Morningstar Wealth Platform Review for Expats and HNWIs

This content first appeared on adamfayed.com

After completing the acquisition of Praemium, Morningstar joined the international wealth management platform business.

This article will therefore be a review of Morningstar’s platform for the international market.?

If you have any questions or want to invest as an expat or high-net-worth individual, you can email me ([email protected]) or use?these contact options.

This includes if you have an investment and aren’t happy, or are considering one, and want other options.

Table of Contents

1. Who is Morningstar?
2. What are the basics about the Morningstar offering?
3. What are the fees?
4. Are discretionary fund managers (DFMs) available?
5. Are US clients accepted?
6. What are the positives associated with this option?
7. What are the negatives associated with this option?
8. Conclusion

Firstly, who is Morningstar?

Moringstar is known for financial research, after being founded in the US by Joe Mansueto about forty years ago. They are listed on the stock market on the Nasdaq. Their revenues were over 2bn in 2023 and continue to grow.

More recently, Morningstar has gone into the investment platform business. They offer an investment platform both in the UK and internationally.

This article will primarily be focused on reviewing the?solution from the perspective of expats?and high-net-worth individuals who are looking for advice, even if some UK do-it-yourself clients might find it interesting.

What are the basics about the Morningstar offering?

Morningstar accepts individuals, businesses, joint accounts, charities and trusts.

In the UK market, they accept ISAs. Internationally, QROPS and QNUPS are accepted.

The majority of expat clients are investing in vanilla stand-alone accounts.

There are no fees for getting out of the accounts.

In the internationally market, they recently purchased Praemium International Limited.

What are the fees?

The charges for Custody & Administration are tiered.

Below are the fees, which are stated as a yearly percentage of account value.

• Up to ￡250,000 – 0.35%
• ￡250k – ￡500k – 0.28%
• ￡500k – ￡1m – 0.21%
• ￡1m – ￡2m – 0.14%
• ￡2m – ￡5m – 0.07%
• ￡5m – 0.03%

On top of these fees, you will pay an advisor charge, which is typically 1% per year.

Therefore, you can expect average fees of 1.1%-1.35% per year inclusive, unless you are investing millions.

If you have the account in a trust or QROPS/SIPPS, you can expect higher fees, due to trustee fees.

Are discretionary fund managers (DFMs) available?

DFMs are available. Some of the biggest ones are:

• Brewin Dolphin Limited
• Brooks Macdonald?
• Canaccord?Wealth Management
• Investec?Wealth Management
• Schroders (C.I.) Limited

Are US clients accepted?

Yes they are. They have a US Taxpayers Service, which gives access to SEC-regulated investment managers and tax reporting.

What are the positives associated with this option?

The main positives are:

• The US service is one of the best in the?expat investing?space, if not the best.
• The fees are relatively good but not the best (more on that later), and very good for smaller clients.
• There is a decent amount of asset choice available?
• The IT software is one of the best in the expat market
• There are no fees for getting out.

What are the negatives associated with this option?

The main negatives associated with this platform are:

• The fees aren’t as good as you might think. Let’s give an example of somebody who invests 250,000 GBP or USD. If their advisor charges 1% per year, the total charges are 1.35% as long as you keep the account open. In comparison, some competitors (other platforms or life assurance platforms), might charge 1.1%-1.3% for six or eight years + a fixed fee of $500-$800 a year.?
• Therefore, on the surface Morningstar looks cheaper, but they aren’t in many cases, if you include the advisor fees. Getting charged, as an example, 1.6% for eight years only, is much cheaper, long-term, compared to 1.35% forever. What is more, some alternative assets can be obtained with no extra fees, including platform charges.
• UK expats and some others don’t get the tax-breaks which can be obtained through tax wrappers/investment bonds.
• Perhaps the biggest negative is the lack of alternative assets. High-net-worth individuals usually want to gain access to a wide range of investments, including private debt, hedge funds, private equity and enhanced fixed-return options such as insured investments. This option is lacking in these options.
• Following on from the last point, conventional advisors who offer conventional advice will suggest this platform. If you are looking for more creative options, or more broad diversification, you should look elsewhere.?

Conclusion

For high-net-worth individuals, there are better options than this. The restrictions on asset allocation are a major negative.

The fees are also not as good as they first appear.

However, the technology is first-class and for expat Americans this is possibly the best expat investment platform, or certainly one of the best.

Pained by financial indecision? Want to invest with Adam?

The information shared in this article is subject to changes.