Fund fees fall a fifth following RDR

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Investors are paying a fifth less in annual fund fees due to changes resulting from the Retail Distribution Review and a move to passive investments.

The annual average fee for the top 100 funds purchased by online investment platform Rplan dropped from 1.32 per cent around the time RDR was introduced to 1.03 per cent now – a fall of 22 per cent.

Last week was the deadline set by the FCA for trail commission – the ongoing fee paid to advisers as long as their clients remain invested in funds – to be discontinued on all retail funds in the UK under the RDR.

Rplan discontinued the trail commission seven months before the FCA deadline and said 40 per cent of its clients were better off due to the change, with the average investor set to save £27.64 a year.

The reduction in fees was also impacted by investment products investors were choosing with 26 per cent of the platform’s top 100 investments made into passive funds this year compared to 10 per cent in Q1 2013.

Nick Curry, director at Rplan, said: “The greater transparency brought about by the RDR has certainly been a factor in fees being more competitive.”