Advisors and their clients can benefit from the raft of new low-cost funds that are being offered in the fund market, according to asset manager TCF Investment.

The example used is of an advisor’s client who invested £50,000 (around $81,600) with market returns of 7 per cent per annum before charges in the context of two scenarios – scenario A, which has total charges and costs of 4.6 per cent per annum, and scenario B, which has total charges and costs of 2.3 per cent per annum.

The former fund came to have a value of £80,347, whereas scenario B ended up with a fund value of £125,286. At the same time the advisor has been rewarded for the increased value of advice up from £6,000 to £16,000.

“We are at last seeing some price pressure in the UK asset management industry - it is long overdue. Advisors are increasingly aware of the impact of all forms of fund fees, AMC, TER and trading costs and the impact they have on clients’ long term plans. It is not just the AMC that needs to be looked at – trading costs will become even more important as AMCs reduce,” said David Norman of TCF Investment.

“With the advisors recommending low cost funds, customers have seen an increase in their final value of over £40,000 and thus would be happy to pay for the advice that has helped them to achieve this,” said Norman.