22nd March 2016
More than a third of financial advice and wealth management customers do not know what they pay in fees, a new survey has found.
The research, commissioned by investment platform Nutmeg, revealed that 36% of customers surveyed didn’t know what they were charged last year, while 28%of those who did know felt the fees they paid were unreasonable.
The average IFA or investment management customer reports paying fees of £108,160 over 40 years.
On average, customers reported paying 1.69% per annum of their overall investments. According to the research, the mean total value of investments is £160,000 – this equates to £2,704 annually in fees.
Nick Hungerford, chief executive of Nutmeg, says: “For those customers that don’t know how much they are paying or those that are reluctant to check, there is a huge cost to inaction. Investment managers and IFAs are failing customers – they have a duty to give customers clarity not only about what they pay, but on how charges are structured. Instead charges are complicated and opaque – to the absurd extent that when Nutmeg wants to find out a given wealth manager’s latest fees, we have to commission third-party researchers to do mystery shopping.
“This showcases a key principle of saving and investing: control your fees, because they are the one part of your investment returns you can always control, 100%. The fees you pay compound over time, and climb to remarkable heights.”