The level of fees you are paying for the management of your investments can be hard to ascertain. Our cost calculator aims to give you a realistic estimate of your top to bottom fees and chargesbased on a number of factors:
A new European-wide financial market regulation, MiFID II, came into force at the start of 2018 which requires financial services firms to provide clients with greater than ever transparency on the total costs of investing.
You might consider asking your current investment manager to provide you with a MiFID II compliant personalised illustration of the costs you are currently incurring.
If you would like to receive a personalised fee illustration for the costs you would expect to incur with a Netwealth portfolio, you can do so by registering and designing your investment plan, which we will use to create your fee illustration.
Different wealth managers and platforms use different names to describe their charges and fees. Some will be grouped together and others separated out from one another. When working out the total cost you should always consider:
The fee you pay an investment manager to select investments on your behalf. Normally a percentage of the assets under management, this is the fee you pay an investment manager to select investments on your behalf and make adjustments through time.
The fee from an adviser to recommend and monitor an appropriate portfolio for you. Sometimes an upfront fee, such as 3% on contributions to an ISA or £2,000 to consolidate your pensions. This can also be an ongoing fee usually charged as a percentage of the assets under advice.
This is the fee for holding and administering your investments. This is the fee for holding your investments, collecting dividends and interest and dealing with corporate actions and administration. It’s normally charged as a percentage of the assets administered and is often included within the Investment Management charge for fully managed portfolios. For DIY platforms, there is often a different charging structure for fund based investments and shares or ETFs.
Fees and charges that are incurred when investments are bought and sold. These charges can be made each time a trade (buying/selling of investments) takes place. They can take the form of a commission charged as a percentage of the trade value or an administration charge which is usually a fixed fee between £10 and £50 per trade.
If your portfolio is made up of collective investments such as actively managed funds, investment trusts or ETFs then these investments will have their own fees and charges for investing your money.
You won’t see these deducted from your portfolio as it is factored into the price of the investment each day. For actively managed funds this can result in extra fees and charges of 1.15% on average1.
1 Source: Defacto
These are the costs of trading within the portfolio from the difference between purchase and sale prices in the market and are distinct from transaction charges.
Always check if VAT is included in your investment management fees or charged on top For most discretionary fund managers, their fees are quoted excluding VAT. So, if you see a fee of 1% the actual cost to you might be 1.2% after applying 20% VAT.
Assuming an annual investment return of 5%, and the fee rates estimated above, in 10 years time you would be better off by:
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If you would like to find out more about the Netwealth offering and how it might be appropriate for you please call us on 020 3795 4747