Paying too much for your bank investments?

Bevan & Buckland Accountants logoBarclays Announces New Investment Charging Structure – And It’s Not Cheap!

As you may have seen, the world of financial services is changing from the end of this year, writes Gareth Tregidon, Financial Planning Manager at Bevan & Buckland.

The Financial Services Authority (FSA) is introducing legislation known as the “Retail Distribution Review”, or RDR.  Further details on what RDR is, and in particular how it may affect anyone receiving financial advice in the future, will be given in a short series of articles starting here shortly.

In the meantime, in response to the RDR Barclays has now announced details of what it will charge investment clients from January 2013.

If you use the bank’s discretionary management service, then your fees will be 1.25% per annum on the first £5m of investments.  In addition, percentage-based transactional charges will also continue to apply on purchases and sales.  The minimum investment for this service is £3m, meaning that annual fees will be at least £37,500 per year.

By comparison, most of the discretionary fund managers we work with typically charge 0.9%-1.2% per annum on the first £1m including all costs, falling in stages thereafter as the amount held increases.  The minimum investment starts at £200,000, and there is no minimum annual fee.

The differential on other types of investment management is even more pronounced.

Where you do not want or do not qualify for their discretionary management service (for example, where the amount invested is under £3m) the bank will levy an initial charge equivalent to 2% of the amount invested. This will apply on the first £250,000, dropping to 1% thereafter.  So, in theory if you invested £249,000 the charge would be £4,980, but if you invested £251,000 the charge would be £2,510!  The fees for ongoing management will be 0.75% per annum on the first £1m, once again falling in stages thereafter.

This again does not compare favourably with other services.

For example, like many firms of independent financial planners we agree any initial fee with clients in advance, usually as a fixed sum rather than a percentage of the amount to be invested.  This will be based on the amount of work involved, not how much you have to invest.  In the vast majority of cases it is significantly cheaper than working on a percentage-basis, particularly on larger sums.

So the moral of this story is that if you have an investment portfolio with Barclays, or indeed any of the other High Street banks, take a close look at the charges you are paying.

If you are unsure what you are paying or whether this represents good value, and would welcome an independent view, please do not hesitate to contact me. All initial discussions are offered free of charge and without obligation, and it could save you a fortune in fees!

Gareth Tregidon


Gareth Tregidon is manager of Bevan & Buckland’s Financial Planning Department, which operates from the firm’s Swansea, Pembroke and Haverfordwest offices. The department provides fee-based advice to personal and business clients, both from within the firm and elsewhere.

As well as having over 25 years’ experience in the provision of financial advice, Gareth is a Certified Financial PlannerCM and an accredited Later Life Adviser with the Society of Later Life Advisers (SOLLA).  He is former Chairman of the Institute of Financial Planning in South Wales, and an assessor for the internationally recognised Certified Financial PlannerCM licence.

Bevan & Buckland Accountants Swansea Tel: 01792 410100

Bevan & Buckland Accountants Haverfordwest Tel: 01437 760666

Bevan & Buckland Accountants Pembroke Tel: 01646 682383