We believe fees should be simple, straightforward and free of unexpected charges. Fisher Investments UK and Fisher Investments each receive a transparent initial funding fee, and Fisher Investments receives an ongoing annual management fee based on the value of the assets managed for you.
Following are just some of the many types of bank fees:
| Subscription Fees | Although it is common for investment managers – whether a bank or an independent investment manager – to have some kind of initial subscription or funding fee, banks’ initial fees might be scattered between service lines and portfolio models. |
| Management Fees | Although banks and independent investment managers both charge ongoing management fees for their services, it is important to keep an eye out for how high these fees really are. Banks may aggregate a number of fees, without giving you clear insight into the level of each fee and what you’re actually paying for. |
| Trading Commissions | Clients generally pay a fee for each purchase or sale of a share. Your bank advisor may earn commissions from trading in your portfolio. This means they would have an incentive to get you to trade often – buying some securities or selling some others even though this may not be the best way to reach your investing goals. |
| Performance Fees | Some banks also charge additional fees for performance. If your portfolio performs particularly well, banks may charge you an additional percentage of the gain. In our view, this may encourage excessive risk-taking in your portfolio. Moreover, it prevents you from fully benefitting from great performance. When your portfolio performs poorly, you certainly participate in the losses. Shouldn’t you participate just as much in your portfolio’s gains? |
| Sales loads | With collective investment schemes, you may be subject to front-end and back-end loads. Front-end loads are the fee you pay up front to purchase the fund. For instance, if you invest £100,000 into a fund with a 5% sales load, £5,000 will be taken out of your account and used to pay sales commissions to the bank advisor and other distributors. That means you will begin with only £95,000 working for you, regardless of how well the investment performs. Back-end loads are fees you pay once you decide to sell the investment. The longer you own the fund, the lower the back-end loads can be. Bank advisors have a clear incentive for you to purchase funds with the highest sales loads – those that earn them the most in sales commissions. |
*Source: Bloomberg; Expense ratios for all open-ended funds based in EUR, with an inception on or before 01/01/2013. Average Total Expense Ratio (TER) for open-ended funds: 1.4%.
Investing in financial markets involves the risk of loss and there is no guarantee that all or any capital invested will be repaid. Past performance neither guarantees nor reliably indicates future performance. The value of investments and the income from them will fluctuate with world financial markets and international currency exchange rates.
