Page 10 - PIC-Magazine-Issue-26

Understanding
Investment Costs
Imagine you have a beautiful garden. You think buying the seeds is the only cost, right?
But what if you also have to pay for water, soil, and gardeners to keep the plants healthy?
Suddenly, it’s not just the seeds, there are costs in diff erent places.
That’s what happens with an investment portfolio. It’s like a grown-up garden full of money plants.
The costs are not always easy to see because they come from diff erent people doing diff erent jobs.
If you only look at one cost, you might miss others.
Here Are the Costs You Need to Know
Financial Adviser - Ongoing Advice Fee: This is the
money you pay to the person who helps you make
smart choices with your investments. They give advice
and check your investments regularly. Think of them
like a garden landscaper who organises and arranges
the garden.
3rd Party Dealing Broker - Transaction Charges:
Every time you plant or move a plant, there’s a cost.
It’s like paying every time you rearrange your garden.
Discretionary Fund Manager (DFM) Fee: It is like
hiring a specialist gardener to make decisions for you.
They move plants around and choose what grows
3rd Party Custody and Administration - Platform
without asking you every time. This fee pays for their
Fee: Your investments need a safe place to live, like a
skill and time.
strong greenhouse. The platform is that greenhouse.
It keeps your plants safe and handles the paperwork.
Underlying Portfolio Cost - Portfolio OCF
(Ongoing Charges Figure): Inside your portfolio are
lots of funds, like fl ower beds inside the garden. Each
bed has its own individual costs paying for soil, water,
and care. These are all bundled into the OCF.
Financial Adviser Why the Total Cost Is What Really Counts
Now, here’s the important part, if you only look at
one fl ower bed, you don’t see the whole garden.
That’s why the total cost fi gure matters most.
It tells you the real price of running your investment
garden for a year.
Example: How It Adds Up
Let’s say you have £500,000 in your portfolio. Here’s what the costs might look like:
Fee % £
Ongoing Advice Fee 0.50% £2,500
3rd Party Platform Fee 0.15% £750
Underlying Portfolio Costs Portfolio OCF 0.35% £1,750
3rd Party Dealing Broker Transaction Charges 0.07% £350
Discretionary Fund Manager Total DFM Fee 0.25% 1.32% £1,250
£6,600
ascenciaim.co.uk
If you’d like to discuss this further,
please feel free to get in touch at:
enquiries@ascenciaim.co.uk
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INDUSTRY EXPERTS
Partners In Costs