A 17-minute watch.

Stephen Mitchell is head of proposition at FE Fundinfo, and in the latest of our OctoBlast interview series, discusses the impact of advised versus non-advised fees on potential 25-year investment returns, using FE’s Reduction in Yield tool. Evaluating the results, he breaks down the various cost centres along the vertical, and offers his view on where he thinks savings could be found for better end-client outcomes. 

Having recently reached an age and level of wealth where his pension and investments were becoming too complex to self-direct, Stephen accepted the sands of time and sat down with an adviser to get his affairs in order. Having paid for an initial assessment, he was offered a risk-level 4 DFM MPS option.

Using FE tools to map his risk profile to create a passive, non-advised route, he then applied product and service fees using a FE’s Reduction in Yield calculator for the two options over a theoretical 25 year time-frame annualising 5% growth.

Unsurprisingly, a stark contrast in fees produced a stark contrast in investment returns.

Taking a lens to industry’s value chain, Stephen takes us through the impact of fees on his potential returns and offers his view on whether there’s room to manoeuvre on cost within the vertical’s four key cost centres: asset management, platform, DFM, adviser.

For more on fees, Alan Smith discusses his approach as the 5% of advisers with flat fees here, and Sam Shaw also writes on The Private Office’s pathway to fixed fees.