Investment Fund Charges – Are You Clear?

Q. I was chatting to a colleague over coffee and the subject of investments came up.

He said that new rules meant that he could now see what he was paying in charges on his ISAs, and it was more than he thought.

What new rules are these, as I must admit I haven’t checked my policies at all and I have not heard from my adviser recently.

A. Yes indeed there are massive changes here and Money Marketing (MM) reported recently that “since 3 January, Mifid II [legislation] requires investment managers to disclose additional transaction costs that are charged to their funds, separately from the ongoing charges figure.

The directive also requires Financial Advisers / Planners to report all the costs to their clients.

As a result of the new rules, clients may not be paying any additional charges, but they can now see separately how much the transactional costs have always added to the total.”

MM gave examples of the old and new published charges and in many cases it meant that a fund charge of say 0.85% pa became 1.25% pa or 0.79% pa became 1.85% pa because of high transaction costs.

In summary we would suggest you contact your adviser and ask for your own fund charges information to see if you are getting good value – or not.

Graeme Urwin

My passion is to help senior doctors and dentists organise their finances to create their own strategy to achieve their goals in life. I do this impartially as I charge fees. Outside of work the words that best describe me are: family man, squash, badminton, jogging, travel, reading, archaeology, genealogy, writing a book on Robert the Bruce. I live in the hills of Northumberland in Rothbury and believe in living the life you love.

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