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Barclays charges are ‘death by 1,000 cuts’

IFAs are up in arms over basic annual fees of up to 1.8 per cent for Barclays Investment Management Service, arguing that this is money for nothing.

Customers of Barclays’ traditional discretionary managed portfolio service are being switched to the new service automatically unless they write to Barclays by March 17.

Annual management fee is 0.5 per cent plus VAT a year – with a minimum fee of 100 – plus a separate annual management charge of up to 1.25 per cent. Additionally, service charges of 2 per cent will be charged on purchase transactions after the portfolio has been converted and charges will be paid to the investment managers, varying according to institutional rates but expected to be about 0.5 per cent a year.

IFAs say they cannot see how Barclays can charge these rates, given the likelihood of their investment in more cheaply administered multi-manager funds from now on.

Worldwide financial planning managing director Peter McGahan says: “There is nothing wrong with charging a fee but to then add another 1.25 per cent and the underlying fund management charges is absurd. As a client, I would be thinking, what on earth are you guys doing for this money for what is effectively a wrap?”Bates Investment Services head of investment strategy James Dalby says: “This seems like an incredibly high level of recurring income for Barclays. If I were an investor, I would want to know what value I was getting for 0.5 per cent a year.”

Seven Investment Management director Justin Urqu-hart Stewart says: “In a low-growth, low-return economy such as we have, most people would be better off investing in an online bank account. These charges amount to death by a thousand cuts.”

A Barclays spokesman says: “The change to a multi-manager approach will give our clients access to institutional quality fund managers at lower prices than otherwise available.”

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