Fund advisory fees climb 17%

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8 Sep 2017

Average investment advisory fees have increased by 17% in the past three years, according to Fitz Partners, a researcher.

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Average investment advisory fees have increased by 17% in the past three years, according to Fitz Partners, a researcher.

Average investment advisory fees have increased by 17% in the past three years, according to Fitz Partners, a researcher.

Trustees now pay on average 41bps for investment advice compared to 35bps in 2014, while gross management fees (including distribution fees) fell 4% to 1.02% from 1.06%.

More significantly, Fitz Partners’ Investment Advisory Fee Benchmarking report shows that the share of the management fee paid for investment advice increased by 22% in three years. When considering equity funds, the increase is 20%.

So the revenue or margin received by fund houses from management fees has in effect shrunk, once the investment adviser takes its cut and distribution costs are subtracted.

Fitz Partners claims that this research is based on asset managers’ confidential fee schedules.

Fitz Partners chief executive Hugues Gillibert said that as asset managers are watching margins ever more closely, it has become essential to benchmark all components of fund management fees.

“It is remarkable to see that for many European asset managers, the part of management fees paid for investment advisory services has increased substantially and has been eating into asset managers’ margins.”

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