Most of this article has been about fund charges, but of course that is only part of the equation: investors also have to pay for the advice they receive. For any advisers who fear the conversation about fees, we have some good news.
Research suggests that discussing fees can help foster a high level of perceived adviser value. As figure 2 shows, 57 per cent of clients who perceive a high level of value from their adviser have had a detailed discussion about adviser fees. Conversely, investors perceiving lower adviser value are less likely to have had a conversation about fees.
Figure 2: Fee transparency and adviser value
Source: Adviser Impact
So it seems that clarity on costs is in everyone’s interest. It helps fund providers because it is a stepping stone towards building a sustainable investing culture; it helps advisers because it is part of a clear value proposition; and, most importantly, it helps investors to make informed choices.
Nick Blake is head of retail at Vanguard Asset Management
Key Points
* Providers have been urged by the IMA to produce standard documents setting out the breakdown of the charges that investors pay
* When advisers are constructing portfolios to help investors reach their goals, costs play a central role
* If investors do not know what they are paying, it is hard to make an informed choice
