Female Focus
Page 11
“John had no idea his investment fees were so high!”
By Sam Kelly, Managing Partner, Chorus Financial.
Recently, a gentleman, we’ll call him John, (I’ve changed his name to protect his identity) came to see me. John wanted a second opinion on an investment plan he had set up when he first moved to Spain 5 years ago. Somehow, despite strong financial markets, John’s portfolio hadn’t made a penny this entire time.
John was helpful enough to bring along all the valuations he’d been issued since he started his plan, along with some Fund Fact Sheets.
From these documents, I quickly realised that the funds that had been recommended to John had incredibly high entry and ongoing fees. These anomalies were directly related to the fact that these funds were not FCA regulated.
FCA regulated funds cannot make non-disclosed payments to financial advisors, yet the funds John’s advisor had recommended actually charged the client a 5% entry fee, all of which was subsequently paid to John’s advisor here in Spain, and also paid John’s advisor a hidden ‘trail’ fee of 1% per year. This explains the incredibly high ongoing fees, which were 3 to 4 times higher than I’d expect of an FCA regulated fund.
In addition, the client had also paid open fees to his advisor – 3% to set up his plan and 1% annual advisor fee.
To add insult to injury, around 18 months ago, John’s advisor had switched all of John’s funds because his firm now had access to a new ‘exclusive’ fund. This
cost John another 5% of his portfolio, to buy into a fund with absolutely no track record, which subsequently underperformed. John’s total fund and advice fees over 5 years were close to 25%, over three-quarters of which had been paid to his advisor.
Due to the complex way the fees were disguised and layered, John had no idea his investment fees were so high. There were only 2 small reassurances I could make. Firstly, he was not alone – 10,000s of expats in Spain have been set-up with similarly over-priced portfolios as this is widely practised by firms here. Secondly, it’s a very easy problem to solve.
John agreed for Chorus to take over the management of his portfolio, and we immediately reduced his annual advisor fee, and sold those over-priced, under-performing funds.
John now has a diverse portfolio of FCA regulated funds, with a strong track record from well-known, UK based investment institutions, none of which charged an entry cost. His total fund and ongoing advice fees are down to just 1% per year, meaning John will save significant amounts in fees over the coming years which will have a positive effect on the growth of his plan.
The exact overall fees paid will depend on the specific situation so may vary, but Chorus pride ourselves on fair, transparent and above all, value for money fees.
Chorus may not be the oldest, or indeed the biggest company out here in Spain, but we firmly believe that our approach to UK style, truly independent advice, makes us the best.
If you would like me to demonstrate where I can help reduce costs and improve the returns on your existing portfolio, including QROPS and Spanish Bonds, please call me today to book a free, no obligation review on 664 398 702.
Chorus Financial is a trading style of Tourbillon Limited, authorised and regulated by the Financial Services Commission (Gibraltar), licence Number FSC1118B & registered with the UK FCA, ref. 539348.
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