Unveiling Hidden Investment Fees: How Savers and Pension Holders Could Be Losing Thousands

Are you investing your savings through a financial adviser? You might be among many who are spending thousands of pounds on hidden fees without even knowing it.

Research, as reported by The Independent, reveals that 41% of investors are clueless about the impact of platform fees on their investments. These fees are charged by online services used by financial advisers to manage portfolios. In 2017, £311 billion of investments was managed on adviser platforms.

On average, adviser platforms charge around 0.3% of the latest value of investments annually. This cost is often passed on to savers and pension holders. For example, on a £50,000 investment over 25 years growing at 5% annually, you could end up paying a staggering £12,500 in platform fees alone, not to mention fees for financial advice.

Of the 41% of oblivious investors, 27% are aware of the fees but unsure how they affect their investments, while 13% don’t even realize they’re paying platform fees.

AFH Wealth Management, which conducted the research, emphasizes the urgent need for greater transparency, engagement, and education of investors. They question whether it’s fair for customers to foot the bill for operational efficiencies of platforms that indirectly benefit advisers.

Moreover, financial advisery firms are chosen by advisers but paid for by consumers, as highlighted by the Financial Conduct Authority (FCA). AFH suggests that these firms should absorb platform fees without increasing other charges.

The research also reveals broader confusion about fees among investors. A quarter of investors surveyed were unclear about what they were paying for, while 26% of advisers admitted feeling uncomfortable discussing fees.

In conclusion, it’s essential for investors to be aware of all the fees associated with their investments. Transparency and education are key to ensuring that investors aren’t unwittingly losing out on their hard-earned money.

Founded in 2017, Fintuity has fast become one of the only digital Independent Financial Advisers (IFA) in the United Kingdom.  Fintuity offers a wide range of financial advisory services including pensions, protection, investments and mortgage advice. The key difference is that as an exclusively digital service, we can offer significant savings and a service that is direct to you and on demand.