Fees and Service
It can be difficult for investors to compare the fees and services between financial service providers. This often leads to investors becoming disappointed when the returns are lower than expected and/or the fees higher than they anticipated, this often occurs for a number of reasons:
We see three main problems:
1. Complicated Products
It can be very difficult for an investor to analyse exactly what they are investing in and therefore properly analyse the risk vs. return.
2. Confusing Charges
Sometimes fees are broken up into many components such as entry, exit, admin, execution, management etc. Sometimes charges such as brokerage etc. have the effect of reducing the return and are not immediately identifiable as a charge on the account.
3. Compromised Capital Gain Exposure
Structured products do not take into account the effect of each transaction on the ultimate beneficiary, there are also issues such as inbuilt capital gains to be considered when purchasing units in a fund.
Leyland IMA's avoid all of these problems as they are extremely transparent with a simple fee structure and each investment is held in the client’s name allowing all the tax benefits of direct share ownership.
We believe that investors should look at three key issues when selecting a financial product or service:
Service - Performance - Cost
This can normally be established by asking a few key questions:
- Is the service I am receiving appropriate for me?
- What am I really being charged?
- What is the performance?
- What are the entry and exit fees?
- Do I know exactly what I am investing in?
- Do I understand the risk/return of my investment?
Our quarterly management fee is 0.5% of the value of the portfolio at the start of each Quarter (Jan, April, July, Sept). The fee is drawn directly from the CMT or Margin Lending account associated with the portfolio.
This fee structure compares very favourably with many other providers, particularly when undertaking a deeper analysis of the entry, exit, brokerage, administration and performance fees often charged elsewhere.
There are no additional or hidden fees when dealing with Leyland Private Asset Management which results in the client receiving more of the real return from the portfolio.
By way of comparison we have provided a chart below comparing the Leyland fee structure with that of another firm which charges 1% of assets under management and 20% of profits. Whilst this may seem attractive to investors at first glance, an analysis of the numbers reveals that clients are substantially better off under a flat fee structure:
The two tables below highlight the difference in structure, transparency and service between Individually Managed Accounts (IMA’s), Separately Managed Accounts (SMA’s) and Managed Funds.
