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W & K

Investment Advice – Understanding Fees and Commissions

Before you use any investment adviser or seek professional advice, it is important to be familiar with how various fees and commissions work.

Like most things we pay for, we expect value in return.  Investors expect to receive a service that will potentially enhance returns, minimise risks, save time and generally relieve the stress and doubt that often comes from investing.

Legally, anybody offering investment advice, must disclose how they are remunerated. The adviser’s primary disclosure statement has a standardised text that must be used. The adviser must tick the box(es) that apply to them. For example, a fee only adviser, would disclose as follows:

The advisers’ secondary disclosure statement should show the fee calculations and the adviser should provide a fee estimate once they know the amount intended to be invested.

Some people ask, "But why pay someone else when I can do it myself?" Unless you have plenty of time to research markets and new investments, and are confident about the best times to buy and sell, it can be difficult to achieve returns better than a full time professional with access to a large range of resources.  One of the major downfalls of DIY investing is that many DIY investors tend to follow last year's big winners, hungry for the returns others have pocketed.  They inevitably buy too late, at the top of the market, and watch their investments suffer.

Fees are obviously a cost to investors, and there will be a wide variation in costs between advisers. There will also be quite a variation in the value that the adviser adds to your investments. However, the real value should be that the adviser helps you to meet your financial goals.


Steven Barton (FSP 32663) and Susan Pascoe Barton (FSP 32382) are Certified Financial Planners and Authorised Financial Advisers.  Their initial disclosure statements are available free of charge by contacting them on (07) 3060080 or they can be downloaded from www.pascoebarton.co.nz. This column is general in nature and should not be regarded as personalised investment advice.