Quilter Cheviot and Rathbone Investment Management have joined forces to create a transparent pricing comparison model for calculating the total account costs of using a discretionary investment management service.
This price comparison model will seek to express total account costs as an annual percentage, not unlike the ongoing charges figure for collectives.
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The move comes as financial advisers increasingly want to understand total account costs beyond the annual management charge as part of their due diligence.
Both the firms hope that this standard methodology will encourage the creation of an industry standard for discretionary managed portfolios.
A survey of potential private clients, commissioned by Rathbones, has revealed that a high proportion of those surveyed were unsure about exactly how much a discretionary investment management service would cost them, while a large number of those surveyed thought that a discretionary service would be of value to them.
Quilter Cheviot executive director Pamela Reid said: "We feel there is a need to ensure that advisers and clients can compare apples with apples. For too long discretionary investment managers have responded to the same due diligence questions using a variety of assumptions, making it difficult for an adviser or client to see the difference in terms of total costs.
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By GlobalData"Capita Financial Solutions are also keen to adopt this method for their new comparison tool, Fusion," Reid added.
Rathbones head of investment management Paul Chavasse said: "We are keen to encourage other discretionary investment managers to adopt this methodology and have had a number of initial discussions with other industry participants.
"We believe that this level of transparency is essential so that the value of a discretionary investment manager is clear for the client.
"It is hoped that by introducing a standard total account charge calculation that financial advisers will be able to compare relative costs and services provided, enhancing the quality of service they deliver to their clients as a result," Chavasse added.
