It’s a bit of a misnomer, isn’t it, wealth manager? It all too easily conjures up images of fur coats, diamonds and yachts in Monte Carlo. That might create the wrong impression, and often is just the means by which the average person can manage their tax-free savings and pension funds.
Investors can simply use online tools or a platform to manage their equity or fund investments for an annual fee, but these fees vary considerably. Some charge a small fixed fee of as little as £10 per month, while others take a largely uncapped percentage of the money invested. You get what you pay for, however, from complete bare bones through to written investment insights, high speed of service, fund discounts, commission-free trades or limited investment guidance (not advice – you always pay extra for that). The more profitable part of the industry is ‘advised’ investment, where either one-off structural guidance is given (such as Sipp transfers or taking tax-free lump sums at the point of retirement) through to full management of one’s portfolio.
The fundamentals of the sector might appear strong – an ageing population that is often woefully underfunded for retirement coupled with the chance of more government action to force everyone to save more (auto-enrolment may just be stage one). However, this sector has put in a woeful performance in the past five years despite seemingly solid long-term trading and solid financials.