Personal Account

Why are wealth managers so reluctant to reveal precisely how much they charge savers? It’s a disgrace

Earlier this year St James’s Place, Britain’s biggest we a l t h m a n a g e r , announced a major overhaul to its fees which should ( finally) make it easier for its nearly 1m customers to understand how much they’re paying.

Armed with that information, savers can compare what they could be paying elsewhere, make an informed choice and Britain’s opaque financial services sector would be that much clearer. At least, that’s the theory behind the City watchdog’s new “consumer duty” rules. But I’m afraid that in reality, it is still virtually impossible to get a straight answer from the men in the pinstripe suits. Despite the bland promises to “treat customers fairly”, wealth managers remain reluctant to share this basic information.

These companies, who manage billions of pounds of our money, will try their hardest to convince you that comparing them to their rivals is a meaningless exercise, a complete waste of yours and everyone else’s time. The phrase “comparing apples and pears” comes up a lot. It’s easy to see how this lack of transparency benefits wealth managers.

But it is their clients, ordinary savers, who lose out in the long term. Without clear data, it is virtually impossible to shop around and make sure you’re getting the best deal. Over time, a small difference in performance or fees can cost clients tens or even hundreds of thousands of pounds.

So just how unreasonable was my request? I wanted to know how wealth managers had performed in recent years. The group Asset Risk Consultants analyses 350,000 portfolios from 120 firms to produce a peer group benchmark. But wealth managers are cagey about their own performance data. So measuring them up against this benchmark is difficult. I did manage to find one wealth manager who was happy to help with my request. Funnily enough, it just happened to be one of the best-performers of the last few years.

Waverton told me the average annualised returns for its “cautious” portfolio had been 1pc in the three years to December 2022, compared to an industry average of just 0.1pc. This includes bespoke and so-called model portfolios.

Other wealth managers were not so helpful. Several told me they were unable to provide average figures for their bespoke portfolios. Yet, clearly, as Waverton showed, it can be done.

Working out how one wealth manager’s charges compare to another’s is just as maddening. The firms generally apply layers of charges: management fees, fund fees and platform fees. Many also charge an initial advice fee.

Even when charges are spelled out online, they “tend to bear little resemblance to what customers end up paying,” Holly Mackay, of the platform Boring Money, told me. “Once someone is at the point of becoming a client, they are presented with a clear outline of what their specific charges would be. But if you set out with just the internet and a calculator and attempt to do a comparison, you will achieve nothing other than the need for a very large gin and tonic.” It shouldn’t be this difficult.

The cloak of mystery that surrounds fees and performance benefits wealth managers, and not the customers who pay their wages with their savings.

‘The firms generally apply layers of charges: fund fees, management fees and platform fees’