Understanding Wealth Management Fees — and How to Negotiate Them

The cost of wealth management advice is one of the most significant factors in long-term investment returns — yet it is often the least understood element of the client relationship. Many investors have a vague sense that their adviser charges "a percentage," without a clear picture of the total cost, what that includes, and whether they are getting good value.

This guide cuts through the complexity: how wealth management fees work, what total costs typically look like, what the regulations require advisers to disclose, and how — and when — to negotiate.

The Main Fee Structures

Percentage of assets under management (AUM): The dominant model in wealth management. The adviser charges a percentage of the total assets they manage on your behalf, calculated and charged annually (often quarterly in arrears). As your portfolio grows, the fee grows proportionately.

Typical AUM fee ranges in the UK:

• Under £250,000: 1.25-1.5% per year
• £250,000-£500,000: 1.0-1.25%
• £500,000-£1m: 0.75-1.0%
• £1m-£5m: 0.5-0.75%
• Above £5m: 0.25-0.5% (often negotiated individually)

These are the adviser's fees alone. They do not include the cost of the underlying investment products.

Flat fee: Some advisers — typically those focused on financial planning rather than investment management — charge a fixed annual retainer. This might be £3,000-£10,000/year for ongoing advice regardless of portfolio size. The flat fee model is more common for tax planning, pension advice, and financial planning services that are not directly tied to AUM.

Hourly rate: Rare in ongoing wealth management but used for specific, bounded projects — a pension transfer analysis, a QROPS review, a will review. Hourly rates for qualified financial planners and advisers typically range from £150-£400+/hour depending on seniority and firm.

Performance fees: Common in hedge funds and alternative investments (typically 20% of gains above a hurdle rate), but rare in conventional wealth management. Where performance fees exist in mainstream wealth management, look closely at the calculation: is the hurdle rate genuinely demanding? Is there a high-water mark provision (the fee is not charged again until prior losses have been recovered)? Without a high-water mark, performance fees can be charged on recovery gains after a loss, which is not in the client's interest.

The "Fee on Fee" Problem

The adviser's AUM charge is not the total cost of investing. Underneath the adviser fee, the investment products used also carry their own charges. For a discretionary portfolio of actively managed funds, this might add:

• Fund management fees (Ongoing Charge Figure, OCF): 0.1-1.5% depending on active vs passive
• Platform custody fee: 0.1-0.25%
• Any dealing charges on transactions

Example — a £500,000 portfolio:

Fee Component	Rate	Annual Cost
Adviser AUM fee	1.00%	£5,000
Fund charges (active)	0.75%	£3,750
Platform fee	0.15%	£750
Total	1.90%	£9,500

£9,500 a year — nearly £10,000 — before you have received any investment return. On a portfolio growing at 6% per year (before charges), the total charge of 1.9% reduces your net return to approximately 4.1%. Over 20 years, this difference in compounding has a very significant effect on the final portfolio value.

Example — a £2m portfolio at the same rate:

Fee Component	Rate	Annual Cost
Adviser AUM fee	1.00%	£20,000
Fund charges	0.75%	£15,000
Platform fee	0.15%	£3,000
Total	1.90%	£38,000

Is £38,000 per year delivering £38,000 of value? For some clients with complex needs — multi-jurisdiction tax, estate planning, business succession, pension optimisation — the answer is genuinely yes. For clients whose primary need is portfolio management with modest complexity, it may be excessive.

What the Regulations Require

MiFID II (now retained in UK law post-Brexit as UK MiFID) and the FCA's Consumer Duty (effective 2023) both impose significant disclosure obligations on wealth managers:

• Total cost disclosure: Advisers must provide a projection of total costs expressed in both percentage and monetary terms before you invest, and an annual statement of costs actually incurred.
• Value assessment: FCA Consumer Duty requires firms to demonstrate they are delivering fair value — not just disclosing their charges, but actively assessing whether those charges are justified by the outcomes delivered.
• Ex-ante and ex-post costs: Before investing (ex-ante) and after investing (ex-post), you should receive a clear statement of all charges.

In practice, ask for the Total Expense Ratio (TER) or Total Cost of Investing — a single figure that combines the adviser fee and all underlying product charges. Compare this number across providers on a like-for-like basis.

When and How to Negotiate

The scope for fee negotiation depends heavily on the size of assets you are bringing:

Below £250,000: Very limited negotiating leverage. The economics of the adviser relationship at this level are already compressed for most firms; expect to pay close to standard rates.

£250,000-£1m: Some scope to ask for the upper end of the lower fee tier rather than the standard rate. Moving from 1.2% to 1.0% on a £500,000 portfolio saves £1,000/year — worth asking.

£1m+: Meaningful negotiating leverage. Most wealth managers will agree to fee caps, volume discounts, or a tiered rate that reduces as assets grow. It is entirely reasonable to ask.

£5m+: Almost everything is negotiable. The minimum fee that a well-resourced private bank is willing to accept to take on a client of this size is negotiable, and many will compete aggressively for the relationship.

Practical negotiating approaches:

• Use competition as leverage: Get a comparable quote from another firm and present it. Advisers who want to retain your business have incentive to match or better it.
• Agree a fee cap: For very large portfolios, a percentage fee becomes disproportionate to the work involved. Agreeing a flat fee in pounds above a certain portfolio size (e.g., 0.5% on the first £2m, then £8,000 flat per year on amounts above £2m) is a reasonable ask.
• Ask for a fee review: If your assets have grown significantly, your fees should have reduced proportionately through the tiered structure. If they haven't, ask.
• Question the underlying product charges: Ask whether the portfolio can be implemented using lower-cost passive (index tracking) funds where active management is not delivering demonstrable value-add. A switch from 0.75% active OCF to 0.15% passive OCF saves 0.6% per year — on £1m, that's £6,000 annually.

The Value-Fee Balance

Cost is not the only consideration. An adviser charging 1% who saves you £50,000 in taxes through SEIS investments, pension carry forward, and ISA optimisation is delivering excellent value. An adviser charging 0.6% who manages a vanilla portfolio and provides no tax planning may be less value-add despite the lower headline rate.

The question to ask periodically is: what specifically has my adviser done in the past year that a robo-adviser or a simple index portfolio could not? For investors with complex international situations — cross-border tax, pensions in multiple jurisdictions, estate planning across several countries — the answer should be substantial. For simpler cases, it is worth being more honest about what you are actually receiving.

Transparency and value assessment are your rights as a client under FCA Consumer Duty. Ask for them.

How Global Investments Can Help

Global Investments operates transparently on fees — before you invest, you receive a full breakdown of all charges, including both our fees and the underlying product costs. Our fee structure is tiered and negotiable for larger portfolios. We welcome the question "what value am I getting?" because we believe our offering for internationally mobile, tax-complex clients delivers demonstrable value that justifies our fees. Speak to our team to understand exactly what you would be paying and what you would receive in return.