81% of private investors think that investment advice is biased towards generating fees for the industry rather than towards delivering better investment performance, according to research we conducted.
The research also suggests that high fees are now seen as such a problem that a substantial proportion of investors are turning their back on financial advice and trying a DIY approach to investing.
One in two (46%) savers risk forfeiting what should be higher investment returns in the long term because they believe that managing their own investments offers them the best value for money.
Consumers are increasingly shy of the high costs and the lack of transparency associated with active fund managers and financial advisers – often for good reasons.
Fees can be so high and eat so substantially into returns that they can even impact the quality of life during retirement.
Unless the investment industry’s fees come down, savers will continue to opt out of using professional advice – risking lower returns, in the long term, as a result.
Advances in technology mean that investors should not have to be charged high fees to get a first class service. High fees mean that many investors are giving up on wealth management services and trying to do everything themselves but without professional asset allocation they risk severe underperformance.
Delivering healthy long-term investment returns is a complex process and investors really do benefit from the expertise offered by professional help even an area as seemingly simple as maintaining a properly diversified portfolio.
A third (33%) of savers do not seek expert investment advice because they believe commission costs will be too expensive.
This is something that needs to be addressed. Products need to be made cheaper, unnecessary costs need to be eliminated and investors need to have more visibility over where their money is invested, what it is doing and how it is performing.
If this does not happen, investors will continue to turn their backs on the use of professionals.
Their money will not be working as hard as it could be for them – meaning their returns will ultimately suffer as a result.
Moneyfarm uses highly innovative technology to deliver top quality and transparent wealth management services, offering competitive returns at a low-cost price.
Survey of 761 savings / ISA account holders carried out by Atomik Research on behalf of Moneyfarm, April 2016