Eight out of 10 people expect their adviser to shop around for the best price on investments, research has shown.
Figures from Alliance Trust Savings, which surveyed 500 people with annual household income of £100,000 or above in July, found that although most expect advisers to compare costs, they do not do so themselves.
More people shop around for their washing machine than for their Isa or pension, with 89 per cent comparing prices for large household purchases.
Only 51 per cent do so for their investment service, despite 68 per cent saying that they would move to save money in fees.
“Consumers are very savvy when it comes to saving money on big ticket household items like washing machines, but it seems they are less aware of the difference comparing fees can make when buying investment products like Isas and pensions,” said Sara Wilson, head of platform proposition at Alliance Trust Savings.
“Many investors expect their adviser to shop around on their behalf, but with so many fees to take into consideration, such as platform fees, fund management fees and transaction costs, it is often difficult for even professionals to compare.”
| ISA Comparison table | |||||
| Portfolio size | £100,000 | £250,000 | £500,000 | ######## | ######## |
| Aegon Retirement Choices (ARC) | £540 | £1,215 | £1,215 | £1,215 | £1,215 |
| Alliance Trust Savings (standard) | £120 | £120 | £120 | £120 | £120 |
| Alliance Trust Savings (inclusive) | £225 | £225 | £225 | £225 | £225 |
| Ascentric | £300 | £750 | £1,500 | £3,000 | £3,900 |
| James Hay Modular iPlan | £250 | £625 | £1,150 | £1,950 | £2,300 |
| Nucleus | £350 | £875 | £1,750 | £2,625 | £3,375 |
| Standard Life Wrap | £400 | £925 | £1,675 | £2,675 | £4,175 |
| Transact | £432 | £762 | £1,512 | £2,612 | £3,987 |
Bob Wilson, financial adviser from Green Sky Wealth, said clients should expect advisers to shop around for the best price, but that this was only part of the story.
He said: "There's also fund choice and tax wrappers that are available. It all has to be considered together as part of a jigsaw."
He added that he believed most consumers to be price sensitive when it comes to investment funds and they would switch if charges were too great.
Alliance Trust's findings come after back in June, the Financial Conduct Authority recommended a single all-in fee for investors and revealed it will further investigate how disclosure can be improved.
In a 114-page asset management market study the FCA stated a number of respondents to its consultation had raised concerns about the idea of a single all-in fee.
This had been one of the proposals from the FCA’s interim report, published in November, and the regulator stated it continued to support this idea.
In the final report the FCA stated: “Several respondents raised the high cost and practical complexity of providing transaction costs as part of a single all-in fee.
“Respondents also raised concerns that subsuming transaction fees into a single all-in fee could create perverse incentives for asset managers.
“They felt this could lead to a conflict of interest as asset managers might not be incentivised to trade even where this would be in the best interests of investors.”
Instead, the FCA has said it will test ways of improving the effectiveness of disclosure, including the prominence and formatting of charges information so investors can understand fees and the impact they have on their investments.
The FCA highlighted the incoming Mifid II proposal which will require the disclosure of a single all-in fee to investors using intermediaries which will include the asset management charge, an estimate of transaction costs and any intermediary fees.
The regulator added: “To supplement existing and incoming legislation we are also considering whether to consult on guidance in areas such as the wider use of pounds and pence disclosure on other information sources.
“As part of this work we will also consider the benefits to consumers of consistency between point-of-sale and on-going disclosures.”
The FCA said it would consult on its proposals for fees and charges communications later in the year and this will inform any future action in this area.
rosie.murray-west@ft.com
