UK-based financial advice firm Chase de Vere has rubbished claims it channelled customers into its discretionary portfolio service which has seen portfolios underperform peers over the past two years.
According to internal company documents seen by The Times, four of the firm’s 12-strong Select portfolios have returned less than the ARC Private Client Indices over a two-year time horizon.
In addition, six portfolios have underperformed when compared with their respective Investment Association mixed investment sectors.
Out of favour
In the document, Chase de Vere blamed the poor performance on the styles of the managers running the portfolios, which it said were “out of favour”.
“Naturally we would like all portfolios to outperform their respective benchmarks over any given time period and we will continuously strive to achieve that,” The Times quoted.
The Select range was launched in June 2018 and despite the underperformance, last month the firm reported assets in the service jumped to £669m ($859.6m, €732.2m) from £40m during 2019.
Chase de Vere reported a 23% increase in profits to £13.1m during the year.
Hitting targets
In September last year, Chase de Vere head of portfolio management Ben Willis told our sister publication Portfolio Adviser it was his personal ambition to grow AuM to £1bn within three years of launch.
The Times noted that hitting this target would net the firm £3.6m a year.
According to the UK newspaper, Chase de Vere’s Select service adds 0.36% a year on top of its annual charge for advice, which is up to 1.08%.
There is also a platform fee of about 0.25% and the underlying funds cost up to a further 0.70%, taking the total to just over 2%.
It said fees in excess of 2% a year could see a pension pot lose half of its profits to charges over 30 years, according to research.
At 0.5%, an investor will lose about 10%, it added.
Willis also previously told PA the range had been priced to hit advisers’ “magic number” of a 2% all-in cost.
Factually incorrect
The Times also said it is understood that Chase de Vere customers benefit from what the firm calls a 2% annual “decency limit” on costs. However, a source claimed that this cap applies only to investments outside the Select portfolio range.
But Chase de Vere rubbished the claims, saying it chose not to engage with paper in the preparation of its article.
The firm said in a statement: “Based on our previous experience we believed they would misrepresent our company and had no intention of writing a fair and accurate article.
“In the event the article that was published was based on factually incorrect information regarding our charges and other aspects of our service.”
In February 2020, The Times also accused Chase de Vere of perpetuating a “hard selling culture” as it awards its top-selling advisers with cruises in a move reminiscent of St James’s Place’s sales perks practices.
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