Source: Source: Numis Securities, Citywire, Netwealth. Based on forward looking expected return for our medium risk portfolio (level 4) of 5.3%, gross of fees, and assuming all-in charges of 1.82% for Traditional and 0.7% for Netwealth.
You can equally see the significant impact this fee reduction can make upon retirement income drawdown, and how much longer this pot could last as a result. In this example, we consider a portfolio of £500,000 where a client is drawing £40,000 per annum. The portfolio with lower fees lasts for three years longer, based on the same gross investment returns but with 1% lower fees.
Source: Netwealth. Based on forward looking expected return for our medium risk portfolio (level 4) of 5.3%, gross of fees, and assuming all-in charges of 1.82% for Traditional and 0.7% for Netwealth. We assume that £40,000 is deducted annually and the figures shown are the year-end values prior to the withdrawal.
Performance varies, but the impact of fees is a certainty
The additional costs typically associated with a traditional wealth manager are often associated with:
Yet while the performance of markets and wealth managers will always vary, the value of lower fees for investors is indisputable.
Therefore, we should always carefully consider how much we pay to manage our money – and examine just how much even a 1% difference could make to our circumstances over time.
Please remember that when investing your capital is at risk.
* The traditional wealth manager all-in fee of 1.82% is calculated as the average total expense ratio (TER) of the wealth managers listed in research by Numis and Citywire published by Citywire Wealth Manager in February 2015. The TER for Netwealth is calculated as 0.7% based on the 0.35% all-in fee and 0.30% of estimated all-in underlying fund costs and 0.05% of estimated annual costs of trading. Please note that forward looking models are not a reliable indicator of future performance.