Do wealth mgt. clients know how much they are charged?

From the underserved to the mass aflluent, and all the way up to HNW; the Transparency movement makes us think that a large percentage know what they are charged because they care.


I don’t now stats on this but anecdotally most investors know it is opaque and expensive but cannot put a number on it. The UHNW probably know and have the clout to change it and the Unadvised know that every penny counts, so innovation will come from these two ends of the barbell.

I don’t think that a lot of UHNW know either. The DIY guys know exactly what fees they are paying but the rest of them probably don’t. The fee structure of a lot of the large wealth mgmt groups are such that it is really hard to peel it all apart. And fees that are basically from funds to the wealth mgrs are rarely discussed. Only the wealth mgrs who state that they give those fees back to their clients are transparent about what is, in essence, kick backs.


makes sense, it is the DIY segment of the UHNWI that are tech savvy and like to be personally in control who are the early adopters

I agree with you Bernard that the UHNWI will force changes to banking fees since there are more alternatives in the form of fintech offerings or bank competitors.

However, as much as the unbanked/unadvised will have little leverage to force fees lower. But at least they will gratefully take any opportunity to pay less and here come fintech into play.


Yes they do - UHNWI for the past four years have been maximising their performances by hard bargaining fees. Their family offices have been very good at blackmailing banks and brokers. Reducing fees is a way to build performance :wink:

UHNWI are NEVER 100% in a Do it yourself mode. For one reason is that most of the process of tax optimisation / insurance / private deals are not standardised at all ! XML for personal income tax one day ?

ps . Thanks Bernard and Efi


@AL.of.InvestGlass what you say about UNHWI pressuring their providers on fees, reminds me of what the hedge fund industry faced. The large pension funds and endowments, would pressure them for Seperate accounts with No performance fees (i.e. only AUM).

The very wealthy do, With companies such as for instance. These guys recalculate based on every single transcation down to the penny, but it is a huge work and therefore cost is high. But actually the pure hunt for comparing fees does make very little sense. First be be aware of all of them and then sencond the key question is what you get in return. I understand that many of the portals who compare go after fees and commissions cause thats on what they have access. When we talk about pure asset management key is risk ajusted netperformance. Thats all that matters. Simple. All fine if somebody is charging the double than an asset manager as long as his performance is better. Of course fees have a strong impact on performance and chances are that when somebody is charging significantly more, that performance is below average. In our days there are still o lot of mith. Performance is a tabue. Transparency will change the rules of the game. Now go and check in which area banks resist the most to have transperency, that is then exactly where the impact is the biggest.


It is not about fees only, its about fees and what value is added in return. This chart shows the net performance of of a big number of real portfolios for CHF small, medium and high risk (blue colours) over 5 years compared to the MSCI world. Everyone in the industrie should ask himself if he really added value and if not what he has to do to really add value.


In this challenging macro enviroment (remember water freezes below zero), returns are tough. One starts with reducing costs around investing But as @marclussy reminds us, we need a value-added investment strategy (executed always correctly-low cost).


Could not agree more with the notion that it is more about fee value than fee level!

1 Like

Absolutely! Costs must come down for pure asset management. Maybe they were justified 20 years ago, but not anymore. That is not a busines case though but a logical step. That is also the reason why my excitment about most of the first generation roboadvisors is limited. It is just cheaper but nor really adding value at least in most cases. Cutting costs is never a real business model. There is a wide space for new models on the advisory/client coaching side. For this we need courage we need to leave old things behind


There are so many old things to leave behind @marclussy We started with fees (charging less). You are now dedicating your energy, into Transparency; of fees and performance! There are more areas to challenege.

Who is “challenging - disrupting” the basic financial advisory question;

Should you invest right now or not?

Any Digital advisor in the US @npappous or in Australia @SelfWealth or in Europe?

1 Like

Absolutely and the enabelling of transparency is just the first step. Much more to come, but there you got to start. Its the old school management cicle. Analyse, Decide, Implement and CONTROL if your decisions were right and this you only can do if there is transparency. I am not speaking for clients now but for the banks. How can you improve when your are flying blind in this area.


No, in general they don’t know except the UHNW. Until Mifid II will be in force the market will be driven by inducements on mutual Funds. In Italy customers don’t like financial advisors since they believe they get it for free from their trusted banks selling “products of the house”

1 Like

To the question: Should you invest now or not.

Everyone with a + on the personal balance sheet is always invested/ in a position. You either hold cash (cash = a possible short position based on long term goals), a car, house … stocks.

Cost and fees as a differentiator is a bad (1989 supply chain model) starting point.

I like to propose that the value/fees are only relevant if there is no value over benchmark/reaching the goal.
Yes, full transparency in asset management is needed for long term relationship success as the new competition will show the numbers.

The client’s goal and path should be the basis for the discussion of fees. Oh yes, a portfolio based on his/her loss toleranz.

As a first step we should ask the question:
How do I help the client reach a goal or solve a problem better than … and what is a fair price for both sides. Ask the client he may surprise you!

Happy 4th


Investors’ preference for low-cost bond funds is clear. Roughly 93% of net cash flows into taxable bond funds went to low-cost options. By “voting with their feet,” investors in both equities and bonds are showing they’ve clearly received the low-cost message.

1 Like

The equity funds with expense ratios in the lowest quartile attracted $611 billion over the last 15 years, while funds with higher expense ratios suffered net outflows.

1 Like

Market returns cant be modeled anymore with the 8% long term expected return.
So investors in this enviroment of below 2% on fixed income and below 6% on equities, become instinctively ver nimble on costs!
Let alone that the sharing economy and freemuim businesses, lead to customers demanding more for at least the same cost.

Hi All,

I’m very new here and I want to thank Efi for the invite. With all the talk about fees and lowering the fees, I’m curious how an industry can raise it’s fees? Shouldn’t we value what we do rather than be commoditized? I’m all for fair pay for a fair day’s work and I’m not in the camp to charge fees for the sake of charging fees but I do think the industry needs to stop and take a look around and create more value and perceived value.

Kind regards,