The FCA have suggested that all firms construct a methodology so that clients can ascertain the performance of their recommended portfolios. One such suggested methodology to achieve this is for firms to construct a model portfolio and distribute this to clients in the form of a factsheet.
As clients will be aware, Midas have been managing a discretionary balanced (capital growth and income) portfolio for clients for a number of years. What is new is we have detailed this portfolio on a factsheet which we will now distribute to clients on our monthly e-mail to clients. The factsheet will develop as it progresses.
We have been reviewing what fees our competitors charge on a £250,000 discretionary portfolio:
|Company||Discretionary Management fee %|
|Rathbone Brothers plc||1.0|
|Pilling & Co Stockbrokers||1.0|
|Brewin Dolphin plc||1.3|
|Equilibrium Asset Management Limited||1.5|
|Midas Investment Management Limited||0 or 1.0¹|
¹ based on performance
In view of the above, we have decided to give our clients even better value for money and bear some of their risks within our business model. So we have good news for all current clients using our discretionary portfolio service.
We are altering our charges so that we charge you purely a Performance Based charge. The Performance based charge is set at 1.0 per cent of the total portfolio value per annum plus VAT, which is higher than our 0.5 per cent per annum plus VAT current charge. However, the new fee will only be charged if the performance for the period to the end of the year in question exceeds the agreed benchmark (with the benchmark as agreed by the client, but normally being the Asset Risk Consultants Sterling Balanced Asset Private Client Index).
Any NISA wrapper charge would again be an additional 0.75 per cent which would be charged regardless of performance. This email does not apply to IHT portfolios.
“Great, but I am advisory so why would I want to move to discretionary?”
A key drawback to the advisory services is that, while a manager will complete the investment transactions on your behalf, this can only be done after he or she has received your approval, (either verbally or in writing). This can be a slow process as you may not be available when the manager tries to contact you and thus you may miss out on a short-term investment opportunity.
Our Discretionary Management service offers an attractive and convenient solution for those without the time or inclination to take an active role in managing their investments. For clients who prefer to make the fullest use of our expertise, a dedicated Investment Manager will take care of everything associated with the day-to-day running of a portfolio, from determining and maintaining the most appropriate blend of assets, to monitoring and managing risk, to dealing and administration.
Controls that you retain:
- We still send you contract notes after every trade for your records.
- You still have the web log in to check your portfolio – which is available on a 24 hour basis.
- We must manage the portfolio in line with your risk profile and investment objectives or we will be punished by our regulator.
- You can cancel the service with immediate notice and revert back to the advisory service if this service does not work well for you and only pay a pro rata fee for the time you took the service.
As ever, please do not hesitate to contact us on 0161 228 1709 if you would like any further information on our model portfolio, investment ideas or if we can assist you with any of your financial requirements.
Midas Investment Management Limited