Putting fees under the microscope

  • Ever booked a flight with a budget airline for an ostensibly low fare, and been shocked how much the price rises when you add all the extras?
  • Have you bought tickets for a West End show, and baulked at the unexpected charges they add on?
  • Can you imagine buying petrol with the price separated to show the cost of fuel and tax?

There is increasing consumer demand for price transparency.

In some sectors, such as theatre tickets, the fee has to be broken down by law.

Unfortunately, in the financial services industry, not all wealth advisers display their fees with the clarity you deserve.

St James’s Place

Back in September, there was an article in the Sunday Times that focused on Britain’s largest financial adviser – St James’s Place (SJP). They do a fantastic job of marketing themselves, and claim that 98% of their clients would recommend them, however their fees are not transparent.

Here’s what some SJP clients say:

“Whenever I have asked about fees I don’t get simple answers, as its fees are incorporated in its unit cost pricing structure, so nothing is transparent.”

“I recently tried to get to the bottom of the fees and charges levied by each of four advisers, and only St James’s Place has been difficult.”

“I don’t understand the relationship between [my] adviser and St James’s Place. How much of my investment goes to paying the adviser?”

SJP said: “If you go to John Lewis and buy a television or a computer, you don’t ask for the breakdown of the costs to find out what the margin is that John Lewis makes versus the manufacturing costs and everything else.”


Following the rules

Since 2012, rules have been in place to show consumers the charge breakdown for unit trusts and ISAs, which is typically:

  • 0.1 to 1% to fund manager
  • 0.50 to 1.25% to adviser
  • 0.25 to 0.75% to platform used to make the investment

Quite a range.

There are no such rules covering pensions and investment bonds.

What about us?

At Plan 100, our fees are totally transparent.

Before we work together, we send you a letter of engagement that includes full details of what you will pay and the service you will receive.

But remember, it’s not just about the amount you pay; it’s about the value you get. For more on this subject, please see our recent article 2+2=4. Or does it?

If you have any queries, please call 01435 863787. We will be happy to help.

Lance Baron

Certified Financial Planner (CFP) based in East Sussex, UK. We support people in Southeast England with more than £500K to invest by building a financial plan that will help them live the life they want… until age 100