Investments and pensions taken out since 2012 are what we in the industry call “clean” shares meaning the annual management charges are as low as possible and the share itself doesn’t murkily and perpetually pay commission to the adviser that set it all up. In the bad old days before the industry tried to clean up its act, an “adviser” or “sales-person” (as I call them) would sell clients investments and pensions and then sit back and receive on-going commissions for doing very little. These sales people would then earn a recurring income for doing no further work – can you believe it? The commissions would only be turned off once the funds are encashed or transferred away.
Since 2012 and what is known as “RDR” or the Retail Distribution Review, the pensions and investments taken by clients since are said to be sold “clean” meaning they are no longer allowed to continue paying perpetual commissions. Surprisingly (or not!!) this then lead to new classes of shares and on most occasions lower ongoing charges. So to explain neatly, you can buy the same investment at different prices. You may pay 2% per year or 0.2% per year for the exact same fund! Which would you prefer?
Not checked yours for a while? Get in touch with your local friendly firm to discuss your situation.