Monitoring fees under pressure

Reuhman and Co challenges planners over monitoring fees.

Tuesday, December 23rd 1997, 12:00AM

Wellington-based discount brokerage Reuhman and Co has thrown down the gauntlet to the financial planning fraternity over monitoring fees.
In the past the firm was offering investors buying managed funds free or a hefty discount on entry fees. Now it has launched a service, which offers free reporting, and free portfolio reviews.
Generally advisers will charge anywhere between 0.5 per cent and 2 per cent of a portfolio's value for monitoring.
Reuhman says the service is "very advantageous for investors and will inevitably cause some ripples in the investment advisory industry where high entry fees and exit fees, poor service and poor returns are of major concern."

He says "the potential savings for the investor (using this service) are huge when one considers what planners have traditionally charged."
The system is based around the use of InvestmentLink as a source for fund data and this is married together with front-end Virgil portfolio monitoring software from FAB.
InvestmentLink is an industry owned utility which provides fund and client specific data to advisers who subscribe to the service. Currently it covers 12 Australian and nine New Zealand fund managers and several others are due to be downloading their data into the system next year.
The drawback of the Reuhman service at present is that free reporting and review are only available to funds where the manager downloads their information into InvestmentLink.
Reuhman says his financial reward is the trail commission which managers pay intermediaries. This can range from between 0.25 per cent and 0.5 per cent annually of the amount invested.

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