Whether we are talking about Pensions, ISAs, Bonds, Unit Trusts, OEICs etc… these will all likely have an underlying portfolio of investments.

You may or may not know what you are paying for your investments. New regulatory disclosure rules introduced in January 2018 meant that all charges must be disclosed and broken down for investors so you may be able to understand how much you are paying for what service.

Typically, an investment holding on a platform will have the following 3 charges: –

• Platform charge
• Portfolio/Fund charge
• Ongoing Adviser charge

What’s the challenge?

In the majority of instances when we are reviewing a new client’s existing investments, we discover their underlying investments are invested in ‘the usual suspects’, which generally have an ongoing Portfolio/Fund charge of more than 0.80% per annum. Whilst this might not seem like a lot, when added to the other two charges above this can take the total overall investment charges above 2% per annum.

That’s 2% the investment has to make up before trying to compete on performance against banks and building society interest rates. That’s also 2% before the effects of inflation have been considered.

In our experience, we often find these portfolios of usual suspects are not only costing the investor more than necessary, they purport to be actively managed and attempt to outperform the market average but often they don’t achieve it.

How can this be addressed?

We know from our experience it is possible to obtain better performance via a more passive approach, which also typically has a lower charging structure (saving around 0.50% pa on average). Using this method we have saved some of our clients thousands of pounds.

At Alextra Wealth Management, we can review your existing portfolio to check whether you are currently invested in any of these funds and help you to reduce your ongoing charges where possible as well as seek superior alternatives.

Investing isn’t just about charges and performance. We help our clients to understand where they are going in life, put plans in place and help them to use their finances for this. See our other post on What to expect from a Financial Planner for more information on the financial planning journey.

For a free initial health check on your existing portfolio please contact us on 01270 250800 or planningteam@alextragroup.co.uk for an initial chat.

The value of investments and income from them may go down. You may not get back the original amount invested.