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Nearly 50% of IFAs say unit trust charges are too high

Nearly half of IFAs believe the unit trust industry is overcharging for its products, acc-ording to research by Money Marketing and Virgin One on the State of the IFA Nation.

The poll of Money Marketing readers shows a significant proportion of IFAs support Sandler&#39s probe into the costs involved in the unit trust industry, with 44 per cent of the 280 respondents saying the unit trust industry was overcharging clients.

While Catmarked funds, corporate bonds funds and trackers have low charges, IFAs say unit trusts have not had to deal with the 1 per cent charge cap which the pension industry has had forced upon it through stakeholder schemes.

IFAs have expressed concerns that annual management charges on unit trusts have been steadily increasing.

Many can discount initial charges but they say high annual management charges have a big effect on projections in a time of low returns.

Investment Management Association (formerly Autif) spokeswoman Clare Arber says: “By industry standards, UK funds are highly competitive and give consumers highly competitive products in the market. We have been working to separate the cost of advice out of the product and a significant proportion of the AMC goes back to the adviser.”

Plan Invest joint managing director Michael Owen says: “In some cases, unit trusts do charge far too much.

“There are some real dog funds out there which people are paying a lot for. AMCs are creeping up – it seems 1.5 per cent is now the norm. That starts to eat into returns, which are already facing difficult times. There is a case for all investment products to be looked at.”

State of the IFA Nation details, p14 and next week&#39s issue

ABI research, p3


Universal Building Society – 2 Year Discount

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