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By Marc Shoffman | Published Mar 29, 2012

Fundsmith warning on upfront Isa fees

Terry Smith warned that many asset managers charge up to a 5 per cent initial fee when an Isa is bought directly from a provider.

He said: “Investors need to be careful that by going direct to other fund managers they are not incurring the penalty of upfront charges.”

Mr Smith claimed his firm embraced a direct and transparent relationship with its investors. He added: “At our first shareholder meeting, more than 300 of our investors attended.

“We intend to make our shareholder meeting an annual event, enabling our investors to question us face-to-face.

“This is a policy that is due to get promoted in an upcoming paper on reform of the UK mutual fund industry to be published by the highly-respected Cambridge political think tank, The Wilberforce Society.

“The policy is intended to improve accountability among money managers and Fundsmith endorses that wholeheartedly.”

Ian Cooper, IFA for Cheshire-based Cheshire House Financial Planning, said: “We would not put our clients anywhere where there was a 5 per cent upfront fee.

“We filter out the funds to make sure a client achieves best value. All our clients generally get sorted out in April and May so there is no last-minute rush.

“We make a conscious effort to avoid a last-minute rush and get people saving early on. There is no point in waiting.

“The only last-minute rush we see is if clients have not yet made full use of their Isa allowance through their monthly installments and need to top it up.”

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