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Trail commission
Harmoney100
Posted: 13 December 2010 09:54:55(UTC)
#1

Joined: 10/06/2010(UTC)
Posts: 5

Investment managers pay trail commission to intermediaries (IFA'S) who manage investments. I have over 30 years experience in the investment industry both as a professional and managing my own investments. I do not use an intermediary and would prefer not to. Fund mangers still charge trail commission and keep it for themselves; I question the morality of this. Is there anyway I can stop them doing this and stop them from charging for a service I do not receive and do not want?
Anonymous Post
Posted: 13 December 2010 13:13:23(UTC)
#2
Anonymous 1 needed this 'Off the Record'

A number of Fund Managers have institutional classes of their funds which pay little or no trail. Unfortunately they usually have a high minmum investment, which may not suit or you would be unable to buy these typically these have an AMC of as little as 0.3%

Hargreaves Lansdown ( amongst others) rebate intiial charges on many funds which maybe as far as you can go in the pre RDR world
Ian Grumpy
Posted: 13 December 2010 13:17:56(UTC)
#3

Joined: 14/01/2009(UTC)
Posts: 61

Thanks: 1 times
Was thanked: 3 time(s) in 2 post(s)
I invest in funds via Alliance Trust Savings. They rebate all the initial charges and subsequent charges half yearly.
M H
Posted: 13 December 2010 13:19:52(UTC)
#4

Joined: 01/03/2010(UTC)
Posts: 3

I'm afraid there's not really a lot you can do about this, any fund manager you care to speak to will tell you that the trail commission paid to advisers is actually deducted from their own annual management charge (AMC) for the fund i.e the AMC is 1.5% and they "choose" to take 1% and pay the 0.5% to the adviser. They will argue that they cannot give this 0.5% to investors who do not have an IFA as this is not fair on clients who do have advisers and it would also encourgae clients to invest directly rather than through an adviser, bearing in mind that about 80% of fund managers business comes through the IFA channel you can see why they do not want to start upsetting the apple cart.

Some of the bigger nominee services and also wrap \ platform services may negotiate a rebate of this AMC who will then pass this on to the underlying investor but there are usually other annual charges associated with these methods of investment.
Peter Redhead
Posted: 13 December 2010 13:29:51(UTC)
#5

Joined: 29/09/2007(UTC)
Posts: 2

You can get trail commission rebated by appointing an organisation such as Cavendish Online who will act as your 'notional' financial advisor.

In axchange for a fixed annual fee they will rebate the commission back to you.
Sarkinkudi
Posted: 13 December 2010 14:00:54(UTC)
#6

Joined: 04/11/2009(UTC)
Posts: 3

Invest via Alliance Trust Savings. They rebate all commission including trail commission.
William Phillips
Posted: 13 December 2010 14:47:54(UTC)
#7

Joined: 10/06/2010(UTC)
Posts: 24

Was thanked: 2 time(s) in 2 post(s)
I use Commshare for most of my unit trust holdings. They split trail 50:50 and deal with most of the big management groups. I get a nice cheque a month before Christmas every year.

http://www.commshare.com/

No other connection with them, and it's not my only broker- just a satisfied customer.
Alan, Bristol
Posted: 13 December 2010 15:28:11(UTC)
#8

Joined: 06/08/2010(UTC)
Posts: 4

Trail commission is only paid by Unit Trusts to intermediaries. Some intermediaries rebate a proportion of this trail commission to their clients. Fine, but Unit Trust clients are still being screwed by the Fund Manager with high annual charges, with or without a rebate but more so if trail commission is not rebated.

The short answer to minimising annual management charges is to completely avoid an IFA who only guides his clients towards commission-paying Unit Trusts. Far better to use an enlightend IFA (are there any?) who will advise clients on the basis of a negotiated fee (not commission) or, better still, do it yourself and invest directly into stocks or Investment Trusts. The latter have a more transparent fee structure which is invariably far less than the annual fees charged by Unit Trusts.

Just look at the number of unit trusts that there are in the market place. There are far too many and they are all vying for their share of the available annual management fees. How do you think they manage to stay in business? Just look at the number of Unit Trusts that are complete dogs that act like parasites on the poor unsuspecting public. The fund manager will never go hungry; he gets his annual commission even if he runs a dog fund.

Forget Unit Trusts and go for a bit of DIY, OK?
Muggle
Posted: 13 December 2010 17:19:53(UTC)
#9

Joined: 14/05/2010(UTC)
Posts: 7

Surely the answer to the expenses problem is to avoid Unit Trusts altogether and only invest via ETFs. Their charges are minute.
tony levene
Posted: 13 December 2010 18:53:39(UTC)
#10

Joined: 03/05/2009(UTC)
Posts: 4

Investment trust savings schemes are generally good value for both regular amounts and for lump sums. But avoid Alliance - besides mediocre investment performance, it also has high charges.
mike88
Posted: 14 January 2011 09:05:47(UTC)
#11

Joined: 14/01/2011(UTC)
Posts: 20

Was thanked: 1 time(s) in 1 post(s)
Cavendish online rebate 100% of the trail commission for a one-off fee of £25. The rebate comes direct from either Funds Network or Cofunds whichever you are invested with. If you invest direct with the fund provider then Cavendish rebate the commission for a reasonable fee but it is advantageous to reregister your funds with either the FundsNetwork or CoFunds platforms. Again you can do this through Cavendish for a one off £25 fee.
jonnets
Posted: 15 January 2011 16:47:52(UTC)
#12

Joined: 06/12/2010(UTC)
Posts: 12

tony - i presume you're referring to the Alliance investment trust, not the fund supermarket they run, which rebates all their commission and allows you to hold investment trusts, OEICs and unit trusts in the same account. £12.50 per transaction. Seems a good deal.

Anyone tried commfreefunds?
Harmoney100
Posted: 16 January 2011 12:19:02(UTC)
#13

Joined: 10/06/2010(UTC)
Posts: 5

I am still at a loss as to why individual managers will not charge the lower rate to clients who go direct. I do not want another intermediary; while not doubting any particular organisation I do not see why I should be forced to add another level of risk. It increases the complexity of efficiently holding collectives. I can only believe the managers have an easy income stream and will not voluntarily give it up. They are taking fees without providing a service!
Chris Marsden
Posted: 16 January 2011 12:56:59(UTC)
#14

Joined: 17/04/2010(UTC)
Posts: 138

Thanks: 2 times
Was thanked: 4 time(s) in 3 post(s)
I can't see the benefit of an IFA for anyone with Internet and average intelligence.

IFAs do not ring you up and say, "We think these are a better bet for our clients" do they? None I have ever had have not. I am up about 2 to 3 times during 2010 (+85k) by doing it myself than with an IFA. How many IFAs say "get out, into cash there is a crisis happening" like 2008? I think many expected that, and were disappointed.

If 'Alliance' is the Fund, the performance is poor by most comparisons, as are all their Funds. The TER is low, but there is a "Performance' fee.
http://www.h-l.co.uk/fun...ity-income-accumulation

There has been an interesting discussion on good funds on another thread:
http://www.citywire.co.u...n=BulkEmail_Money_Daily

if that long link works.

Perhaps there are just too many Funds - is that frightening people and keeping them using IFAs? Do they use a pin?
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