Passive route to keep costs low

Advisers should be looking to passive investments to reduce investment costs and maximise earnings, according to Taxbriefs editorial director Danby Bloch.

At the Money Marketing RDR and economic update last week at Grocers Hall in the City of London, AWD Chase de Vere marketing director Martyn Laverick asked the panel whether passive strategies will play a greater role.

Bloch said: “If the financial adviser wants to maintain a relatively large share of the amount of money coming from the client, then it is very important to drive somebody else’s share down, like the share taken by fund managers. I suspect that is most easily going to be achieved by very low-cost funds like exchange traded funds. After the RDR, that is going to be a very important driver.”

Seven Investment Management chief executive Tom Sheridan said: “In an environment where returns are expected to be lower than they have been, costs will become a bigger feature and you can really reduce the costs of investing by using passive instruments. For that reason, I think they will have a great deal of popularity.”

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