Why We Are Different
How We Charge
We charge flat fees for all services, even for discretionary portfolio management.
Our charging approach, which has remained unaltered since the day we opened our doors, goes beyond the requirements of the FSA’s new rules about ‘customer agreed remuneration’ (effective in 2013, the Retail Distribution Review bans commissions on new business and requires advice and product charges to be ‘unbundled’).
- A fee for an ‘Initial Review’, the analysis and goal planning on which all client relationships are based, will be agreed in advance
- Fee levels lie within a range (depending on scope) of between £3,500 and £7,500
- The fee is not dependent on us making or arranging investments or policies as a result of the review
- We believe we are unique in setting flat fees (indexed for inflation) for dynamically-managed discretionary portfolios
- Each client’s fee relates to service value which maps loosely to levels of wealth as well as to specific differences in scope and complexity
- By breaking the link with portfolio values we make costs an explicit budget item; we eliminate agenda differences between clients’ exposure preferences, or investment risk, and our revenue stream and business risk; we reduce incentives for clients’ to game fee structures by withholding assets or information about themselves
- Flat fees align our reward with clearly-identified aspects of service and value delivery that we can control, rather than aligning them with market volatility which is random and outside our control
- We only provide ’commission offset’ (crediting commissions against client invoices) when commission is the only way a provider charges for a product or policy; if taking and rebating commissions would reduce client charges compared with buying without commissions (which is very rare)
- Commission offset as the basis of other firms’ charging approach disguises the true costs of the service, usually precisely because it biases selection of the underlying investments to those that pay ‘trail commission’
By clicking here you can read an article, originally written for industry website Citywire, prepared by Stuart. In it he describes our flat fee approach and highlights reasons why both the client and the business should value this method.