Mattioli Woods has revealed plans to reduce fees to 1% in light of the Financial Conduct Authority’s evaluation of the Retail Distribution Review (RDR) and the Financial Advice Market Review (FAMR).
In a trading update on Thursday, Mattioli said it is aiming for this fee target as the reviews may lead to regulatory pressure on the sector to reduce the cost to consumers. The wealth manager reported gross discretionary assets under management of £2.6bn and net inflows of £250m for the year ended 31 May 2019.
The update also revealed James Wilson will join as chief compliance and risk officer. Wilson has held senior positions at IFG Group, Royal Bank of Scotland Group, Standard Life, TD Wealth International, Speirs & Jeffrey and FNZ.
Chief executive Ian Mattioli said: “Our long-term aim continues to be to reduce clients’ total expense ratios towards 1%, meaning we are well-positioned as the market changes and evolves.”
1% will be a challenge for some businesses
Simon Bussy, director at Altus, said the industry’s ambition should be to drive costs below 1% and that those using hybrids of technology and people are already achieving fees below that level.
“The impact of regulatory reviews on the cost of advice will be particularly interesting; we have previously seen a change in the way that advisers are remunerated, with some advisers charging ongoing fees of 0.75% or 1% pa, for example. Is this sustainable, particularly when taking the others fees and charges into account that a client must pay?”
However, for some players a 1% fee or lower will be a challenge, Bussy said.
“For those who are serious and invest to truly transform their businesses, not only will they reduce the overall costs to the consumer, they will also increase business profits while reducing operational risk, but I don’t under-estimate the challenge of such a transition.”
