UK wealth managers face pressure to simplify fee disclosures

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UK wealth managers fee transparency

Highlights

Financial Conduct Authority proposes new rules to simplify investment fee disclosures and ban 'double dipping' practices across platforms, advisers, and wealth managers.
Wealth managers face increased regulatory and client pressure following Consumer Duty regulation, highlighting persistent opaque fee structures deterring investor participation and provider comparison.
Netwealth, managing over £1.5 billion in assets for nearly 3,000 clients, charges 0.7%–1.1% plus investment fees of 0.1%–0.45%, emphasizing long-term portfolio cost savings.

FCA proposals target opaque charging structures

As reported by the Financial Times, the Financial Conduct Authority issues proposals on Thursday to simplify how platforms, advisers and wealth managers communicate investment costs and to require the use of plain English for clients.

The regulator says it will consult on simplified rules covering the full range of investing costs, from product charges to advice fees. It also says it will ban “double dipping”, where wealth managers or investment sites keep part of the interest on clients’ deposits while also charging a fee for holding the cash balance.

Charlotte Ransom, founder and chief executive of Netwealth, says the industry still uses “incredibly complex” fees and that some firms engage in “deliberate obfuscation” to make charges harder for clients to understand. She says the persistence of hidden or complicated fees deters many people from investing and leaves others unable to compare providers properly.

Ransom says the problem has not materially changed even more than a decade after the Retail Distribution Review rules introduced in 2013 sought to improve transparency in financial advice. She adds that jargon and opaque charges continue to cloud the sector despite years of regulatory reform.

Client scrutiny grows across the sector

Certain wealth managers come under greater scrutiny over whether their charging structures deliver fair value to clients, as the recent Consumer Duty regulation sharpens attention on the issue. Gina Miller, a long-time campaigner for fee transparency, says it is shameful that investors still cannot clearly see what they are paying and argues that this is a matter of choice rather than complexity.

Netwealth, which has just over £1.5 billion in assets and just under 3,000 clients, typically manages portfolios worth £500,000. For clients receiving both investment management and financial advice, the firm charges 0.7% to 1.1%, depending on portfolio size, plus investment fees ranging from 0.1% to 0.45%.

The company says on its website that saving 1% in fees on a £250,000 portfolio over two decades amounts to £114,000. Ransom says investors cannot control markets, but they can remain invested and monitor costs closely.

Our earlier article on New Financial’s ranking of the UK’s financial services explained that while the UK trails larger economies in domestic financial scale, it remains a leader in cross-border business lines that anchor London’s role as a global hub. We noted that the UK’s competitive edge shows up most clearly in internationally mobile activities such as foreign exchange infrastructure, derivatives trading, international banking claims and corporate bond issuance.

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