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Advisers warned of DFM transfer charges

 A Money Marketing study highlights the wide variance of transfer fees charged by discretionary fund managers.


Advisers are being warned to consider the exit charges applied by discretionary fund managers before investing client assets, following Money Marketing research into the sector. 

A survey of 11 DFMs in this week’s issue shows a wide variation in the charges levied to leave a DFM, with fees applied on transfers ranging from £15 per line of UK stock to £50 per line of overseas stock.

Brewin Dolphin charges a £15 fee per line of UK stock and £25 per line of overseas stock alongside a £15 preparation fee, while City Asset Management charges £20 per line of UK stock and £25 per Isa wrapper, plus £5 per line of stock held within the Isa.

Quilter Cheviot charges £15 per line of UK stock and £50 per overseas stock, while Octopus Investments charges a flat fee of £50 per portfolio transferred out as cash and £100 per in-specie portfolio transfer.

DFMs including Brooks Macdonald, Smith & Williamson and Vestra Wealth would not reveal their exit charges when asked as part of the research. 

Industry figures warn these charges can be a barrier to exit and should form a vital part of due diligence before investing with a DFM as they can add significant costs for clients.

CWC Consulting senior partner Clive Waller says: “If you have got a lot of lines of stock with a DFM and you are going to be charged £25 per line of stock, it is almost not worthwhile transferring away because the charges are so high.”

Plutus Wealth Management independent financial planner James Robson says: “A DFM will usually have many more lines of stock than the average adviser would have in their own model portfolio. It is not uncommon to run investments across 20 lines of stock so this can come at a really high cost to a client if you want to transfer.”

Threesixty Services managing director Phil Young says: “Advisers should be asking about, considering and adding up all costs they expose their clients to when outsourcing to a DFM.”



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