Tune into this informative episode as Christian Rodwell, Kevin Whelan, and expert Manish Kataria uncover the impact of fees on wealth. Learn about the types of fees, the importance of negotiation, and how the SCORE Report can aid in fee reduction and wealth enhancement.
In this episode, hosts Christian Rodwell and Kevin Whelan discuss the devastating effect of fees on wealth.
They are joined by Manish Kataria, Founder of Invest Like a Pro and a WealthBuilders Wealth Coach, who shares his expert insights on reducing fees and building wealth.
The conversation covers the different types of fees and where they occur, the importance of negotiating fees, and the SCORE Report, a tool that helps individuals understand and reduce their fees.
Tune in as this episode emphasises the need for individuals to take control of their investments and reduce fees to maximise their wealth-building potential.
Resources In This Episode:
>> Request a free SCORE report - Email hello@wealthbuilders.co.uk Subject line: SCORE report
>> Investment Academy [Special discount of 10% using code WB10]
Next Steps On Your Wealth Building Journey:
>> Join the WealthBuilders Facebook Community
>> Become a member of WealthBuilders
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Welcome to episode 234 of Wealth Talk. My name is Christian Rodwell, membership director for Wealth Builders, joined today by our founder, Mr. Kevin Whelan. Hello, Kevin. Hi, Chris. Good to be with you again. Two, three, four. We're climbing up, aren't we? We sure are. Hope everyone enjoyed the first Head to Head podcast last week. Yeah. Got some exciting CEOs to interview. We'd love anyone to suggest more and that we can really interview the people who you think could inspire you, give you an insight that can help you build your wealth because they're all so humble and willing to share, you know, so I'm so pleased to be doing them. And thanks for you letting me step into the chair every now and again. No problem at all. And today we have another wonderful guest, it's Manish Kataria.
Manish is the founder of Invest Like a Pro, but also one of the Wealth Builder Wealth Coaches and he's been there with us since the beginning, has helped many of our members to move from financial insecurity through to security and a fantastic coach that he is. And today we're talking about a topic that is very close to your heart, Kevin, and it's that devastating effect that fees can have on your wealth. It's one of those things that is so obvious when you say it out loud. You know?
The thing you can, if you listen to, Manish talks about the three drains, right? And one of those drains being fees, and it's the only one you can control because you can't control inflation and you can't control what the tax rate is. So it was a leakage. It's the biggest drain on your money and it's the easiest one to fix. But for some reason, which I think I understand it.
There's a level of inertia that sets in with people, almost in a way that, well, everybody else is doing it this way. Everybody else is letting somebody else manage my money. Surely it must be okay. The sad tragedy is the amount of loss of return, which is hidden, right? Because you don't see it. It's not transparent. And that opaque structure, and as Manish explains,
Christian Rodwell (02:56.642)
that is given to us as the appearance of complexity when in fact investing money is so simple. You know, you can budget your house budget, you can manage your money. It's not difficult at all. And hopefully Manish will share how simple it can be. But once you realize, and I'll talk later about what those devastating impacts are, because you know me, Chris, I like a good ROI.
and the ROI, the first one, is a reason to overcome the inertia. So I'm hoping that somebody will listen to this and go, enough's enough. I'm not letting someone stick a siphon in my life for the rest of my life and then the rest of my children's lives to profit themselves at the expense of me just because I'm not looking closely enough at that. And I would like people to change, and I'd like to make an offer to help people change.
and to see the ugly, it's almost like, do you remember the film The Matrix? Yes. You like that movie? Very good. It's a cracking movie, isn't it? And you take the red pill or the blue pill, right? And if you take the blue pill, you wake up in bed, nothing's ever changed, and you just see life through the same lens as you are now. You take the red pill, and you get shown how deep the rabbit hole really goes. This is a red pill moment, ladies and gentlemen. Take the...
red pill, you know, and this isn't Kansas baby, or whatever her name was and the Wizard of Oz, you know, this is Kansas, Kansas bye bye. This is a wake up call that most people are being devastated and their lifestyle, their future lifestyle is devastated by the impact of fees. Anyway, enough of me on a soap box that I almost never get off Chris.
know, what are the ways you want to introduce Manish, who I respect hugely as a very benign, gentle coach, not as aggressive as me on the subject, but I know he feels as strongly as I do on it. He sure does indeed. And yeah, do stick around till after the interview with Manish, because we've got an offer to help you really dive deep into those fees and reduce them. So stick around. And we often talk in other podcast episodes, Kevin, about
Christian Rodwell (05:22.25)
You can't DIY your way to wealth, but this is an area where you actually can DIY. You can do it yourself and the steps are there. It's not too difficult. And we obviously help our members with that. And we're going to go into some of those steps with Manish in just a moment. Yeah. Every asset has got a different level or levels, let's say, of knowledge. There's always something you can DIY. Every pillar you can DIY to a certain degree. The challenge with DIY for the most part is it just takes too long.
And I don't think there's a DIY pathway to wealth here. There's a DIY pathway to making the money you've got work harder. But it's still a long journey. You know, if you leave your money exclusively in the stock market, as most people do, their pension, their ISA, their investments generally, in the stock market, you're still gonna be waiting 30, 40 years to do it. If you manage to reduce your fees, you could do it maybe five years earlier, but you're still talking 20, 25 years.
before you can be completely financially secure. So the only way you can accelerate that with knowledge in the stock market is to understand there are other ways the stock market can be a diversifier or the stock market be a way of generating cashflow and you can't DIY that. Somebody's gotta teach you that. Yeah, and then once you've got the equipment, you got the tools of the trade, then you can apply those things. But in every aspect of wealth, whether it's property business,
creating intellectual property or joint ventures. You can't really just do it on your own. There's always a collaboration with somebody who can help you understand what you need to do to do a better job. And that's what we're hoping to do. And wealth builders, we often talk about the who, not how principle, Chris, that whenever there's a problem, and most people don't realize that this is a problem, but when they realize there's a problem, how do you start? Otherwise, if everybody knew how to start,
be so few people investing money in what you would call it the active funds as opposed to passive funds. There are more people would see themselves as a wholesale customer as opposed to a retail customer. I'll cover some of those later. So I don't want to take away from Manish's points, but you can tell I'm itching to get going on this one. All right, so let's find out from Manish Kittaria how fees can drain your financial future.
Christian Rodwell (07:48.77)
Manish, welcome back to Wealth Talk today. How are you? I'm very well, Chris. Thank you. How are you doing? Yeah, I'm excellent as well. Thank you. Now, Wealth Builder members know you very well as one of our wealth coaches, but for everyone else, you're the founder of Invest Like a Pro. So let's start there, Manish. Tell us about your business, please. Yeah, so I set up Invest Like a Pro a few years ago, really in response to
people I was working with and my background is in investment management, in professional investment management. I was already helping people to invest better, saving fees and just helping them, giving them the tools to create a better portfolio for themselves, to secure their financial future. And so, I got to a point where a lot of people were asking me,
questions and I thought, you know, how best can I help people? And so I set up Invest Like a Pro to really help investors to save fees, compound better and just create a recurring income stream in a diversified way. So that was the sort of birth of Invest Like a Pro. Absolutely. And I know loads and loads of wealth building members have benefited from your wisdom as well through your investment academy and also all of the free information. You published lots and lots of fantastic articles.
almost on a weekly basis by the looks of it. And yeah, loads of information over at your website. And where's the place to go and see some of those blog posts? So yeah, they're all on inve There's a tab called Intel and Insights where we publish all of my sort of blogs and emails that are sent out. So they're all published in an article format where people can go and have a read. So there's lots of info there.
And our members get exclusive access to you as well and delivering sessions for our members in particular through Wealth Builds' membership. And we're going to turn our attention to the massive impact that fees can have on someone's wealth today. But before we do that, as our resident market expert, Manisha, I'd be foolish to not ask you just for a little recap of really how the market's performed in 2023 and what's the outlook for 2024 in your eyes?
Christian Rodwell (10:06.494)
Yeah, well, 2023 was a really strong year for the markets. Overall, global equities were up anywhere between 18 to 25% on a diversified basis. The US was up around 20%. The European markets weren't that strong, so the FTSE in the UK was down, sorry, was up, but underperformed, so up around 8%, which in a normal year, that's not bad, right? But in 2023, it underperformed.
But yeah, when I speak to investors, when people go through the Investments Academy I run, we're always encouraging people to be globally diversified. And those shares, globally diversified ETFs and funds, were up around 20% on average. I also do options. And so my own option strategy was up around 23% in 2023. I'm fairly conservative. There are...
lots of other investors who've been up 40, 50, 60% even. So it was a really good year in 2023. 2024 has started off pretty strongly again, driven by the US market, but technology. But there are signs of it sort of broadening out now, which is encouraging to see. And just thinking, my own interest within AI over the last 12 months and we're seeing,
blown up. Does that have an impact? Have you seen those technology stocks, those companies performing better? They are performing really well. Yeah, I mean, the likes of Nvidia, Microsoft, tech stocks in general are performing really well. But this is not just a tech story because AI is going to impact the entire economy. We're already seeing signs of that. AI is having a really meaningful impact on things like
things like consumer stocks, transportation, you know, you name it, every sector will be impacted by this, just like the internet impacted every single sector in the economy, AI is having that impact already, but just faster. So this is going to be a story about technology to start off with, but you need to think, broaden that, you need to think about, you know, the entire economy, all the sectors, and we're always encouraging people to sort of diversify into different sectors.
Christian Rodwell (12:30.25)
So it's a great story and look, there's been lots of studies being done to kind of trying to quantify how much of an impact AI will have. And it will have an impact on company profits, which is great for shares, but it will have an impact on our productivity, you know, overall economic growth, GDP. It's going to have a positive impact across all economic sectors, I think.
We're talking, as we said, about the impact that fees can have. I know one of your main messages always to our members is about low-cost investing. Perhaps we'll start there, keeping fees low but investing in things such as ETFs is a smart move. It is. ETFs are a smart move for so many different reasons. One obvious reason is that because they're cheap, right? Because they track the index.
The world of ETFs has really exploded onto the investment scene in the last couple of decades and they're so popular because they're flexible, because they're low cost, and because they enable you to…essentially, they enable regular investors to go out and access parts of the investment sector, parts of the investment space that were only previously available to the pros. So now we can get access to all sorts of sectors.
different funds, different markets in a way that we couldn't before, before ETFs. So ETFs are great, but the main impact we find is they're accessible and they're very, very low cost. So ETFs are a great way to do it. Not the only way, but they are a great way to cut costs and achieve great performance.
So we're going to look at where some of the different places are that fees occur when it comes to investing and the steps that you can take to reduce them. But let's just begin by really emphasising the impact that this can have. So give us some numbers. Just how much are we talking here in terms of actually being aware of how much fees are eating into our wealth? The answer is huge, much more than you might imagine. And it really is huge. We're talking...
Christian Rodwell (14:44.17)
know, huge percentages of your overall wealth. So there is actually a great website which anyone can go to. It's called T-Rex or Google T-Rex score and you can just put in your own numbers there. But essentially, we're talking about, you know, 50% plus of your overall wealth. So I'm talking about, for example, your pension, you might have a workplace pension scheme.
You might have your money being managed by an IFA or a wealth manager, and you may not realize the extent of the fees that they are taking, and it really is devastating. I work with investors all the time who can come along and they can have their own portfolios just evaluated to see what the overall impact on the fees are and essentially whether that scheme is underperforming or not.
and nine times out of 10, I find that those schemes are underperforming, but also they're giving far too much away in terms of fees. So we're talking, you know, by the time you retire, whether that's, you know, 55, 60, 65, whatever that is, you will probably find that if you've made, you know, let's say you've made £800,000 in investment gains, you shouldn't be surprised if you...
fine that you're ending up giving away sort of 50% of that in terms of fees. Um, and that's not unusual depending on who you're with. So, you know, we're talking 400,000 pounds out of a, out of a pot of 800,000 pounds. Um, so yeah, I mean, the extent of the fees and the amount you're giving away is huge. I mean, I was talking to somebody the other day who she has, she has, um, a pot with
a well-known IFA, let's call it, no names being mentioned. And so they've been investing for 10 years and the investment pot had made 617,000 pounds and what she's gonna end up keeping of that is 398,000 pounds and that's just over a 10 year period. And imagine what it would be like if she had continued with them over 25, 30 years. Right, so we're talking hundreds of thousands of pounds.
Christian Rodwell (17:05.322)
magical word when it comes to investing of compounding, but it can work both ways, can't it? So it can be a wonderful thing. But if it's compounding fees and losses, then it can have a devastating effect. And what we're talking about now, reducing fees, being aware of fees, applies whatever age you are, however many more years until you might retire. But certainly, if you're in your 30s now, or your 40s, or 20s even, then the impact of compounding over the next 20, 30, 40 years
with the potential to then cut those fees by 50% will have a huge impact. Huge, massive. It's a really good point because, as you say, compounding works both ways in terms of positive returns, but also we call them the leakages. There are three main leakages fees, inflation and taxes. If you can minimise those leakages, sometimes those leakages, it's not as glamorous.
as making returns, but those can be as important as actually making your returns. So, yeah, never underestimate those leakages in particular fees. You mentioned a couple of places where someone might look at where fees are being charged, so pensions being one. Any sort of professional management fee, be fund managers, IFAs, where else might someone see fees occurring?
Christian Rodwell (18:30.57)
And just on the work pension schemes, we might believe that because we worked with a company and their pension schemes were set up for employees, we might believe that they are sort of almost charitable and benevolent in nature. But actually, you need to check those fees to make sure that they are okay. And again, nine times out of 10, they are way over and above what you should be paying. So it pays to just evaluate your own pension schemes.
You might already have taken control and you might think you're paying lower fees, but there are lots of hidden fees. There are lots of platforms out there which advertise zero commissions, but they need to make their money somewhere, and they encourage you to over trade. When you're trading rather than investing, you may not realize it. You're actually paying away a huge amount of fees because instead of having commissions, what they do is they have
what's called bid offer spreads. So when you're buying something, you end up paying more than you should be paying. When you're selling something, you end up receiving less than you should be receiving. So the bid offer spreads are wide, which is a great revenue source for these trading platforms. So I always encourage people to invest for the long term rather than trade. And things like stop losses and all of these things.
don't really work. Most people end up losing money from over trading and stop losses. And really, the only person who wins in that whole trading game is the house, is the platform, because they're extracting huge commissions from you as a trader. So those are the things to watch out for, essentially. Will Barron Yeah, I'm interested on that point. I saw you write about that in one of your blog posts, Manish. And
Perhaps for someone who's not sure what a stop loss is, we should explain what that might be. But the purpose of it is to, if a stop generally is going down, it's going against the direction that you want it to, it's a way to cut your losses, shall we say, to get out and minimise the damage. But are you saying that actually sometimes that can get you out of a position whereby perhaps a few days or weeks later, the stock then returns in the direction that you wanted it to, but you're now out of that?
Christian Rodwell (20:46.374)
Exactly that. Exactly that. So stop losses sound great in theory, because as you say, right, the purpose is to get you out before the losses get deeper. So in theory, it sounds great to stop your losses. But actually, in reality, they end up getting you out of a position when actually you should be buying. Right. And that's the key difference. So if you think about it, if I've got some data going back to
15 years, 15 years worth of data. If you go back, you look to see how many corrections there have been in the markets since 2009, 15 years ago. And actually, there have been 32 corrections between 2009 and now over that space of 15 years. And there have been all sorts of reasons for those corrections. So recession fears, pandemics, interest rate
Christian Rodwell (21:44.354)
During that period, if you had been looking at the headlines, you'd think, okay, I need to get out of this. I'm going to put my stop losses on because I can't live with these corrections. Actually, over that period of time, the market has risen something like 650%, which is an annualized return of around 17% per annum. Imagine if you put stop losses during all of those 32 occasions.
Imagine all the money you'd lost. Instead, if you'd just left your money, assuming you were set up the right way with low fees and properly diversified, you'd have benefited from that 17% annualized gain. That's not bad. Not bad at all. And it's completely passive, of course. So, you know. Yeah. Well, I guess that was a slight digression, but over it, it's all about preserving your wealth, isn't it? And that's the name of the game here. And back onto fees then. So, let's just...
Talk about what are the average fees out there, Manish? So we're talking about reducing fees by 50%, but what's an average fee that someone you see is paying? There are broadly three different types of fees that we should be looking out for. One is the platform fee. So if you're with your work pension scheme, your work pension scheme will have its own platform fee from overseeing your pension.
If you're with one of the IFAs, or IFAs will have their own platform fee. If you're directly with one of the platforms, so we're talking, you know, AJ Bell, Hargreaves, Lansdowne, Vanguard, they'll have their own advertised platform fee. So think about your platform fee like, you know, all the platforms, think of them as shops. They're all different shops. So when you go into a shop to buy your investments, right, you don't take your investments home, you select your investments.
then you keep them there, right? Because they do the custody of your investments and they'll charge a fee for that. So that's the platform fee. So typically, your work pension scheme might be charging 1% to 2% per annum. Your higher cost IFA might be charging between 1% to 3% per annum. If you go direct to a low cost platform, which
Christian Rodwell (24:04.042)
we work with, you're looking at 0.1%, 0.2%. So we're talking fractions of what you'd be paying. So that's number one, your platform fee. Number two is your product fee. So product fee is what are you buying? What are the investments you're selecting? So we talked about ETFs earlier, they're fairly low cost. There are other types of index tracking funds which operate like ETFs. They're fairly low in cost.
On the other end of the spectrum, there are active funds which are the premium end and they might charge 1% to 2% per annum, whereas ETFs might charge below half a percent per annum. Okay, so that's number two. And number three is your trading fee. And that sort of is your, think about that as your sort of entry and exit costs. Every time you buy or sell something, you get charged something. One way or another, you'll get charged. Even if they claim that they are zero commissions, you'll still get charged.
So those are the three main fees to be thinking about. Overall, if you go with a low cost setup, yes, there are three or four different types of fees, but they amount to something quite small. If you go with a higher cost setup, which I always encourage people to think about carefully, you could be ending up paying a lot more than you.
would have ever imagined. So think about your costs in terms of those three different categories I've just mentioned. Yeah, that's really helpful. And how would someone go about checking to see what they're currently being charged? Yeah, just ask the question. So if you're with a work pension scheme, send them an email saying, look, what are my total charges? And the word total is a really important word because you want to have all of your costs in the one figure.
even if they give you two or three figures, you just add them up. So ask them, you know, what are my total costs for the platform fee? What are my total costs for the fund fees and any other sort of admin or custody fees that I'm paying? Tell me my all in costs. So you can ask your work pension scheme that same question. You can go to your IFA or wealth manager and ask them the question. And really important that they break it down because you wanna know your total costs.
Christian Rodwell (26:20.982)
The other thing which I didn't mention are exit fees. So some IFAs are really naughty and they charge you exit fees for getting out and moving across to another provider. And sometimes it's worth swallowing that fee just to go to a lower cost provider. So make sure you have full visibility of all of those costs. Yeah. Not to mention the fee for the IFA themselves as well. Yes. Okay. And I guess once you've taken stock, so you're clear now on what you're paying across all those different things we've just discussed.
Is there the opportunity to negotiate? So instead of actually having to change platform, which for some people that might, they might not know how to do that, or it might be too much, you know, hassle. Can you go to the current provider and is that a possibility to negotiate down? Sometimes, sometimes you might be able to not with your work pension scheme so much, but with your with your IFA, possibly, you know, you could say, look, I'm not happy with these fees, I'm looking at other providers. What's the best you can do for me?
all probability, they won't be able to match the low-cost platforms that are out there. But yeah, it's worth asking that question, in particular with your eye face, because everything's up for negotiation, as I mentioned. The things that are not negotiable are the product fees, so the fees that you pay for the ETFs or the funds that you're invested in, because those are uniform to all investors, and also the trading fees. So again, they are
But the platform fee, i.e. the custody fee, the shock fee, might be negotiable. Okay, that's great. Thank you for that, Manish. So is there anything with regard to the topic of reducing fees that we've not covered? And what would be your final word for someone now who perhaps knows they're paying too much, but just hasn't got around to it? Yeah, I think we've kind of summed up most of it, but actually...
The one thing people should remember is that at first sight, the financial industry is very good at making us believe this is a complex area. Give us the money, we'll do it for you, we'll take the headache off you. But actually, it is super simple. And a lot of people get scared off from sort of taking control of their pensions or their investments because they don't know where to start. And that's understandable, right? Because of the...
Christian Rodwell (28:46.098)
the way we have been conditioned to think, it's actually a lot simpler than you'd imagine, especially with ETFs and index tracking funds and the new sort of providers out there. It's so simple to take control. So not only are you saving huge amounts of costs, you're taking control and doing a better job than most of the professionals, so-called professionals will be doing. And yeah, I would just say to people, don't worry about the sort of potential complexity of self-managing.
it's a lot, lot simpler than you'd imagine. In fact, in the US, there are a lot more advanced than we are in the UK. There's a whole kind of movement around self-managing your wealth in a low-cost way. And they've done it, so there's no reason we can't do it either. Yeah. We talked about technology at the beginning, didn't we? But the fact that there's so many apps now and it's low-cost, it's so much easier now to take control of yourself and not have to rely on those expensive professionals.
A final note, Manish, before I let you go, as I mentioned right at the beginning, you've been one of our wealth coaches for several years now, helping our members. You've seen some fantastic progress, some real transformations with some of those members over the last few years. For anyone who's listening who perhaps is thinking, I need to do something about building wealth, building recurring income, getting to financial security as a coach.
Just a few words on that process and what you've seen among some of our members for yourself. Yeah, I mean, look, there's a lot of members who've done an amazing job and they've taken control. They've built up their pillars in different areas, so property, investments, options for recurring income. The first thing is recognizing, which all of the members have done, and that's why they're here, right?
It's not all about working nine to five. It's not all about exchanging time for money. Let your assets do your work for you instead of you doing your work. And then you can just have freedom of time and geography and whatever else you're looking for. So yeah, I think the first thing is recognizing that. Second thing is how do you go about doing it, right? And the next step is to be diversified. So don't just focus on the one asset class. Spread your kind of asset investments across different asset classes.
Christian Rodwell (31:09.25)
because that mitigates the risks of individual asset classes, but you also benefit from recurring income, from inflation beating growth, whether that's in property or investment. I would say be diversified, recognise that there are really effective ways out there, and this is a great community for people to be learning from each other in terms of what other people have done.
Yeah, thank you. We always appreciate your input. And I know our members absolutely love having you there by their side. And thank you again for being a great guest on Wealth Talk today. Thanks, Chris. Catch up later.
Christian Rodwell (31:51.75)
Right. So thank you to Manish for sharing there. And I know you're itching to get into some of those points, Kevin. Before you do, I'm going to read out a review that's come in this week from, let's have a look through on our Trustpilot page. So we're over 265 five-star reviews on Trustpilot. Now, thank you so much to absolutely everybody who's taken time to leave us a review. It means so much Trust, Kevin. And this week, Paul.
has, let's have a look here. Paul, yes, I joined Wealth Builder six months ago with the view that I needed help achieving my long-term goal of financial independence within five years. Although it's been a slower start, I'm encouraged by the amazing resources available to me, especially the monthly one-to-one sessions with my wealth coach to keep me on track. So nice of Paul there to just give us an update on his progress so far. Absolutely, and that accountability.
is a good thing because it's saying, hey, have you done that? And this is one of the things, this looking at fees is one of the things most people don't do. You know, we know that because we know, for example, there's billions, 27 billion pounds worth of unclaimed pensions. Well, why is there so much? Why is there millions of people just forgetting their pensions? It just doesn't seem to be a level of connection that people have. And I think it's busy lives and head down and...
pressure of time, of family, of business and life, and all those things. But this together with doing things like wills, powers of attorney are the two things that everybody should do but so few people actually get round to doing so. We wanna do our best to help people understand where would you start with this? And it's not easy, is it? You're gonna go to your, send an email to every provider and say, can you give me my total charge ratio or TCR?
Uh, are you going to interrogate that? Look at that. Then do it's too hard. It really is too hard. Now, if you're in our program and you've been coached by Manish, you've already overcome inertia or you're doing something, but most people listen to this podcast, haven't overcome inertia yet. They're still thinking about it. They're still what we would call going round the outside, Chris, aren't they? They're circuit going round the orbit of, am I going to do something? Am I not going to do something?
Christian Rodwell (34:14.946)
The thing to do is we do something called a score for Chris. S-C-O-R-E, you know me, I love an anagram, but you know, an acronym. You see, I'm racing ahead, my brain's racing ahead. So score, right? So the score report is available for our members, but I'll make some available here, which allows you to understand what it is you're getting, what your fees are and what you can do about it.
And S stands for statement of benefits because in the end, particularly around pensions, and it's usually the pension is the biggest challenge, it's too far away. So it says this is the amount of benefit that's expected based on what the provider says. And that was, Chris, I was with somebody the other day, a really smart business owner. And we met for a coffee because it was convenient at the time.
and he showed me a statement. I asked him to bring statements, I wanted to make a point. And he showed me the statement. And when he saw the statement with me, he'd read it. But he hadn't read it. And I won't put the numbers in, but the amount of money that was expected to grow was minus. In other words, the fund value was X and the retirement projection was less than X.
because of the low risk he had on the funds and he wasn't paying attention to the funds and the fees that would come out of the funds and the projection of the income, which is a statement of benefits, if you like, was so small as an annual income, he got angry. And that's a good emotion to have. If you can get angry about this, you'll do something about it. If you just feel there, then you won't do anything about it. So the score report.
first statement of benefits. The C is those charges, right? C stands for charges. And we've got a friend of Wealth Builders really, an IFA team, who do this work for Wealth Builders because they love Wealth Builders clients. So a friend of Wealth Builders, they will do this work. Now normally they charge for it, but you know, I'll do so many for free, we'll have to work out how many in a moment. But charges.
Christian Rodwell (36:39.234)
they'll write to the provider so you don't have to and get the total charges. And when you see the total charges, now normally when you see them expressed on a piece of paper, about 2% is the norm, it doesn't sound very much. But when you divide 2% into, let's say an average return of 6%, there's a third of your money going, compounding upon compounding upon compounding every year. And when you realize that the...
Institutions are getting that money, whatever happens to your money, they're getting paid it. It's not a good outcome for you. And that's why I encourage people to be challenging the charges. So challenge the charges. The O stands for what are the retirement options or what are the options you've got? Not again, mostly for pensions. The options go into detail of have you got tax-free cash? Is it drawdown? You know, there's some complexity around pensions. And then the
the E being Expection of Wish, so who've you nominated is beneficiary. It doesn't matter even if I mix up one or two of the points, the thing is it's a report, it normally costs £295 to do the report for up to three pensions and people get huge value for that. Chris, I'm going to offer 50 schemes up, okay? So 50 people, so if you listen to the podcast, don't think, oh yeah, somebody else got it.
just go hello at weal score, give me a score, okay, and I'll do 50. So that's gonna cost me quite a bit of money, but I'm so passionate about this, Chris. If I can help 50 people change the outcome for their life in funds, and then they can listen to the lessons of Manish and look at the different ways then when you've discovered that, you can do something about it. But the...
The first point of any ROI is the reason to overcome inertia. And you've got to get to that point first. And I think Score Report will help do that. And it's a tragic lesson, and it plays out so much more than just the fees. If you think about the word ROI, what, particularly on pensions, because there's a target outcome, which is your retirement. Well, if you're trying to build the biggest retirement fund possible,
Christian Rodwell (39:05.226)
What you need is a return on your investment, don't you? And what's going to be negative on that is the drain on the fees. So the more that you can reduce the fees and go for passive investments as opposed to active, no evidence active fund managers do better. In fact, all the evidence is they do not. ETFs, which are exchange traded funds, it's passive funds, but with a little bit more of a zero in on a particular area of investing. So,
Google ETS, and if you can do that, and then you can regularly interact with your money, even if it's once every six months or once every year, whether you learn how to do it yourself or you pay somebody to help you, you get a chance to then reduce the risk as well because you're interacting with your money, not just watching it rise and fall, but every now and again, if you've made a gain, for example, you could take some of that money off the table and lock it into something else.
whether it's gold, whether it's some other asset that you feel would help when things are a bit rocky, but at least you're looking all the time to do that. So number one ROI is the return on investment you're looking for, reduce your fees, you'll increase your return investments straight away. Number two, if you're looking for an income in retirement, that's a return on your income. Here's a devastating number Chris. What do you think?
Most people do, in terms of their attitude to risk, is they reach closer to the retirement. Do they increase their risk or do they reduce their risk? What's your intuition? They reduce their risk. They reduce their risk. So when they reduce their risk, if they're dealing with the traditional retail customer who buys through a... You're not just going into a supermarket, you're paying somebody to take you into the supermarket. That's your advisor. And if you're going through that process...
they're going to be saying to you, well, Kev, you're getting old now, you need to reduce your risk. But okay, I'll do that. So I'll reduce my risk. What's the outcome is I have less money that is likely to grow. So my returns, instead of being, say, 6% a year or 7% a year, there may be 3% or 4% a year. Well, if I'm still paying 2% in fees, that hasn't changed. That's 50% of my money. It's like giving your IFA more money than you're going to give your kids on your death.
Christian Rodwell (41:31.446)
It's nuts. But people fall into this trap because for whatever reason they feel that the marketing says, you know, this is too hard. It's not. Passive funds, ETFs. If you then know you're doing that, and we know we talk about other ways you can use your pension in terms of property and other assets, but even if it's in stock market, if your fees are less, then when you come to draw income, you've got a higher level of income because you're not having to give half of their way.
in fees. So you've got a return on income. And then if you've got a bigger return on income and you die, what are you going to leave? A bigger pot for your children. That gives a return on inheritance. And overall, if you wrap that around and you learn more, because you spend time in wealth builders, you spend time with somebody else, you're spending time to build your knowledge. And that knowledge transfer is just as important as the money transfer.
Because if you learn what to do, you learn about ETFs, you learn about fees, you learn about different mechanisms to reduce your risk, you learn about other assets, you pass that knowledge on to the next generation. So they won't get hoodwinked in the same way as you might be. You see the point? It's so fundamental to me to the wealth building process that you reduce those fees and then start on a journey of learning more, and then you can expand your wealth, you can expand the wisdom.
and you do a better job for the whole family. And that's why I'm on my soapbox, Chris, because it makes my blood boil when people just leave things as they are, unchallenged. It's just wrong. Well, I can see the ripple effect there of passing that knowledge down. And we know these lessons are not getting taught in school. We've covered this on many episodes. So, you know, if you're a parent, if you're just listening now, and even this is just piquing your interest to go and explore and do something, take some action now.
start learning a little bit. You don't need to learn a lot to do. You just take those small steps every month. Exactly right. So forgive me everyone for really laboring this point, but it's something almost anybody can do. And I encourage, take me up on the score. Chris, if we get a hundred people, you'll persuade me to do it, won't you? Let's come to that bridge.
Christian Rodwell (43:51.274)
Yeah, we've got 50 available. We'll honor the 50. And if we get oversubscribed, then knowing us, we'll probably open the doors a little bit more. We'll warn the team to look out for those emails. So once again, hello at wealthbuilders.co.uk put score in the subject line and we will create that report for you and we'll show you the impact of that on your own fees and specifically really pillars.
and three. So we've got the seven pillars of wealth, the seven different asset classes we teach people to generate recurring income. Pillar two is pensions, pillar three is investments. That's really where these fees are. Yeah, it's the same thing. We can do a score for investing as well. The only thing is there's not going to be a statement of retirement benefits, but that's okay. The fees are what's important here. And when you think about why 95% of the population do not become financially independent, it's because there's an over-reliance on those pillars,
They put too much of the emphasis, too much of their life is focused on somebody else doing it. And that delegation is the witness of this. And this delegation without knowledge turns into application. You can't advocate your wealth, you're going to get what you deserve, which is a very compromised life if you don't know what your fees are. As always, if you've enjoyed this episode, if you've learned something, if you think somebody else might benefit from hearing these words, then please hit the share button.
send it to a friend and we hope that they can benefit as well. Okay. Well, more of the same next week, Kevin, you and I will be back here. Same time, same place. Do you know, I look forward to that, Chris and until then my friend. See ya.