Investor Education > Wrap Accounts > Costs of a wrap account
HOW MUCH DO WRAP ACCOUNTS COST?
When applying for a wrap account, investors should keep in mind that there are several categories of fees which might be charged:
|
Fee |
What it's for |
|
Account administration fees |
Wrap account administration fees are charged by the platform operator. Most platforms charge on a tiered basis with administration fees declining as account balances increase. Others charge administration fees on a per investment basis.
Consider badged versions of the main wrap providers as the fee structure is often determined by the selling organisation. For example, Personal Choice eWRAP is a badged version of the Asgard eWRAP but with lower administration fees. |
|
Investment management fees |
The underlying funds you choose will have management fees which are charged in addition to the wrap account administration fees (if investing in shares no investment management fees will apply). These are typically wholesale fees which are about half of the price of their retail fund equivalent.
Wrap platforms will use their market share to negotiate fee rebates from fund managers and some will pass these rebates back to the investor. |
|
Transaction fees |
Some platforms might charge transaction fees for buying and selling investments. Investors can also incur additional fees such as the buy sell spread. Share trading also incurs a brokerage fee either from the default platform broker or the investor’s chosen broker from an available panel of brokers. |
|
Establishment/entry fees |
Entry fees up to a maximum of 5% are paid to your adviser as an upfront commission. Entry fees are optional on wrap accounts you can access directly. 2020 DIRECTINVEST offers wrap accounts with no entry fees. |
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Adviser service fees |
Most wrap accounts do not charge a fee for switching so financial advisers commonly charge a percentage based adviser service fees ranging between 1-2% pa. Adviser service fees are in addition to other platform fees. |
Are you wrapped up in fees? Until recently, investors could only access wrap platforms through a financial adviser and as a result incurred the often unnecessary fees such as sales commissions and exorbitant annual adviser service fees. Ongoing adviser service fees of 1% - 2% pa of the account balance undermined the cost effectiveness of wrap accounts. By accessing a wrap account directly, you can bypass entry fees by paying a financial planner on a fee for service basis when required and execute your investment decisions yourself. 2020 DIRECTINVEST offers direct access wrap accounts with no entry fees and no adviser service fees.
Portfolio administration solutions - wrap accounts