Exit fees are a barrier to competition and are a hangover from the old school way of investing where, with smoke and mirrors and opaque charging, clients and advisers could be so bamboozled with information there was no way of knowing exactly how much it would cost to invest with a platform.
Advisers, of course, do not always want a completely ‘all inclusive’ style of charging structure from a platform, as you may be paying for knobs and whistles that you have no intention of using. An exit charge, though, is a stealth tax. You are being charged ‘extra’ for something that it is highly likely you are going to use, as at some stage your clients will be wanting to en-cash. Exit fees are a backwards step and have no place in an industry where transparency and flexibility are the goal posts.
Bill Vasilieff is chief executive of Novia
Key points
The levying of exit fees is a retrograde step and will only serve to lose the trust of the client, and damage the reputation of the industry and platforms more specifically.
Some platforms promise a “waiving”of fees for certain products over certain time frames, or highlight “special offers” for entrance fees over given time frames.
Issues facing platforms accepting re-registration business can include complications over share classes.
