Investors who have decided to go it alone with the help of an investment platform are likely to have done their due diligence when it comes to platform fees. However, it has been discovered that nearly half of all people who have put their investments in the hands of a financial advisor are completely in the dark when it comes to the subject of platform fees.
Research conducted by The Independent showed that 41% of investors are currently unaware that they could be unwittingly paying thousands in platform fees as their financial advisor utilises investment platforms to make investments on their behalf.
There are a number of investment platforms available and the platform fees can vary significantly between one and another. Platform fees are payable, regardless of whether your investments are performing well or not, and can therefore have a significant impact on your bottom line over time. Fees are usually structured as a percentage of the total value of your investments annually, or as a fixed fee. For portfolios of less than £50,000 it is often recommended that a low percentage platform fee will ultimately work out as more cost effective, and large portfolios of more than £50,000 should seek to engage with a fixed fee platform in order to reduce this cost.
This cost is passed from your adviser, straight on to you, the investor, including pension holders, however, levels of transparency are being questioned as it becomes apparent that not many investors are aware they exist. The question arises as to whether the advisor is seeking the most cost efficient platform for your portfolio, or indeed whether they are simply seeking the platform that offers the greatest efficiency and service to the advisor.
Investors who engage the services of an advisor are being urged to discover what, if any, platform fees they are subjected to and ascertain whether they are getting good value.
Peter Field is a financial analyst and has written for InvestingReviews.co.uk covering topics from pensions, savings, investments and ISAs. His knowledge of the Investment market has proven invaluable, making his unbiased views and opinions open and honest for everyone. In 2021 Peter retired and is working towards enjoying more of the outdoors with his beloved labrador Millie.