“John had no idea his investment fees were so high!”

Sam Kelly DipPFS, EFA, BA (Hons)
Managing Partner Chorus Financial

John came to see me because he wanted a second opinion on an investment plan he had set up when he first moved to Spain 5 years ago. Somehow, despite strong financial markets, John’s portfolio had barely beaten inflation in all that time.

John was helpful enough to bring along all the original paperwork and valuations his IFA had provided since he started his plan, along with some Fund Fact Sheets.

The first thing I noticed was that the original recommendation had included a long tie-in and a high annual bond fee. I won’t name the specific provider in this article, but it was a Spanish compliant investment bond, which are offered by companies like Quilter (formerly OMI), Prudential, SEB, STM and Lombard International.

I also quickly realised that the funds that had been recommended to John had incredibly high annual fees and below average performance.

John’s had been recommended funds that were costing up to 5 times more than the average due to undisclosed fees they were paying to his adviser.

Due to the complex way the fees were disguised and layered, John had no idea his investment fees were so high. There were only 2 small reassurances I could make. Firstly, he was not alone – 10,000s of expats in Spain have been set-up with similarly over-priced portfolios as this is widely practised by firms here. Secondly, it’s a very easy problem to solve.

John agreed for Chorus to take over the management of his portfolio, and we immediately sold those over-priced, under-performing funds.

Unfortunately, as John had already signed paperwork for that long tie-in 5 years ago, there was nothing I could do about those high bond fees, and he would continue to pay them for a further 5 years. It’s just a shame he hadn’t sought a second opinion from us before signing up.

The good news is that John now has a diverse portfolio of FCA regulated funds, with a strong track record from well-known, UK based investment institutions. Even with that high bond fee remaining in place, his annual fees have now reduced by 1.6%, meaning John will save significant amounts in fees over the coming years, which will have a positive effect on the growth of his plan.

Although past performance can never be a guarantee of future performance, the portfolio we placed him into has substantially outperformed his existing portfolio historically, and I’m confident he’ll see better returns moving forward.

The exact overall fees you may pay for any investment or pension solution will depend on your specific circumstances so can vary, but Chorus pride ourselves on fair & transparent fees and are now offering Spanish compliant investment bonds and SIPP/QROPs solutions with no tie-in and fully transparent, low fees.

If you would like me to demonstrate where I can help reduce costs and improve the returns on your existing portfolio or a new recommendation, including QROPS, SIPPs and Spanish Compliant investment Bonds from companies like Quilter (formerly OMI), Prudential, SEB, STM and Lombard International, please call/whatsapp me today for a no obligation consultation on +34 664 398 702 or email s.kelly@chorusfinancial.es for more information.