Samnew

Sam Kelly DipPFS, EFA, BA (Hons)

Managing Partner

Chorus Financial

I’ve come across a number of clients in the above-mentioned funds. They are commonly used by certain firms here in Spain, and I wanted to provide some information that may not have reached the clients holding them.

Momentum Harmony – Momentum offer a number of different funds, so for this example I will focus on Harmony Portfolios Sterling Balanced Fund Class D, as I have seen this one a number of times here in Spain. According to the fund Key Information Document, the annual ongoing cost of this fund is 3.28%. I suspect you agree that that seems incredibly high? But this isn’t where it ends. Built into this annual ongoing fee is a 5% commission paid to the IFA. This means that you may have found yourself tied into this fund for 5 years, or face an exit penalty of up to 5% should you wish to sell it.

Moving onto the next series of funds, Russell, to give a specific example I will look at Russell Emerging Markets Equity Class R fund. As with the Harmony funds, we have discovered surprisingly high fees in these class R funds, 2.71% per annum ongoing costs on this particular fund. I’ve personally only ever seen these fund classes held in Lombard International bonds, where they are referred to as Lombard Russell funds on valuations. In my experience these valuations have not included the International Securities Identification Number (ISIN), which is a 12-digit code that clients and financial advisers can use to easily confirm information, including fees, for particular funds. Without these numbers, which are included on the vast majority of valuations I’ve seen in Spain, it can be very hard to those holding these funds to understand the true costs they are paying for their overall recommendation. I’ve also seen a number of Lombard International portfolios holding Privee Select funds, as a specific example, the Privee Select Dynamic GBP Share Class A fund has total ongoing charges of 2.29%.

If you are holding funds with particularly high charges, then there is a distinct possibility that these fund houses are paying your financial adviser to recommend these funds to you. This creates a clear conflict of interests, raising the question of whether your financial adviser is truly acting in your best interests, or simply recommending solutions that pay them. If you are also paying SIPP, QROPs, Investment Bond fees and adviser fees, you could be unaware of the true combined costs of your overall recommendation. We have seen genuine examples where clients have been unwittingly paying over 6% in combined fees per year for many years and have only discovered this when they have come to Chorus Financial for a review.

For context, Chorus have always guaranteed we would never use funds that pay us any form of fee or commission. Unlike funds costing up to 3.28% per year, as we’ve seen above, the average cost of funds in Chorus portfolios is comfortably under 1% per year. Think about the difference 2-3% in additional annual costs can make to your finances over a number of years. Beyond keeping your costs down, Chorus use the world’s leading fund houses to ensure the quality of your portfolio. You can learn more about that at: https://www.chorusfinancial.es/investment-management/

If you are in any of the above-mentioned funds, or fear that you may be in a similar fund (there are dozens being used in Spain) then you should contact Chorus Financial urgently. We have seen such funds in Investment Bonds including SEB, Quilter International, Lombard International and STM.

A short review of such a portfolio can lead to you saving significant amounts in fees each year, whilst moving to a portfolio that has been selected with your best interests in mind, rather than the interests of your financial adviser. For a free review without any obligation, call us today on +34 965 641 163, email info@chorusfinancial.es or visit www.chorusfinancial.es for more information.

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