Financial Advisers can sometimes be a little opaque when it comes to what charges are applicable for initial and ongoing advice.
The good news is that we like to be entirely transparent with our fees.
Initial fees
Initial advice fees vary company by company, however, recent Financial Conduct Authority (FCA) Research established that on average a fee of 2.4% of the initial investment (either new or transferred money) is charged.
At Chapter House Wealth Management we charge hourly rates for our time. These rates vary depending on if the work you ask us to do is simple or complex.
Examples of simple advice would be to arrange a new investment from cash deposits, or, if we provide a review of your existing investment and pension accounts. This advice is charged at £175 per hour and is subject to a minimum fee of £1,000 and maximum fee of £2,500.
Examples of complex advice are us providing our advice and calculations for pension tax matters (such as annual allowance) or if you want our advice on a consolidation of multiple pension plans. This advice is charged at £250 per hour and is subject to a minimum fee of £1,000 and a maximum fee of £6,000.
The table below provides a comparison of our maximum charges against the average initial fee in the industry. We have assumed that an investment of £1M results in the need for more complex advice.
The table below compares our standard fees with the average initial fee in the industry.
|
Type of Advice |
Amount Invested | Average fee | Our Maximum Fee |
Difference |
|
Simple* |
£150,000 | £3,600 (2.4%) | £2,500 | £1,100 |
|
Simple^ |
£500,000 | £12,000 (2.4%) | £2,500 |
£9,500 |
| Complex~ | £1,000,000 | £24,000 (2.4%) | £6,000 |
£18,000 |
*Assumed to be a new cash investment into an investment portfolio.
^Includes a review of existing investment and pension accounts and formal recommendations.
~This includes research and advice on a portfolio of investments, pensions and inheritance tax planning which could take up to 24 hours of our time.
As can be seen, you could save anywhere between £1,100 – £18,000 depending on how much you invest (based on our maximum initial fees for simple or complex advice compared to the market average).
Our advice fee can be paid directly or deducted from the various investment and pension accounts held.
Ongoing Fees
An article in the Sunday Times analysed the total cost of investing with some of the biggest names in the wealth management industry. They found that the ongoing cost of investing (as measured by the ‘reduction in yield’) to be somewhere between 2.4% and 3.8% per annum, over 10 years!
We try and keep things simple and have an annual fee of 1% that covers all our advice (this is discounted the more money you have with us), which is taken monthly, straight out of your portfolio to cover our comprehensive Ongoing Service; which includes access to our online portal (for secure messaging, video calls and open banking), online valuations, cash management service and formal reviews at least annually.
We expect other fees associated with investing to be a maximum of 0.9% (this is for fund management companies and providers).
Our ongoing cost of investing (as measured by the reduction in yield) should therefore be no more than 1.9% per annum – a potential saving of between 0.5% – 1.9% per annum, depending on your current provider. In reality this may be lower depending on your level of wealth and the mix of investments used.
Based on the above and assuming an investment of £100,000, you could save up to £1,900 each year; in truth, the savings clients make are usually much more due to the size of portfolio we currently advise on.
Not sure if you’re getting good value for money from your current wealth manager, why not contact us today.