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03/06/2014

A new report by Skandia, using independent data from the Lang Cat, has revealed that the cost owning similar portfolio management services can vary by as much as 66% over a ten year period.

The Skandia Portfolio Pricing Report, launched today, compares the outcome of various ISA and pension portfolios invested in some of the most popular portfolio management services in the market, with similar asset allocations, across different investment platforms. Increasingly financial advisers are using these types of service to manage the investment element of their customer’s financial affairs. The analysis takes into account the most recent publicly available portfolio details, including asset allocations, underlying funds, investment costs and trading costs.

The resulting projections show the impact these costs have on the returns generated for customers, with a large disparity between the services which offer the best value.

For a £75,000 investment in a pension, the total cost of ownership ranges from 1.12% per annum for the best value portfolio to 1.86% for the most expensive, a differential of 66%. Over a ten year period this results in the highest cost portfolio being worth £7,000 less than the best value portfolio.

For a £500,000 investment in a pension the impact on returns is more pronounced. The best value portfolio has a total cost of ownership of 1.04% per annum compared to 1.60% for the most expensive, a differential of 54%. This results in a portfolio value difference of £46,000 after ten years.

Skandia’s new WealthSelect fund range has been designed to simplify this process by providing an accompanying managed portfolio service for no extra charge above the cost of the platform and the funds within the portfolios.

Paul Feeney, chief executive officer of Old Mutual Wealth, said:

“There are too many costs involved in managing long term investments. We believe the types of portfolio management services that are usually only available to the very wealthy should be available to more people. This means giving people access to simply designed world class portfolio management services at a price they can afford.

“In order to make portfolio management services more accessible to customers there needs to be greater transparency around total cost of running portfolios over time so customers can understand what they are paying. We are now in an era of transparent pricing for advice and for investment platforms – it is time for the fees associated with portfolio management services to catch up.”

Mark Polson, principal of the Lang Cat, said:

“Most investors concentrate on just one aspect of cost when investing – perhaps a fund annual management charge (AMC) or platform charge. Our research demonstrates how dangerous that can be – investors need to think of the total cost of investing across the investments themselves and how they’re held. The more the industry can do to make this clear, the better.”

About the lang cat:

The lang cat is a small but noisy specialist platforms and pensions consultancy based in Edinburgh. The lang cat works with financial advisers, providers and other interested parties, helping them develop new propositions, turn marketing strategy into action and articulate their services in such a way that people without financial services degrees have a hope of understanding them. Bit by bit, it aims to make the industry just a little bit less corporate and stuffy and a little bit more human.

For more information contact

Tim Skelton-SmithOld Mutual Wealth02380 916 99807824 145 076
Amelie ShepherdOld Mutual Wealth02380 916 09107834 499 596

Notes to editors:

Quilter is a leading wealth management business in the UK and internationally, helping to create prosperity for the generations of today and tomorrow.

On a ‘go forward basis’, Quilter oversees £ 111.6 billion in customer investments (as at 31 March 2018).

It has an adviser and customer offering spanning: financial advice; investment platforms; multi-asset and single strategy investment solutions; and discretionary fund management.

The business is comprised of two segments: Wealth Platforms and Advice and Wealth Management.

Wealth Platforms includes the Old Mutual Wealth UK Platform; Old Mutual International, including AAM Advisory in Singapore; and the Old Mutual Wealth Heritage life assurance business.

Advice and Wealth Management encompasses the financial planning network, Intrinsic; Old Mutual Wealth Private Client Advisers; discretionary fund management business, Quilter Cheviot; and Old Mutual Wealth’s multi-asset investment solutions business.

The Quilter businesses will be re-branded to Quilter over a period of approximately two years following separation from Old Mutual:

  • Intrinsic to Quilter Financial Planning
  • Private Client Advisers to Quilter Private Client Advisers
  • The Multi-Asset business to Quilter Investors
  • The UK Platform to Quilter Wealth Solutions
  • The International business to become Quilter International
  • The Heritage life assurance business to Quilter Life Assurance
  • Quilter Cheviot will retain its name.

On 19 December 2017, Old Mutual Wealth announced that it has agreed to sell its Single Strategy asset management business to the Single Strategy Management team and funds managed by TA Associates. The proposed transaction is subject to customary closing conditions, including regulatory approvals. 

Quilter is part of Old Mutual plc, a FTSE 100 group that provides investment, savings, insurance and banking. For the year ended 31 December 2017, Old Mutual reported an adjusted operating profit before tax of £2.0 billion. For further information on Old Mutual plc and the underlying businesses, please visit the corporate website at www.oldmutualplc.com.

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