The UK wealth management industry is facing renewed pressure over the way it explains charges to customers, after a senior industry figure warned that some firms still use complexity and “deliberate obfuscation” to disguise the true cost of investing.

The criticism comes as the Financial Conduct Authority consults on new rules designed to simplify how platforms, advisers and wealth managers communicate investment costs. The regulator wants firms to use clearer language, show total costs more consistently, and make it easier for consumers to understand how fees affect returns.

This is not a new issue. More than a decade has passed since the Retail Distribution Review changed the financial advice market by banning commission payments from product providers and requiring advisers to agree charges directly with clients. That reform was intended to make advice clearer and reduce conflicts of interest.

Yet the debate has not disappeared. For many consumers, wealth management fees remain difficult to compare. Charges may be split between advice, platform fees, fund costs, discretionary management fees, transaction costs, custody charges and interest retained on cash. Each item may be disclosed somewhere, but the combined effect can still be hard to understand.

That distinction matters. Disclosure is not the same as clarity. A fee structure can be technically disclosed and still be confusing.

What the latest criticism is about

The latest debate was prompted by comments from Charlotte Ransom, founder and chief executive of Netwealth, who argued that parts of the industry still make fees unnecessarily difficult for clients to understand.

Her criticism is not simply that wealth managers charge too much. The stronger point is that some charging models are structured in a way that makes comparison difficult. A client may see one headline fee, but then discover that the full cost includes separate investment costs, underlying fund charges, advice fees, cash charges or product-related costs.

For a sophisticated investor, that may be manageable. For an ordinary saver trying to decide whether to use a wealth manager, financial adviser, investment platform or low-cost fund, the comparison can become almost impossible.

That can discourage people from investing. It can also weaken competition because customers cannot easily identify whether they are receiving value for money.

In a market built on trust, opacity is a strategic risk.

The FCA wants simpler disclosure

The FCA’s proposals are aimed at making investment cost information clearer and more useful.

The regulator wants platforms, advisers and wealth managers to communicate costs in plain English, reduce unnecessary jargon and present charges in a more consistent format. It is also consulting on rules to bring different disclosure regimes together, reducing the complexity created by overlapping requirements.

This is important because investment firms currently operate under a mixture of rules derived from different regulatory frameworks. In theory, those rules were designed to protect consumers. In practice, multiple layers of disclosure can produce long documents that are technically complete but difficult to read.

The FCA’s own review found that only a small minority of investment disclosure documents were written in plain English, and that none of the documents it reviewed were easy enough to understand at a secondary school level.

That finding should concern the industry. If customers cannot understand cost information before they invest, they cannot make properly informed decisions.

The problem with “double dipping”

One of the most specific issues is the treatment of client cash.

Some investment platforms and wealth managers allow customers to hold cash within investment accounts. That can be useful. Clients may be waiting to invest, taking profits, preparing for withdrawals, or holding a short-term cash buffer.

The concern arises where a firm charges a fee on that cash while also retaining some of the interest earned on it. The FCA has described this as “double dipping” and has already told firms that the practice raises concerns under the Consumer Duty.

Under the latest proposals, the FCA wants to codify the expectation that firms should not both charge a fee on cash holdings and retain interest. If a firm charges fees on cash, it should pass on interest in full. If it retains interest, it should not also charge a fee for holding that cash.

This is a good example of why fee transparency matters. A client may think they are paying a clear management fee, but the true economic cost may include interest they never receive.

In a higher interest rate environment, that can be material.

The Consumer Duty has changed the pressure on firms

The FCA’s Consumer Duty has made this issue more urgent.

The duty requires firms to deliver good outcomes for retail customers, including fair value, clear communication and support for customers to make informed decisions. It is not enough for a firm to point to a long disclosure document and say that charges were technically available.

The question is whether the customer understood the service, the cost and the value.

That is why wealth managers have come under greater scrutiny. Some firms have already changed pricing structures, reviewed ongoing advice services or stopped charging fees on client cash.

The sector is therefore moving from a world of formal disclosure to a world of outcome-based accountability. Firms must be able to show that clients are getting what they pay for.

The industry’s defence deserves consideration

A balanced view should recognise that wealth management can be complex.

A full wealth management service may include investment management, financial planning, pension advice, tax planning, inheritance planning, estate structuring, cash flow modelling, behavioural coaching and regular reviews. A cheap service is not automatically a good service, and a higher fee may be justified if the client receives valuable advice and strong long-term support.

There is also a danger that simplified fee presentation could remove useful detail. Some clients need to know the difference between adviser charges, platform costs and fund management fees. A single total figure is useful, but it should not obscure the underlying components.

Firms also face substantial regulatory, compliance, technology and staffing costs. Advice is expensive to provide properly, especially where clients have complex circumstances.

The issue is therefore not that all wealth management fees are excessive. The issue is whether customers can understand what they are paying, why they are paying it, and what value they receive in return.

Why comparison is so difficult

Fee comparison is hard because wealth management services are not always directly comparable.

One firm may offer a discretionary investment service with no wider financial planning. Another may include full financial advice, tax planning and regular reviews. A third may provide access to model portfolios through a platform, with an adviser charging separately.

A client comparing only headline percentages may therefore miss important differences in service.

However, that does not excuse complexity. If anything, it increases the need for clarity. Firms should be able to explain clearly what is included, what is not included, what is charged separately, and how much the customer is likely to pay in pounds and pence over a year.

Percentages can be especially misleading. A 1% fee may sound modest, but on a £500,000 portfolio it is £5,000 a year before underlying investment costs. Over time, fees compound and can materially reduce investment returns.

Customers do not need every technical detail at the start. But they do need enough information to judge value.

The advice gap remains a problem

There is another side to the debate. If regulatory pressure makes advice more expensive to deliver, some firms may raise minimum investment thresholds or focus only on wealthier clients.

That would worsen the advice gap. Many people need help with pensions, retirement planning, investments and tax-efficient saving, but cannot justify or afford a traditional wealth management service.

The industry therefore faces two related challenges: making fees clearer for existing clients and creating simpler, lower-cost advice or guidance models for people with more modest sums.

Technology may help. Digital advice, hybrid advice and model portfolios could make investment support more accessible. But they also need clear charging structures and proper governance.

A cheaper digital service with unclear fees is not progress. The future of advice should be both more accessible and more transparent.

What consumers should look for

For consumers, the practical question is not simply “how much is the fee?” It is “what is the total cost, and what am I receiving for it?”

A client should understand the initial advice fee, ongoing advice fee, investment management charge, platform charge, fund charge, transaction costs and any charges or retained interest on cash. They should also understand whether the adviser is independent or restricted, how often the portfolio is reviewed, and whether ongoing reviews are actually provided.

The most useful information is often a total annual cost in pounds and pence. That makes the charge real.

Consumers should also ask what would have to happen for the service to represent good value. If a firm charges thousands of pounds a year, the customer should know whether they are paying for investment selection, tax planning, retirement modelling, estate planning, behavioural coaching, regular contact, or simply access to a portfolio.

A firm that cannot explain its fees clearly may struggle to justify them.

A business lesson in trust

For businesses, the wealth management fee debate offers a wider lesson: complexity can be profitable in the short term, but damaging in the long term.

Many industries rely on complicated pricing. Telecommunications, insurance, utilities, software, banking and professional services all have examples where customers struggle to compare like with like.

That can create margin. But it also creates mistrust. When customers feel they do not understand the bill, they become more suspicious of the business.

The strongest firms increasingly compete on clarity. They make the cost easy to understand, explain the value clearly and avoid hidden extras. That does not mean being the cheapest. It means being credible.

In regulated markets, clarity is no longer just good customer service. It is part of compliance, risk management and brand protection.

A turning point for wealth management

The FCA’s proposals will not solve every problem in wealth management. Fee structures will remain varied, and some services will remain complex because client needs are complex.

But the direction of travel is clear. The industry is being pushed towards simpler, clearer and more comparable charging.

That should be good for consumers, but it may also be good for the better firms. Wealth managers that can explain their value clearly should benefit from a market where customers are more confident and more willing to invest.

The firms most exposed are those whose business model depends on customers not fully understanding what they pay.

The wealth management industry is built on confidence. Clients hand over money not only for investment expertise, but because they believe the adviser or manager is acting in their interests. If fees are hard to understand, that confidence weakens.

The lesson is straightforward. In modern financial services, transparency is not a regulatory burden. It is a competitive advantage.