Abraham Okusanya
By Abraham Okusanya on March 22, 2021

The undeniable truth about DFM costs

Ok, you’ve outsourced the investment part of the advice process, getting rid of all that research, reporting and rebalancing, and you’re now free to focus on the planning; tax mitigation, cashflow planning, behavioural coaching etc.

Excellent. You’re now delivering a fully joined-up service, a collaboration that allows you to do what you do best, and that can only lead to better results for your clients.

But hang on a minute, aren’t we forgetting one vital element: the fees?

Logic would suggest, that if the majority of the value is coming from the planning side, then that must be reflected in the fee structure.

The split would downplay the investment management side, in all its various forms – the platform, the DFM/multi-asset fund/Model Portfolio Service etc – in favour of the personalised, bespoke service that technology can’t provide.

But unfortunately, this is where logic definitely doesn’t prevail.

How do we know? Because we’ve done the numbers.

We’ve run the figures across £100m of assets, taking a typical MPS charge of 0.36%, to see the cumulative impact of those charges over a 10-year period.

And the results are… eye-watering to say the least.

Definitely worth the next 3 minutes of your time: play now.

Published by Abraham Okusanya March 22, 2021
Abraham Okusanya