The FE Analytics + Reduction in Yield (RIY) Calculator gives clients an inclusive view of the impact of costs on their portfolio and on returns in the future and is fully integrated with FE Analytics.
Access is free for existing FE users and can be used for all investment types.
The latest development from FE comes at a time when the asset management industry is facing increasing scrutiny to be transparent about costs and demonstrating value for money.
Fund providers are now required under Mifid II to list all transaction and trading charges separately from the ongoing charges figure (OCF). This has already led to some startling revelations, with some funds charging investors nearly double the OCF of their funds.
Advisers have also received pressure from the Financial Conduct Authority to give clients the full picture on fees and are now required to undertake appropriate cost comparisons when recommending investments.
As a result, RIY calculations have become a popular alternative of factoring in all costs for comparisons with other products, instead of relying on the “lengthy and manual process” of dealing with fund providers, said Matt Surfleet, commercial director at FE.
“Many advisers face difficulties when searching for the necessary charges information and routinely rely on projection data to identify and demonstrate the impact of charges on real returns,” he said.
“Traditionally, projections on existing plans have been obtained straight from the provider and compared to projections on the new plan to show the monetary impact of the charges. This method can be lengthy and does not always consider every type of charge, for instance advisers’ own charges, making comparisons difficult.”
FE’s tool allows advisers to add on their own charges and any other platform charges in addition to existing fund charges, which Surfleet said will help them obtain the most accurate reduction in yield figure of their recommended portfolio against an existing portfolio.
