The calculator expresses the impact in a single figure, rather than relying on projections from product providers, says FE.
The FCA requires that when recommending investments to clients, advisers undertake appropriate cost comparisons, factoring in all costs.
The Reduction in Yield calculation is becoming a popular way to do this, says FE. FE’s RIY tool offers advisers an alternative to what it calls “an often lengthy and manual process.”
Matt Surfleet, commercial director at FE said: “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.
“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 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 users and can be used for all investment types.
Cathi Harrison, founder of Paraplanning firm Para Sols and newly launched Apricity Compliance, said: “The calculator allows you to drill down to a good level of detail on each charge, is flexible enough for most investment types and provides a clear and transparent summary for clients that can be included in client reports.''