Disclosing Fixed Fees

HR246

How do you typically display charges in suitability reports when there's a mixture of percentage based charges and fixed charges (for example, an annual fixed charge of £500 plus an annual charge of 0.50%)? When every charge is percentage based I usually prefer to use a table with one column showing the % and another column showing what that works out as in £. When there's a fixed charge thrown into the mix, can this start to look a bit misleading? I'm particularly thinking of cases where the fixed fee looks quite expensive in % terms due to the low size of the portfolio.

I'd be interested to learn how other paraplanners deal with this.

benjaminfabi

I wouldn't say it looks misleading if it is calculated correctly, the percentage might just be high.

What matters is whether the client is getting value for what they are paying. The disclosure of the fee as £ and % doesn't determine this.

I might use two columns in a table, with a note like:

Note: The fixed charge may appear high as a percentage of smaller portfolios. This is a flat fee and does not change with the size of the portfolio. Please refer to your service agreement for information about everything covered by this fee.