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RDR - Suggested Charges Clause For Platforms
Posted: 07 February 2013 20:45:39(UTC)

Joined: 14/03/2011(UTC)
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Regulars will be well aware of the issues with platform charges.
Comparing different platform's charging structures is a minefield
Some people think they actually pay nothing, so subtle can be the process.
Would it have been useful if (the) RDR had included a clause requiring platforms to provide:-
1) An annual 'charges deducted' statement (like a Tax Certificate)
2) An (even more useful?) 'we will deduct £ p.a. based upon £1000 invested for this investment' statement?
Posted: 08 February 2013 11:25:50(UTC)

Joined: 10/08/2008(UTC)
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Spot on.

However, the problem is rather more complex as the cost is highly dependent on the investors profile in terms of asset mix, there value of the portfolio and their dealing patterns. Knowing the total cost isn't enough to know whether or not you are getting value for money.

A % based charging structure starts cheap but becomes expensive whereas a fixed cost scheme is the opposite but may potentially result in investment underperformance as costs reduce invested capital.

What is actually needed is for each provider/platform to be required to

a) Provide the annual cost of holding the investments
b) Provide the annual and cumlative dealing costs incurred (incuding number & type of each deal)
c) Provide an estimated transfer cost and a minimised cost (assuming portfolio restructured)
d) Provide a standardised cost estimating tool which takes a starting capital value, asset mix and associated dealing patterns to estimate the current annual cost and predicted lifetime cost

The key is how to make identifying and assessing each costing model as easy as possible
Fund of Funds
Posted: 10 February 2013 14:35:07(UTC)

Joined: 11/07/2012(UTC)
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As far as which platform to use try

It enables you to do a comparison.

There is an excellent calculator that shows you actually how much these previously hidden trailing annual fees have been costing us. For example a fund of £100000 at 1.5% annual fee with an average investment return over 10 year will be costing you £24000. If you do not get the initial fee refunded then it would be more.

I would look at the platforms refunding all these charges and who just charge specific fees if you buy or sell.
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