The Power of Low All-In Fees

Why do fees matter so much?

Wealth Management and financial services charges have been hitting the headlines lately. Last August St James's Place implemented a major overhaul of its charging structure to make them "simpler to understand and easier to compare" and in January Hargreaves Lansdown followed suit.

Fascinatingly, although some of these changes offer better value on the surface, The Telegraph recently reported that investors are voting with their feet and moving providers. Our CEO Charlotte Ransom shares her opinion on the probable reason why: "Fee changes tend to act as a catalyst for customers to re-engage with and better understand their overall charges". 

You don't have to wait for an update from your current provider. It is always important to take time to understand your current fees - from top to bottom. It’s about knowing what you’re paying, why you’re paying it, and how it affects your future. Hidden or complicated charges make it harder to understand whether you’re getting real value and can have a significant effect over time.

Small fee differences can grow into big gains

A saving of 1% may not sound like much at first glance. Yet over the years, that tiny percentage compounds - and the results can be surprisingly meaningful.

Imagine you invest £500,000 in a medium‑risk portfolio. If everything else is the same (markets and returns for example) but one portfolio charges around 1% less in fees, the gap widens quickly. After 10 years, the lower‑fee option could leave you more than £70,000 better off. Stretch that to 20 years and the difference can approach £215,000. That’s money staying in your pocket, not disappearing into charges.

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 0.8% for Netwealth.

The same principle applies when you’re drawing an income in retirement. With lower fees, your pension pot can last significantly longer - because less is being eaten away by charges.

In summary, you can't control the markets which will always rise and fall, but the impact of the fees you pay is constant. And that's why it matters so much.

Take a look at Netwealth's fees or contact us if you'd like to learn more.

When investing your capital is at risk. This article is for informational purposes and should not be considered personal advice.