When you invest through an international financial adviser, the headline fee is rarely the whole story. Investment structures in the international market often involve multiple layers of cost, some of which are not immediately visible. Understanding these layers — and how they combine — is essential to knowing what you are actually paying and whether your investments are working hard enough to overcome the drag of fees.
The layers of international investment cost
Adviser fee
This is what you pay your financial adviser for their advice and ongoing service. It is typically 0.5% to 1.5% per year, charged as a percentage of your invested assets. Some advisers charge a fixed fee instead. This is the most visible cost, but it is often only a third of the total.
Platform fee
Your investments are held on an investment platform, which provides administration, reporting, valuation and access to investment funds. The platform charges a fee for this service, typically 0.15% to 0.5% per year. Some platforms charge a flat fee rather than a percentage.
Custody fee
The custodian is the institution that physically holds your assets and ensures they are safe. In many cases, the platform and custodian are the same entity, and the fee is combined. In other cases, there is a separate custody charge. This is typically 0.05% to 0.2% per year.
DFM (Discretionary Fund Manager) fee
If your adviser uses a Discretionary Fund Manager to manage your investments, the DFM charges a fee for selecting and adjusting your portfolio. This is typically 0.5% to 1.5% per year. A DFM makes investment decisions on your behalf within an agreed mandate, without needing to consult you on each trade.
Fund charges (OCF)
Each investment fund you hold has its own ongoing charge figure (OCF), which covers the fund manager's costs. Passive index funds may charge 0.1% to 0.2%. Actively managed funds may charge 0.5% to 1.5% or more. The OCF is deducted from the fund's assets, so you do not see it as a separate charge — but it reduces your returns.
Product charges
Some international investment products (insurance bonds, portfolio bonds) have their own product-level charges on top of the underlying fund charges. These can include policy fees, administration charges and bid/offer spreads. Ask for a full breakdown of all product-level charges.
Transaction costs
Every time an investment is bought or sold, there are transaction costs: dealing fees, bid/offer spreads, and in some markets, stamp duty or transaction taxes. These are not included in the OCF and are often overlooked. For actively traded portfolios, they can add up.
FX (foreign exchange) costs
If your investments are in a different currency from your contribution currency, or if funds are bought in a currency different from your base currency, there are foreign exchange costs. These are often embedded in the exchange rate rather than shown as a separate fee, making them hard to spot. On international transfers, using your bank rather than a specialist currency broker can add 1–2% to the cost.
Entry and exit charges
Some investment products charge an initial fee when you invest or a penalty when you withdraw within a set period. Entry charges are less common than they were, but exit penalties still exist in some international products. These can be significant — sometimes 5% or more if you withdraw in the early years.
An illustrative example
Let's say you invest £200,000 through an international adviser. Here is how the costs might stack up:
| Layer | Rate | Annual cost | |---|---|---| | Adviser fee | 1.0% | £2,000 | | Platform + custody | 0.30% | £600 | | DFM fee | 0.75% | £1,500 | | Fund charges (blended) | 0.70% | £1,400 | | Transaction costs (est.) | 0.15% | £300 | | FX costs (est.) | 0.10% | £200 | | Total | 3.0% | £6,000 |
On £200,000, that is £6,000 per year in total costs. Over 20 years, assuming 5% gross investment growth, the cumulative cost would be approximately £190,000 — nearly as much as your original investment.
This is why understanding total cost matters. A 1% adviser fee sounds reasonable, but when the total cost is 3%, your investments need to grow by 3% per year just to stand still.
How to reduce costs
You cannot eliminate investment costs, but you can manage them:
- Ask for the total annual cost in writing, including all layers
- Check whether the adviser uses clean share classes (lower-cost fund units without embedded commission)
- Ask whether passive funds are appropriate for part of your portfolio — they typically have much lower charges
- Compare the total cost with what is available in the market — our guide to international financial adviser fees explains what to expect
- Ask about exit penalties before investing — avoid products that lock you in
What is a DFM?
A Discretionary Fund Manager (DFM) is an investment professional who manages your portfolio on a discretionary basis — meaning they make investment decisions without consulting you on each individual trade. DFMs are used by advisers who do not have in-house investment management capabilities, or who want to outsource the day-to-day investment decisions.
DFMs charge a fee for this service, typically 0.5% to 1.5% per year. This is on top of the adviser fee and platform fee. Some advisers offer both advisory (where you approve each decision) and discretionary (where the DFM decides) options. Understand which model you are in and what it costs.
What is a clean share class?
A clean share class is a version of a fund that does not include commission or platform rebates in its charge. Before regulatory reforms in the UK and Europe, fund charges included embedded commission that was paid back to advisers — sometimes 1% or more per year. Clean share classes strip this out, leaving only the genuine fund management cost.
Clean share classes are typically significantly cheaper than legacy retail share classes. If your adviser is using non-clean share classes, ask why. There may be a legitimate reason, but in most cases, clean share classes are the better option.
The bottom line
International investment fees are complex, but they are not incomprehensible. Ask for the total cost, understand each layer, and compare it with what is available in the market. An adviser who is transparent about costs is generally more trustworthy than one who is not.
Link Independent can connect you with advisers who are clear about their fee structures. Find an adviser or use the Expat Planner to get a personalised financial readiness report.
This guide is for educational purposes only and does not constitute financial advice. Investment costs vary between products and providers. Always ask for a personalised illustration of total costs before investing.