As you may have noticed, I haven’t written much about Investments over the past few months, as I’ve focused on the recent changes to care funding and pensions. However, there are also major changes to how investment services are charged.
Clean share class
These days, a popular way to hold investments such as ISAs and pensions is via a ‘wrap’ or ‘platform’. These can give access to many types of investments and funds in one place, making it easier to administer. Sometimes part of the annual management charge has been returned to the platform provider as a rebate by the fund manager in return for hosting their funds on the platform. This may mean that the investor may not understand the true cost of the service being provided.
The FCA’s goal is to make the charges clearer and a ban on rebates has now come into effect on all new business and will be banned on legacy business in 2016. This has led to a new term “Clean share class”. These only refer to the fund’s investment charges, whilst the platform charge and any charge for advice are then quoted separately.
What’s more, when advisers charge an ongoing service fee, they have to operate an ongoing advice service. At Monetary Solutions, our service covers an annual review for our clients together with up to two visits per year. You can pay us directly or we can be paid by the provider out of the funds that you have invested.
So why should you pay an additional cost for advice?
Having a financial adviser is the equivalent to having a personal trainer in sport. We both help keep your focus on your goals and aspirations, and improve your potential results. For example, a report compiled in 2012 showed the average pension saver (based on a 54 year old) had a retirement fund of £74,554 (advised) compared to £37,277 (non-advised)*.
For advice on your finances, book a free without obligation consultation with us. We’ll be happy to help.
* Daily Express 9 Sept 2012
The value of your investment can go down as well as up and you may get back less than you have put in.