The main recommendation is that clients have to understand the costs drivers and pricing models better to be able to cut costs. However, the pricing models offered by most wealth managers are often intransparent and only report the direct costs either as a “flat-fee”
“Widely used vehicles to hide costs are funds and structured products which can cost up to 5% per year”, explains Christian Nolterieke, Research Director of MyPrivateBanking.com. “In a pricing model based on transaction-
Most of the clients are not aware that a huge chunk of the hidden costs charged by und providers are actually returned to the wealth managers as a reward for “encouraging”
By rather simple measures, detailed in the MyPrivateBanking.com guide, clients can gain transparency and take control over costs:
1) Choosing a strategy and a particular wealth manager best for their investment personality and amount.
2) Pushing the wealth manager for full transparency, the use of cost-effective products, and full disclosure and payback of all kickbacks and commissions.
3) Choosing a price-competitive wealth manager by meeting various wealth managers, assessing their competence and requesting an offer.
4) Opting out of all services provided by the wealth manager that are not required, or that can be done somewhere else at a cheaper rate.
Finally, and very important: Clients should negotiate. As Steffen Binder, MyPrivateBanking.com Managing Director points out: “There is plenty of room for fee reductions. Clients should educate themselves about the market and communicate precise and determined their requirements;
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MyPrivateBanking.com is an independent platform for information and networking for wealthy private clients across the world. Established in 2009 in Switzerland, MyPrivateBanking.com offers a variety of information to assist investors in making their decisions. This includes in-house research, articles and updates related to wealth management, detailed bank directories and client evaluations of wealth managers across the world. The interactive “MyWealth”