How Much Am I Really Paying for International Financial Advice?

Direct answer: Your total cost of international financial advice is not just the adviser fee. It includes the adviser fee, platform fee, custody fee, investment management fee, fund charges, product charges, FX costs, transaction costs, and potentially entry and exit fees. These can combine to 2–3% or more per year. Always ask for the total annual cost in writing, not just the adviser fee.

This guide explains the entire cost chain so you can understand exactly what you are paying and why. It includes an interactive illustration to help you see how different layers of charge combine.

The full cost chain

When you invest through an international financial adviser, you typically pay multiple layers of charge. Here is each layer explained:

1. Adviser fee

This is the fee paid to your financial adviser for giving advice, creating a financial plan and providing ongoing reviews.

• Initial fee: A one-off charge for setting up your plan, typically 1–3% of the amount invested, or a fixed fee
• Ongoing fee: An annual charge for continued advice, typically 0.5–1.5% of assets per year

The adviser fee is the most visible charge, but it is only one part of the total cost.

2. Platform fee

The platform is the technology and administration layer that holds and administers your investments. It provides the online portal, valuation reporting, tax reporting and administrative support.

• Typical range: 0.1–0.5% of assets per year
• Some platforms charge a fixed fee rather than a percentage

3. Custody fee

The custodian is the regulated entity that actually holds your assets. In many cases, the platform also acts as the custodian, and the custody fee is included in the platform fee. In other cases, it is a separate charge.

• Typical range: 0.05–0.3% of assets per year (if charged separately)

4. Investment manager / DFM fee

If a Discretionary Fund Manager (DFM) is used to manage your portfolio, they charge an additional fee. A DFM makes investment decisions on your behalf without consulting you on each trade.

• Typical range: 0.3–1.5% of assets per year
• Not all arrangements use a DFM — some advisers manage portfolios themselves

5. Fund charges

The underlying funds your money is invested in (for example, equity funds, bond funds) have their own charges, known as the Ongoing Charge Figure (OCF) or Total Expense Ratio (TER).

• Typical range: 0.1–1.0% per year
• Passive funds (index trackers) tend to be cheaper; actively managed funds tend to be more expensive

6. Product / wrapper charges

Some investment wrappers (for example, insurance bonds, certain offshore wrappers) have their own charges in addition to the underlying fund charges.

• Typical range: 0.2–1.0% per year
• Not all wrappers have additional charges

7. FX costs

If you invest in a currency different from your base currency, there are foreign exchange (FX) costs. These may be explicit (a visible FX fee) or implicit (a spread between the buy and sell exchange rate).

• Typical range: 0.1–1.0% per transaction (can be higher for large or less common currencies)
• FX costs can be one of the most significant hidden charges for expats

8. Transaction costs

Every time an investment is bought or sold within your portfolio, there may be transaction costs — dealing charges, stamp duty, or bid/offer spreads.

• Typical range: 0.1–0.5% per transaction
• More frequent trading means higher transaction costs

9. Entry fees

Some arrangements charge an entry fee when you first invest. This may be a percentage of the amount invested or a fixed fee.

• Typical range: 0–3% of the amount invested
• Entry fees reduce the amount that actually gets invested

10. Exit fees

Some arrangements charge an exit fee when you withdraw your money or transfer to another provider. Exit fees can be a percentage of assets or a tiered structure that decreases over time.

• Typical range: 0–5% of assets, often decreasing over 5–10 years
• Exit fees can lock you in and make it expensive to leave

Interactive fee illustration

The interactive tool below shows how different layers of charge combine. Adjust the sliders to see the total annual cost.

This is an illustration, not a typical or recommended charge. Actual costs vary significantly depending on the adviser, platform, investment approach and product structure.

Example: How charges combine

Here is a worked example showing how the layers add up:

| Layer | Example charge | |-------|---------------| | Adviser | 1.00% | | Platform | 0.30% | | Investment management (DFM) | 0.40% | | Underlying investments (fund charges) | 0.35% | | Total | 2.05% per year |

On a £100,000 portfolio, a 2.05% annual charge means paying £2,050 per year in total charges. Over 10 years, that is £20,500 — before accounting for the compounding effect of charges on investment growth.

This example excludes FX costs, transaction fees, entry fees and exit fees, which can add further charges.

Why the total cost matters

A 1% difference in annual charges may not sound like much, but over time it has a significant impact on your investment returns due to compounding.

For example, on a £100,000 portfolio growing at 5% per year before charges:

| Annual charge | Value after 20 years | |---------------|---------------------| | 1.0% | £201,800 | | 2.0% | £165,300 | | 3.0% | £135,400 |

A 2% difference in annual charges reduces your final portfolio value by approximately £66,000 over 20 years. This is why understanding the total cost — not just the adviser fee — is so important.

How to find out your total cost

To find out your total annual cost:

1. Ask your adviser for the total annual cost in writing, including all layers
2. Check the platform documentation for platform and custody fees
3. Check the fund factsheets for the OCF of each underlying fund
4. Ask about FX costs — how are they applied, and what is the typical cost?
5. Ask about transaction costs — how often is the portfolio traded, and what are the dealing charges?
6. Ask about entry and exit fees — are there any, and how are they structured?

You should receive a clear, written breakdown of all charges before you invest.

Questions to ask about fees

1. What is my total annual cost, including all layers?
2. How much of that is the adviser fee, and how much is everything else?
3. Are there any entry fees?
4. Are there any exit fees, and how are they structured?
5. What are the FX costs when I invest in a different currency?
6. How often is the portfolio traded, and what are the transaction costs?
7. Are you using clean share classes? (clean share classes do not include embedded commission)
8. Can I see a full breakdown of charges before I invest?

Summary

• Your total cost includes adviser, platform, custody, DFM, fund, product, FX, transaction, entry and exit fees
• These can combine to 2–3% or more per year
• The adviser fee is only one part of the total cost
• A 1–2% difference in annual charges has a significant impact over time
• Always ask for the total annual cost in writing before investing

If you want to understand your full financial situation before choosing an adviser, the Link Independent Expat Planner can help you organise your circumstances. Link Independent is a curated introduction service that helps expats and internationally mobile clients connect with appropriately regulated financial advisers based on their circumstances.

Find an adviser or use the Expat Planner to get started.