DURING & POST
Investment costs
Most people will invest either via a platform, such as Trustnet Direct, or
through a financial adviser. Advisers charge for their time and costs vary
widely, but this can now be an expensive option.
If you are confident enough to make your own
decisions, then using a platform can be considerably
cheaper. It is important to remember that although
these charges look relatively small, over time they add
up significantly, particularly for larger portfolios. You
could be losing 10s of thousands of pounds from your
investments because you are paying a 0.5 per cent
platform fee instead of 0.25 per cent (which in our
case is capped at £200).
Also remember that it is not all about price. These
platforms should be easy to use, have good customer
support and offer valuable tools and information to
help you pick the right investments.
A £250,000 portfolio will command a platform fee of
£1,250 at, for example 0.5 per cent, whereas it will be
just £200 at Trustnet Direct.
And if you aren’t confident enough to handle your
own investments, it may well be worth paying for the
services of a professional investment adviser.
There are other fees to bear in mind too. Transaction
fees are levied on shares, ETFs and investment trusts
and sometimes funds. There are often additional
administration charges to run a SIPP and very
occasionally to manage an ISA. There may be charges
when you enter drawdown too, but look at these
charges in the round. It may look like a lot of extras,
but often these “unbundled pricing” structures are
much cheaper and you only pay for what you need.
Trustnet Direct charges in detail:
www.trustnetdirect.com/account-charges
After all, these investment charges pale into
insignificance if you are in poorly performing
funds or shares.
Key points
Advisers are now obliged to charge a fee for
their services but do not retain any commission
from the fund manager
Platforms charge either a percentage of your
holdings, or a flat fee – some cap their fees
Fund managers take around 0.75 per cent a year
in management charges (AMC), but passive or
tracker funds generally charge a lot less
Investment cost breakdown
SIPP fee
Transaction fee
Platform fee
Fund manager
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