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Taskforce reveals 300 charges in bid to cut ‘hidden’ fund costs

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An industry taskforce has identified more than 300 different costs associated with investments and pensions, and up to £120bn in hidden fees taken by asset managers a year.

Transparency Task Force has created a template listing the costs, which will be presented to the FCA and other organisations.

The template found more than 300 lines of costs and charges on investments and pension schemes, including administration, investment and risk management fees, client communication, legal, governance, regulation, compliance and intermediary fees.

The taskforce has identified six main stages of charges in the template: set-up, contribution, ongoing – steady state, ongoing – changes, withdrawal and wind-up. All the stages except set-up and the ongoing – steady state have transaction costs within them.

The research has been carried out for six months by a 39-member “costs and charges team” at the TTF.

Estimates from FiNexus co-managing director Chris Sier show asset managers in the UK earn between £40bn and £120bn in extra costs retail and pensions investors “pay without knowing”.

In June, the Association of Member Nominated Trustees voted to develop a template and the Investment Association has also moved in this direction.

It is working on a comprehensive disclosure code for asset managers to disclose investment costs.

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Comments

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  1. Another piece of meaningless research unless it is put into context with the wider world.

    How about the same team doing an analysis of how many cost are involved when I buy a tin of baked beans at the supermarket. For a like for like exercise they would have to include all the cost of materials such beans, tomatoe sauce, metal, transport etc etc. I think a mere 300 charges would pale into insignificance.

    I wonder how many individual costs were involved in producing their report. I don’t have time to do it, I’m too busy advising clients so they have something more than the state to live off when they stop working.

    Why is only in financial services that people get paid to look at the minutiae of costs and then get away with presenting ‘horror’ results out of context.

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