Onshore in the UK the supposedly independent advisory will typically receive a slice of initial commission between 3 and 6% for placing their clients’ money in a broker fund.
The management company will then charge up to 1.5% a year for looking after the money, while the IFA skims another 1 - 1.5% for its fund-management expertise.
Broker funds in the UK may need to achieve annual returns of at least 5% just to stand still.
Offshore, in the expatriate marketplace, it’s far worse.
Fees can be much higher for the unassuming investor who has been influenced by their supposedly independent adviser to invest in the broker fund that gives the adviser the best financial return.
What’s more, for any expat whose pension has been invested in broker funds, they are likely to be subject to trustee fees and wrapper fees on top of all the foregoing, meaning invested funds may be and remain in negative territory.