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A New Service That Refunds You Your Fees
By Sandy Naidu | September 9, 2008
Most of us have investments in managed funds (super and non-super funds). Like with every financial product, managed funds have fees. There is a new service in Australia which pays you back a significant portion of the fees you pay to the fund manager. Trust me on this one - it is a true and a legitimate service. Let me start by giving you a bit of background into managed fund fees and then will take you through the new service.
Trailing Commissions
Trailing commissions are commissions paid by the fund manager to the adviser. The advisers are supposed to review the clients’ portfolio every year and make sure that the fund is still ideal for the client. Theoretically it is for this review the advisers gets paid every year. But in reality the commission is paid to the adviser as a ‘thank you’ for recommending the fund to their clients. If the commission was paid from the fund manager’s pocket then we have little to complain about. But the commission is paid from your investment - the commission is usually up to 1.2% of the total value of your investments each year.
Even if you don’t have a financial planner, these commissions are still taken out of your investments. In this case, the commission is taken out and retained by the fund manager. Most of the investors are not even aware that this is happening.
Entry Fees
Every time you make an investment contribution (be it initial or periodic contributions) you will be charged an entry fee. This entry fee is usually between 4 and 5%. So if you make a contribution of $10,000, then you lose between 400 and 500 dollars.
Refund Of Fees
A lot of financial planners refund their clients the entry fees and a part of trailing commission. Basically to get the refund you either have to invest through a financial planner or a broker, who is willing to to refund you the money. But not every one has a financial planner or a broker - in fact a vast majority invest into managed funds on their own. Take my case for example - I did some research and picked my own super fund. I have no financial planner. But I pay trailing commissions (and the entry fees).
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It would be nice if I could get back the commissions and fees (at least some of it). But signing up with a financial planner means seeking his advice and following his suggestions. At this stage I am not ready for that. Imagine though a broker who is your broker only for the purposes of refunding you the money and does not offer any financial advice. That would be nice, wouldn’t it. This imagination has now become a reality. A company called ‘Your Share’ does exactly that. |
Your Share
It is an Australian licensed broker. To get the refund, you have to nominate them as your broker. Then the fund manager starts paying them the commissions and they refund you a significant part of the fees you paid the fund manager.
Here is how you gain:
1. For all your existing funds you will receive a cash rebate for 50% - 70% of the trailing commission you paid. The rest is their fees for offering this service to you. All that you have to do is send them your email address and they send you a simple form to fill in. The form asks for your fund name and account number. Send the form back to them and they will inform the fund manager that they are your new brokers.
2. For all new funds (i.e you start investing in a fund today) you pay no entry fees on your initial contributions and no entry fees on your regular contributions. That is significant savings.
To be eligible for this, you have to select a fund from their list, nominate them as your broker on the application form and start investing in that fund. For your new funds, apart from entry fees, you will also receive a cash rebate for 50% - 70% of the trailing commission you paid. ‘Your Share’ has a huge list of funds in their database, so the chances of you finding the fund you are after on their list are very high.
Which Funds For ‘Your Share’
If you have one of the following investments, you can make use of the service offered by ‘Your Share’:
- Managed Funds
- Superannuation
- Pensions and Annuities
- Master trusts or Wrap accounts
- Insurance policies
- Margin Loans
Conclusion
Here are a couple of important clarifications about ‘Your Share’:
1. You are only nominating them as your broker. They have no access to your funds.
2. All your cheques are made payable to the fund manager and not to ‘Your Share’.
3. They do not offer you any financial advice.
To find out more about them click ‘Your Share’.
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One Response to “A New Service That Refunds You Your Fees”
Comments
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November 19th, 2008 at 5:46 am
We have introduced a service to refund commission on superannuation funds,managed funds,insurance policies and margin loans to refund trailling commission to clients on a quarterly basis.
We are also about to introduce referal arrangements for home loans which will refund 30% of the upfront broking commission back to clients on new loans and allow for the inclusion of a refund of trails via the Commission Refund Service.
We charge a flat fee of $25 per month per household and deduct it from the commissions revieved, ie to cover mum and dad jointly
WE also offer a fixed rate fee for service financial planning advice service.
Our motto is “it’s all about choice”
Check out our website at http://www.refundeasy.com.au.