Monitoring fee

Pays for:
Looking after your overall portfolio of investments, in addition to other fees associated with the product. It can also cover such services as preparing quarterly reports and tax statements, providing advice on changes to your strategy, or providing a transaction report.

Also known as:
Asset management fee.

Cost:
0.5% to 1.5% of assets. Sometimes the fee is a lower proportion for larger amounts.

Tips:

• Ask your adviser how monitoring fees add value over and above the fees charged by the underlying product providers. Ask them to put these reasons in writing and show what the returns would be with and without a monitoring fee using real numbers from their past experience.
• Make sure you understand that your investment strategy (the mix of the various types of assets - cash, shares, bonds etc - and the products within these asset types) has a 10-20 year horizon. If well set up, it should not need the kind of attention that requires an annual monitoring fee.
• If you want to rethink your investment strategy, you might be better to pay for advice once every three years or so rather than pay an annual monitoring fee