1. What is the purpose of this statement?
This statement provides you with an overview of the costs and charges related to the services that we provide to you, all in one place. Where relevant, items such as ongoing fees, one off charges and transaction costs together with third party costs, for example taxes and ‘indirect costs’ are included. This meets our new regulatory obligation to provide you with this statement annually. For an explanation of indirect costs please see question 6 below.
2. Am I now paying more?
No, the costs and charges have not changed. This may however be the first time that you have seen ’indirect costs’ included in a statement or report that we provide to you. For an explanation of ’indirect costs’ please see question 6 below.
3. The costs seem higher than I expected. Why might this be?
The costs and charges that are presented in this statement do not reflect a change in our charging structure. Costs charged by JM Finn have always been included within periodic statements and contract notes. The difference with this new statement is that indirect costs are now detailed explicitly. For an explanation of ’indirect costs’ please see question 6 below.
4. Have returns always been quoted net of fees in my reports?
Yes, we have always reported investment performance after all expenses have been taken.
5. What is the reason for itemising these costs and charges in such detail?
We want to show you the breakdown of your costs and charges, not just the headline figure.
6. What are the indirect costs?
The costs that are embedded within investment products by the product provider and which are therefore not shown as a direct payment coming out of the portfolio are itemised as indirect costs. Product providers have always charged their fees directly to products in this way. It is worth noting that these costs are usually calculated by the product provider and are often referred to as ’fund costs’.
7. What is an investment product?
An investment product is a collective investment scheme (often known as a fund) where investors participate in returns from pooled investments; examples are unit trusts, open ended investment companies (OEICs), investment trusts and exchange traded funds (ETFs). The manager of the collective investment scheme (product provider or fund manager) takes their costs and charges directly from the product.
8. How often will this statement be sent?
The statement will be sent on an annual basis.
9. Can I reduce the amount of paperwork you send me?
We endeavour to limit the amount of paperwork we send to what is necessary and frequently review our reporting arrangements. For those clients not yet set up on our portal, it is possible to receive all the formal reporting, including this annual costs and charges statement electronically; please contact your investment manager to register.
10. What does the statement include if I have changed service type during the period?
If you have changed service type in the period, the statement takes account of the different levels of costs and charges associated with those different service types.
11. How is the percentage of total costs and charges calculated?
The percentage is calculated using an average portfolio value. The average portfolio value is normally calculated using the average of month end values over the reporting period. The 2018 reporting period is adjusted for accounts that have been opened in the period. Where a statement includes partial months, additional valuation dates may be included in calculating the average.
12. Which costs and charges are included?
Costs and charges that are invoiced separately or taken from a different portfolio are not included in this statement. However, costs and charges deducted from this portfolio in respect of other portfolios will be included.
13. How are investment product costs calculated and why might they be different to figures published in the manufacturer’s literature?
We receive the investment product costs from the product provider through our data service provider. We ask for all charges relating to the management and running of the product. This includes one off charges, ongoing charges, costs related to transactions and incidental costs, where they apply, such as performance fees. This total figure will normally be higher than the Ongoing Charges Figure (OCF) or Total Expense Ratio (TER), which you may have been used to seeing published in factsheets and Key Investor Information Documents (KIIDs). Where we have been unable to obtain the total product costs from the product provider, we have estimated the cost based on the experience and views of our specialists.
14. I no longer have an account with JM Finn, so why have I received a costs and charges statement?
We need to send you an annual statement of all costs and charges even if your account with us was only open for part of the reporting period or has since been closed.
15. I have only recently opened my account, why have I received a costs statement for the full year?
If you have only recently opened your account, we are still obliged to send you a full costs and charges statement.
16. Can I have a more detailed breakdown?
We have provided the statement at a detailed level, but of course would be happy to provide any further information that you would like regarding your costs and charges. Please contact your investment manager, who will be able to assist you.
17. Why do you invest in third party investment products that incur additional charges?
A third party investment product is a collective investment where a product provider (fund manager) pools money with other investors to invest in securities. Typically these are purchased to gain a spread of interests across sectors and geographies and to manage risk. They also offer diversity within specialist themes and can access areas of the market not usually open to the private investor.
18. Will I receive a separate statement for each individual portfolio?
We are required to provide the costs and charges statement on an individual portfolio basis. There are very limited exceptions to this. These are where a client has both a general portfolio and an ISA or Corporation of Lloyds accounts that are reported on and managed on a combined basis. In these scenarios, you will receive one combined statement for both the general and ISA portfolios or one combined statement for all Lloyds accounts.
19. My account is managed together with someone else’s. Why have we received two costs and charges statements rather than one combined statement?
We are required to provide the costs and charges statement on an individual portfolio basis.
Please note that we will update these Q&A if we receive questions from clients that haven’t been answered here and that we think other clients would benefit from.