How Fowler Drew Compares to the UK Wealth Management Industry

A recent FT Money survey of 25 UK wealth management firms revealed significant differences in cost structures across the industry. For all portfolio sizes above Fowler Drew’s minimum investment threshold, our annual management fee (including platform or custody costs) is substantially lower than the industry average. This cost advantage translates directly into better financial outcomes for our clients—which is exactly how wealth management should work.

The survey included many market leaders and a selection of smaller firms, making it a reasonable representation of UK wealth management pricing. Fowler Drew was not invited to participate, but we have independently analysed the data to compare our fee structure with industry averages.

Understanding the Cost Structure in Wealth Management

1. How the Survey Was Adjusted for Fair Comparisons

The fee data collected by the FT excluded product costs, which can vary widely depending on investment strategies:

• Integrated firms (such as UK stockbrokers) often build portfolios using individual securities.
• Many firms, including integrated wealth managers, now use funds (either their own or third-party funds).
• Firms relying on actively managed funds typically incur higher product costs than those investing primarily in low-cost passive funds.

To ensure fair comparisons between firms using platform-based models (such as Fowler Drew) and integrated firms (who bundle custody and transaction services), we added a notional 0.15% per annum to platform-based firms. This reflects an industry-typical platform fee, though actual costs may range between 0.15% and 0.30%, depending on factors such as asset scale and spousal portfolio treatment.

2. What the Data Shows: Average Fees in the Industry

With this adjustment, the average total cost across the surveyed firms is:

• 0.97% per annum for a £500,000 portfolio.
• 0.64% per annum for a £5 million portfolio.

In comparison, Fowler Drew’s flat management fee of 0.5% (up to £7 million), combined with actual platform costs, represents a:

• 33% cost saving at the £500,000 level.
• 13% cost saving at the £5 million level.

If we include the impact of Fowler Drew’s preference for passive investing, which avoids the additional 0.5% per annum cost associated with active fund management, the total savings rise to between 45% and 50%.

The True Cost of Industry Fees: Impact on Returns

1. How Much Are Investors Losing to Fees?

For an investor with a £500,000 portfolio, the industry’s typical fee of 1.7% per annum (including product costs) erodes one-third of expected market returns. Assuming:

• A 5% annual return from markets (before fees, with moderate risk-taking).
• No additional alpha (since industry-wide, active management does not add value).

At lower risk levels, the proportion of fees relative to returns is even higher, making the cost wedge even more damaging.

At the higher portfolio end (£5 million+), where regressive fee scales apply, the cost wedge is still substantial:

• More than a quarter of gross expected returns.
• 40% of excess return (the premium for taking on risk).

2. Cost vs. Tax: The Hidden Wealth Erosion

For most investors, management fees represent a greater drag on wealth than tax. While tax efficiency is often a focus of wealth planning, investors should first eliminate unnecessary investment costs, as these represent a permanent reduction in compounding returns.