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As we come to terms with the economic fallout caused by COVID-19 (Coronavirus), the importance of sound financial planning is greater than ever. The inevitable impact that reduced income and furloughed employment have had on peoples’ everyday lives has been profound.


So, we want to remind you of the importance of financial prudence and the value of long-term planning. For instance, do you have investments, Independent Savings Accounts, or pension plans? If so, do you know how much you’re paying and what you’re getting for that money?


In our experience, many investors simply don’t know the answers to those questions. What’s more, some service providers aren’t as forthcoming with that information as we might like them to be.


Who are you paying; what are you paying for; why does it matter?

The first thing you should understand is that, typically, there are three things to consider when it comes to investing your hard earned cash:

  1. How much are you paying?
  2. What are you paying for?
  3. What value does this add?


Who am I paying?

How much am I paying?

What am I paying for?

What’s the value added?

Product Provider / Platform

Typically… 0.25% - 0.5% per annum of the value of your portfolio.

  • To hold money


  • Administer accounts


  • Send statements

Limited. This is effectively an administrative function.

Investment / Fund Manager

Typically… 0.1% - 0.3% per annum of the value of your portfolio (for a lower cost, passive / tracker portfolio).




0.6% - 2% per annum of your investments (for a higher cost, tactical / active portfolio).



  • Invest your money


  • Make investment decisions


  • Place trades for your portfolio

If you choose a tracker or passive solution, it aims to capture the long term returns of “the market”. And, there’s less costs, of course.


Alternatively, if you choose a tactical or active solution, you’re hoping to beat “the market” after costs over time, but this is not guaranteed.

Independent Financial Advisor

Typically… 0.5% - 1% per annum of the value of your portfolio.


Please note, some advisors will offer a fixed fee or hourly rate instead of a percentage of your portfolio.

  • A personal advisor to help you formulate your financial plan, tax planning & investment strategy in line with your goals, financial circumstances and risk profile.


  • An independent specialist to recommend which products, providers, platforms and investments to use.


  • Regular reviews and monitoring of the progress of your plan.


  • Recommendations and the implementation of any changes.

With the right advisor, this can be the most valuable part of the value chain.


A great financial advisor will help you make sound, informed decisions about your money based on evidence and analysis, avoiding costly mistakes.


Vanguard estimate that the annual benefit of using a regulated financial advisor is as much as 3% per annum on your long-term returns. Essentially, with the right advisor, the costs should pay for themselves.*


What’s more, you’ll also benefit from full regulatory protections if the firm is regulated by the FCA.

*source Vanguard Adviser Alpha Study


What difference do the costs actually make?

In the end, it comes down to simple maths. Unless a higher cost arrangement is delivering additional return or value, it is mathematically bound to struggle against lower cost alternatives.


Let’s use an example. Here are two portfolios, each with £100,000 invested over a term of 20 years in retirement. They have the following hypothetical charges:



Higher Cost

Lower  Cost

Platform Charge










2.4% pa

1.15% pa


We’ll assume that the investments grow at a nominal rate of 5% per annum, with inflation at 2% throughout the term. Check out the difference below.

As you can see, assuming the same gross return and same rate of inflation, a lower cost solution could materially improve your outcomes. However, it is worth noting, of course, that the higher cost solution may be seeking to beat the gross returns offered by a lower cost solution to offset this difference in costs. There are no guarantees using lower or higher cost funds will outperform each other. Depending on research, both passive and active (and more expensive) funds can generate superior performance at different times.


Could you benefit from a review of your arrangements?

Yes, in our opinion, definitely.


Many people have funds invested in older products, investments which are underperforming, cost more than they ought to, are out of line with their risk profile, and perhaps don’t possess the features they now require. 


We’ve had recent cases where we were able to significantly reduce the total cost of investing, whilst taking into account the cost of our own financial planning advice. So, our new clients are now paying out less across the value chain while getting more back - further improving their chances of financial success in the long term.


Here at DFP, we can remove that burden, give you the right advice and guidance, and make sure you’re on the right path to meeting your goals. Fundamentally, we believe that successful investments are about investing in line with a clear plan, taking your time, being diversified, and keeping your costs down. So, get in touch today for a free, no obligation chat. And, find out how can improve your chances of success.


Investments carry risk. The value of your investment (and any income from them) can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.

Blog written by
Liam Winstanley
Director & Independent Financial Advisor at Danbro Financial Planning | Website

Liam Winstanley is a Chartered Financial Planner and Independent Financial Advisor. He has worked in financial services for well over two decades, specialising in wealth management and financial planning including things like pensions, investments, retirement planning, financial protection and estate plans.

Liam is the Director of Danbro Financial Planning and is passionate about delivering the very highest standards in service, ethics and professionalism within the financial sector.

Away from Danbro, Liam is an avid long-distance runner and also turns out for his local cricket side, Brinscall CC. He lives in Lancashire with his wife and son.


Important Information

The value of your investment can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance. Investing in shares should be regarded as a long-term investment and should fit in with your overall attitude to risk and financial circumstances.

The Financial Conduct Authority does not regulate tax advice.

Danbro Financial Planning Limited is an appointed representative of the Sense Network Limited, which is authorised and regulated by the Financial Conduct Authority. Danbro Financial Planning Limited is entered on the FS Register ( under reference 796167. The information contained within this website is subject to UK regulatory regime and is therefore restricted to consumers based in the UK.

The Financial Ombudsman Service is available to sort out individual complaints that clients and financial services business aren’t able to resolve themselves. To contact the Financial Ombudsman Service, please visit

Company number 11009261 registered in England. Danbro Financial Planning Limited Registered office address: Jubilee House, East Beach, Lytham St. Annes, United Kingdom, FY8 5FT.