So how does this help advisers with their client value proposition? Discretionary Fund Manager (DFM) fees excluding fund ongoing charges figure (OCF) tend to range between 0.08% and 0.6% per annum with the average DFM fee in the UK estimated at 0.36% per annum*. When viewed on top of adviser fees of up to 1.00% per annum, taken together with the OCF of a typical active fund portfolio, the client’s total cost of investing mounts up rapidly.
The illustration below shows the cost difference versus typical DFM fee structures for different value portfolios over a 7-year period.
In response to the launch, many advisers have remarked that with a maximum annual cost of only £240 they can easily incorporate the SCore MPS cost within their ongoing adviser charges and reframe their value proposition quite dramatically.
The capped fee SCore MPS supports a very powerful value statement that advisers can use to cement relationships across their client base at a time of increasing scrutiny.
John Bennett is Head of Adviser Proposition at Sparrows Capital
*the lang cat – The Value Myth, State of the Platform Nation 2019
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