Annual fund charges published by KiwiSaver and managed fund providers allow investors to compare the cost of having your money managed by the respective providers.
This stands in contrast to fees charged by share brokers and investment advisory firms, which can be difficult to calculate. Indeed, there can be multiple levels of fees which can include costs such as portfolio management fees, advisory and custody fees, brokerage fees, cash management fees, foreign currency fees and margins and underlying fees on managed funds. However, a gap in disclosure requirements makes it difficult to calculate the overall level of these fees.
This has drawn the attention of Michael Lang from NZ Funds who has taken a look at the disclosure statements of five investment advisory firms and found that the gap in their disclosure requirements makes estimates – and therefore comparisons with managed funds – difficult.
He addresses this in an article for the New Zealand Mortgage Mag – Where are the broker fees? His research indicates that taken together, the fees charged by share brokers can be 5% to 6% of the funds under management, or higher. So while clients of brokers and advisory firms may feel they get a more tailored service, the fees can be considerably more significant than for KiwiSaver and managed funds.
The New Zealand Mortgage Mag Issue 4 2020