Wealth managers ‘taking advantage’ of clients’ trust

Half of UK investors don’t know what they are being charged by their wealth manager, according to UK discretionary manager Netwealth.

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Fewer than four in 10 (37%) investors know “most” or “some” of the fees and charges they pay for wealth management services, according to a Netwealth survey conducted by YouGov.

An additional 13% were unclear about any of the fees and charges they pay.

Only 35% of investors had immediate access to information on the fees they are paying; while 44% can only find out from their annual (25%), quarterly (14%) or monthly (5%) statements.

Charlotte Ransom, chief executive of Netwealth, said: “Our research indicates that traditional wealth managers are taking advantage of their clients’ trust.

“They make it extremely difficult for clients to see how their portfolios are performing and to understand fully both the level and the impact of fees that can have such huge negative consequences on their long-term savings.”

The survey polled 798 UK investors with over £50,000 ($66,240, €56,733) in investable assets.

Demand transparency

Ironically, 72% of investors said transparency around fees and charges was the most important factor when choosing a wealth manager.

The second and third top factors were personal trust (67%) and good investment performance (60%).

Another contradiction is that 84% of investors agreed that fees matter to them and they don’t like to overpay.

Despite this, 31% said they are happy with their current provider even though they charge more than expected.

Not purely a tech solution

More than half (56%) of those surveyed see hassle-free access to information about their investment as the top benefit of technology.

Ransom described technology as a “powerful enhance of modern wealth management service”.

“However, technology is not a substitute for the trust that comes with experienced people giving personal advice and making investment decisions on our clients’ behalf. At Netwealth, we believe that pairing technology with human advice is the most powerful combination of all,” Ransom said.

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