CSLR, licensing fees and the general operational costs of running a business are all stressors’ advisers are used to now in 2025, with compliance fees in particular weighing down the wallets of many.
Appearing on the ifa Show Podcast, Omura Wealth Advisers director Terry Vogiatzis said these costs are starting to impact fees being passed onto customers.
“There’s no silver bullet for compliance, because we all understand a baseline is needed,” he said.
“But the incremental layers we’ve added over the past decade have pushed up the cost of servicing certain types of clients, and that changes the entire equation for who can access advice.”
He also highlighted how fee pressure is distorting advice decisions.
“There’s an over-emphasis on fees and fee comparisons. Clients often get fixated on the headline number, and that means they can miss out on genuinely skilled fund managers or less-correlated asset classes that actually improve their portfolio,” Vogiatzis explained.
“The cheapest option isn’t always the option that performs best after fees.”
Elaborating further, he stated that investments that reduce risk through lower correlation often have higher fees, but at the end of the day have generally better outcomes for clients.
“From an adviser’s point of view, it’s really easy to sell a low-cost portfolio. You can say, ‘You’re sitting at 60 basis points and we’re moving you to 50,’ and clients hear that as an instant win. But the truth is the cheapest portfolio isn’t always the portfolio that helps them meet their goals,” Vogiatzis said.
He also highlighted how regulation also creates complications with fee transparency.
“When advisers are forced to disclose a manager’s previous performance fees in advice documents, it creates tricky optics,” he added.
“Even if the client would have been better off after fees, the way those numbers have to be presented makes people nervous about recommending anything that isn’t the absolute cheapest option on the menu.”
To catch the full episode, tune in here.
There’s this $20 book sold at retail stores which turned investment fees into something akin to a cult.
I wish it hadn’t because the same cultish idea now has leaked into policy.
The long-term impact of this won’t be known for a while, but the misallocation of capital due to herding will go down in history as one of the dumbest ideas we’ve devised in this country.
Maybe someone will read this in 2040. What I’m writing here will be right, but it will be too late for many.
Foolish.