed through each platform and indeed we publish our holdings monthly via our website, which hosts the factsheets for the service.’
Richard Leigh, managing director and head of adviser solutions at London & Capital, felt that the paper ‘made interesting reading’ and agreed that ‘fees do create a lag on performance’.
Leigh stated that London & Capital had therefore set a price of 0.25% for its managed portfolios, targeting an overall cost of ownership range of between 1.19% and 1.36%.
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