Transparency at last!

I have written many articles touching on the subject of the hidden fees and charges that are normal in the financial industry, most of which are not only unknown to those that buy the products (pensions, savings plans, tracker bonds, share portfolios...etc.), but unknown to those that sell them too.

On January 3rd this year, new European rules came into being that means all purveyors of investment products (and their agents) must issue a full declaration of costs, included in a document known as the Key Investor Information Document (KIID). For the first time, people buying (and selling) these financial instruments must be made aware of all costs.  

I have run my own calculations in the past and found that far more fees and charges must be levied than my client knew about, otherwise the financial results of client investments that I reviewed did not make any sense.  Once you know the number of payments made, the date of those payments and their current value, it is relatively easy for any trained Financial Planner to calculate the real investment yield. The problem has been that the yield being reported by the investment institutions did not match the one I was calculating, indeed, on every occasion the return being quoted was considerably higher than the REAL return. The only conclusion could have been that some of my client's money was not making it into the investment product, indicating the existence of fees & costs. Having the gross yield (the returns being reported by many investment products were (and still are) quoted before fees are applied) from the institution, it is also relatively easy for a Financial Planner to calculate the true costs.

Now that the regulations have improved I invite any my LinkedIn connections with existing savings or pension's plans, tracker bonds, discretionary share portfolios or any other saving/investment vehicle to get on to your provider/broker/adviser and seek the KIDD for them. I further invite you to send me a copy of the document you receive (email me at: [email protected], quoting the reference "KiddLinked-22018") & I will tell you if the same, or similar, product can be made available at either a lesser cost, with enhanced security and/or with improved terms & conditions.

For those of you contemplating a new savings/investment plan, you should automatically receive the KIDD and I make the same invitation to you, send me a copy and I will tell you whether improved terms can be made available.

Paul A. Overy QFA, FLIA

February 2018