Wealth management is about long-term relationships, but clients should know the time for a change if they aren’t 100% happy explains Wendy Spires. A large […]
Exit fees have become a hot topic, but affluent individuals need to know they are very much the exception and not the rule for client-focused wealth managers.
Starting a wealth management relationship can feel like a very weighty decision, and it is one that can be easy to put off. Whether you are completely new to professional advice or someone who knows they should seek out a better provider, the mind can find any number of excuses not to act. But before you let fears determine your course, it is essential to know whether they are well founded.
When it comes to wealth managers’ exit fees, they are invariably not.
Exit fees have been making headlines in recent times and so are cropping up more and more in conversations with the users of our service – and it is no wonder when they are reading about exit charges as high as 6% of the assets being managed. What they need to know, however, is that this is absolutely notthe norm.
What we have here is a case of a cutthroat minority tarnishing the image of the client-focused majority, and it is vital that you don’t let false assumptions influence your decisions.
One particular investment house has become synonymous with high charges and has suffered a PR nightmare stemming from the fact that it slaps punitive exit charges on clients who want to pull their money out before six years have elapsed. Meanwhile, DIY investment platforms have recently come under fire from the regulator for imposing excessive charges on investors who want to take their money elsewhere. Platforms have rushed to remove exit fees and the investment manager in question has made its justifications. Yet for the kind of wealth managers we work with, this has never been an issue because the best simply don’t charge them.
When it comes to exit fees, nothing less than an organisation’s soul is at stake. I make no exaggeration: if a wealth manager seeks to punish clients who wish to leave before they decree, I think we can infer a lot about its approach to client service and maximising profits. In contrast, if an organisation relies only on delivering strong investment performance and treating clients well in order to keep them, then we can conclude that this is a very different type of firm.
Of course, all wealth managers want long-term relationships with their clients. However, there is a right way and a wrong way to go about securing them. Trying to keep investors hostage – even for a few years – can never be a good approach.
Pressure keeps piling onto investment managers who see these tactics as a good client retention policy, so we can hopefully look forward to a time when exit fees are a thing of the past. For now, you can rest assured that with the wealth managers on our panel you will be free to leave at any time. There may be reasonable administrative fees associated with moving your investments should the need arise, but any reputable wealth manager would never seek to lock you with the threat of punishing exit charges. They understand that it’s far better to retain clients by delivering a high-quality service than through force.
I offer this reassurance in the hope that investors will not think one small contingent in the sector represents the whole. I also want to remove any niggling concerns that might prevent you from entering your first wealth management relationship, or finding a better one if your current provider isn’t meeting your needs.
If you are thinking about changing to a more suitable provider, I hope that any fears you might have had about being hit with exit fees are now laid to rest. One notorious offender aside, it is unlikely that your current provider will try to levy exit charges – and even if they do your new provider may well offset them so a move represents no cost to you.
In fact, you will find that changing wealth manager is far easier and quicker than you might imagine. Depending on the types of assets you own, transfers can usually be completed in a matter of weeks and as soon as you have signed a letter authorisation your new provider can handle all of the paperwork for you. They can even take care of notifying your old one of your intention to leave if awkward goodbyes are a concern. Changing wealth manager is not at all uncommon and the sector is very well set up to facilitate this.
The bottom line is that while your outgoing firm may be sad to see you go, they shouldn’t do anything to obstruct you. In this industry, your reputation for client service is everything, and that goes for outgoing clients as much as it does for incoming ones.
It is strange that some still see nothing wrong in making unhappy clients even more so by charging them with outrageous exit fees, but hopefully they will soon come around to the rest of the industry’s way of thinking. Just don’t let misplaced fears about exit fees hold you back from making proactive decisions now. It’s your money to have managed however you choose and the sooner you find your best-matched wealth adviser the sooner you can achieve your financial objectives.
Our expert team would be delighted to discuss any concerns you might have about starting or upgrading a wealth management relationship, so please do get in touch for an informal conversation on exit fees or any other topics you would like reassurance on before starting your search.