What would you like us to do with the funds you've selected
There are concerns that the new regulations could put consumers off investment in an environment when it has never been so important.
By Mark Smith, Senior reporter
Friday June 29, 2012
Just been going through the numbers on my new account charges and thanks to the FSA’s decision to "try and protect the consumer" I am so far £192 out of pocket. I have worked jolly hard to keep my dealing and account costs to a minimum by reading through the small print, choosing the correct platforms for my needs and making sure I understood what I was being charged for.Now due to the FSA’s decision to protect me, I am to be penalised for my hard work and efforts, while those investors who choose not to read the small print or do the legwork of finding the right platforms for their needs win out at my expense. I will no doubt be able to trim some of these extra costs out in the long term by switching where and how I invest but for now I shall have to accept the extra charges as a tax by the FSA to help the stupid, lazy and incompetent.
Journalists please note:practise is a verb: I practise my putting shots.practice: is a noun. It's good practice to spell correctly.
Unfortunately as a private investor this RDR is going to cost me money. Currently I use iii to buy and sell shares and up until recently the only charge was the dealing cost and stamp duty. Now there will be a £20 per quarter charge, admittedly this can be offset against dealing costs, but I don’t trade often. My funds I hold with Cavendish who rebate the trail commission, I must admit when I signed up with them I wondered how they made their money but it was the best deal I could find, no word from them yet regarding the future. Currently for my SIPP I just pay dealing costs and stamp duty, but again waiting to hear what the changes will be due to the RDR. Even though I invest primarily in shares the RDR looks like it is going to result in me paying extra fees. Currently my plan is to leave things as they are and then move my money once the dust settles.
Is anybody stupid enough to believe platforms are free? If RDR prevents platforms from receiving commission from fund managers they will charge their clients directly. This will not matter if there is a corresponding reduction in fund management charges but looking at what is charged by fund managers to investors who go direct to them this seems unlikely. As a small investor I strongly suspect that ‘transparency’ is a luxury that is going to cost me dear. From my experiences of the FSA as an Equitable Life member I conclude that the FSA is there for the benefit of the financial services industry, not its clients.
It says IFAs slam..... However, anyone notice that the IFA firms asked are those that operate platforms and benefit financially from having a bundled structure. As an IFA I much prefer unbundled. I don't operate a platform
It is clear what will happen. The IFAs will get all the advisory business. The platforms will charge the fund houses 0.2% for the funds they list and HL will charge them 0.5%, rebate 0.2% and shout from the roof tops what bargains they are offering us. They will call it fee, not commission. The fund houses will have 2% initial charge, and the investor will get zilch. As for the myopic investors who now see nothing wrong with being fleeced by performance fees, they will continue in their affliction.
Re. previous post - I meant we pay an AMC, not a monthly charge.
What is paid is the TER, which includes the AMC. The TER also includes the commission paid by the fund house to the advisor and platform. What should happen post-RDR is that the TER should fall to reflect the fact that commission is no longer paid. Some funds have institutional-class shares as well as retail class, and the TER for the former is usually substantially lower than for the latter: this reflects the commission element.What will be interesting will be to see whether fund houses reduce the TERs on retail-class shares to be the same as for the institutional class, or whether they will use this as an opportunity to bump up their AMC whilst being able to point to reduced TERs.
How can this change ever be 'good for clients' when many - like myself and family - use a platform with refunded intitial charge, and a monthly charge. We ask for no advice, so pay no fee. It looks like we will now be paying fees for the first time how is this an improvement for us - and where is the money going?
Mr Compton, You are paying platform fees and trail commission you just cannot see it. You are in effect paying for advice that you haven't received. This is what the FSA is trying to make transparent at the moment most people are ignorant of what they are being charged for as it is not transparent.
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