Charges are an ongoing debate in our industry and I often get asked for my views. Good value matters but wise investors should consider several factors well ahead of costs.
Alongside health and family, money is one of life’s most important assets. Like family and health, it should be entrusted to others only after due diligence and with caution.
Most investors hope to build up a substantial pot of money, so even a pot that starts small is likely to grow to exceed relevant Government compensation limits.
Given that unprofitable companies are usually unsustainable companies, the wise investor will choose a profitable, safe company, ideally one listed on a stock exchange and hence subject to greater scrutiny. The trustworthiness, financial strength and longevity of the company one chooses to invest with should be the paramount consideration.
As money is so important, having someone look after it is a relationship, not a transaction. Maximising returns requires good information and data. Clients need to follow the progress of their investments and get their questions answered. Information needs for tax and other purposes will arise. Great service, including usability, data and information and access to statements and summaries when needed, is therefore also vital.
Investors want to make a good return. The risk reward profile of different regions and asset classes change, as will an investor’s risk appetite, over time.
Accordingly, investments will be bought and sold, often many times over many years. Excellent investment choice with simple, cost-effective switching is key.
The final consideration is cost. Reducing investing costs is important as they make a difference to returns. Over the years, costs have reduced.
It should be remembered investments often remain inherently good value compared with competing areas popular with the public. Unlike property, investments are relatively cheap (and becoming cheaper), do not take up space and are usually easily realisable.
Take note of charges and make sure you are getting good value but keep it in context. Most clients understand that superior security, service and value should come before marginal reductions in charges.
Ian Gorham is chief executive of Hargreaves Lansdown