A recent study by Morningstar explains that European investors are paying less in fees, on average, than ever before. A new study analyses trends in fees for a group of equity and fixed-income investment categories from 2013 to 2020 and finds that fund charges are falling.
The research also debunks the myth ‘you get what you pay for’.
Since I have been working within the investment industry, I can’t say how many times fund managers, wealth managers, stockbrokers…in fact, it’s the people who want to manage your money, have used the term, ‘you get what you pay for’. I understand the point and it often makes sense to consumers. If you can’t judge whether something you purchase is better or not, the price is a differentiator. If you buy a designer suit; you expect to pay more for quality. Think about cars, washing machines, furniture, food, holidays, in fact, there is a strong relationship between price and quality. It, therefore, makes sense, if you pay more for investment service, you should get more.
Wrong.
The chances are you get less. Morningstar explains that fees are a reliable indicator of future returns. In other words, the more you pay the less you get.
Its time to revisit your portfolio with your fund managers, stockbrokers, wealth managers…whoever you delegate investment returns to, to ensure you are not paying more than you need. Morningstar also states to secure new business fund managers are reducing fees….but are your fees being reduced? Isn’t it time you asked better questions?
Want more information. Here’s a report by ESMA Annual Statistical Report on performance and costs of retail investment products in the EU