How much do you save by investing on your own?

Why people turn to a bank or restricted adviser, even when it costs

It isn't irrational to turn to an adviser at your bank: managing your own savings takes time, a basic level of financial literacy, and a willingness to take responsibility for your own decisions. For anyone without the time or inclination to deal with it, "let someone who knows what they're doing handle it" is an understandable instinct, reinforced by a relationship of trust often built up over years with your bank.

The point worth keeping in mind is a different one: that service is almost never truly free. An adviser working through a bank in the UK is typically a restricted adviser — tied to a limited panel of products, sometimes only their own employer's funds (as with some bank and insurer in-house advice arms). Since the Retail Distribution Review (RDR) banned commission on investment advice in the UK at the end of 2012, advisers can no longer be paid directly by product providers for recommending them — but a restricted adviser's remuneration and targets can still be structurally tied to their employer's own products, and the fund and platform charges baked into those products are often higher than the market average as a result. This doesn't mean an individual adviser is acting in bad faith — it means the structural incentive of a tied or restricted model still favours products that are more profitable for the firm, not necessarily the cheapest option available on the whole market.

It's worth being precise about the terms, because the UK has a distinct, separately regulated category: the Independent Financial Adviser (IFA). Under FCA rules, "independent" is a protected term — an IFA must be able to recommend products from the whole of the market, not a limited panel, and since RDR must charge a transparent, upfront fee agreed with the client rather than being paid by product commission. A restricted adviser, by contrast, may only recommend a limited range of products or providers — which can include, in some cases, only their own firm's in-house funds. Everything this article describes about tied incentives and cost opacity refers specifically to the bank/restricted-adviser model — not to genuinely independent advice, which we cover further down as an alternative worth considering.

The hidden costs of active funds and discretionary management

The cost of a fund is never a single number. The KID (Key Information Document, required under UK PRIIPs rules) that every fund must provide lists several items rarely spelled out verbally when a product is sold:

• Annual ongoing charge (OCF): for an actively managed equity fund, typically 0.5-1.5% of the amount invested, taken every year regardless of performance.
• Initial or exit charges: sometimes still present, though largely discounted away or removed on modern platforms — worth checking on older or advised products.
• Performance fees: a share (often 15-20%) of returns above a reference benchmark — a benchmark that, in many cases, isn't particularly hard to beat given how the comparison is constructed.
• Portfolio transaction costs: the buying and selling of securities by an active manager generates costs on top of the headline OCF, which only show up in the more technical parts of the disclosure documents.

Discretionary management services (where a wealth manager or bank runs a bespoke or model portfolio on your behalf) add a further layer: on top of the service's own management fee, there are often costs from the underlying funds the capital is actually invested in — a double layer of cost not always obvious to the client, on top of which a performance fee calculated on the overall result may also apply.

There's a point that goes beyond any single cost listed above: statistically, these products — active funds, often concentrated in specific sectors or themes — fail to beat a simple global equity ETF in the majority of cases. According to the SPIVA Europe Scorecard from S&P Dow Jones Indices, the standard independent analysis comparing active funds to benchmarks, 84% of euro-denominated active global equity funds failed to beat the S&P World Index in 2023; over a 10-year horizon, the share of funds lagging their benchmark rises to roughly 97-98% — a figure that has stayed broadly stable edition after edition. The picture is, if anything, starker for UK-focused funds specifically: SPIVA's UK data found that 88% of broad UK Equity, 89% of UK Large/Mid-Cap and 97% of UK Small-Cap active funds underperformed their benchmarks in 2025 alone, one of the worst years on record in the 14-year dataset. ESMA confirms the same pattern at EU level: active equity funds, while sometimes generating a slightly higher gross return over certain periods, remain on average more expensive than passive funds and ETFs, to the point that their net return still ends up lower. This doesn't mean no active manager ever beats the market — it means doing so consistently over time, net of costs, is statistically rare: even managers who succeed in one period often fail to repeat it in the next, making it effectively impossible to pick "the right manager" in advance.

Investment bonds: the flagship "wrapped" product, often the most expensive

An investment bond — an investment wrapped inside a life insurance policy, sold as onshore or offshore — remains one of the products most commonly recommended through advised and bank-linked channels, not least because it has historically generated some of the highest commission structures among retail products. The overall cost typically stacks several layers:

• Bond wrapper charge: the insurer's own charge for running the bond, commonly 0.25-1.0% a year depending on provider and bond size, on top of the underlying fund costs.
• Underlying fund charges: the OCF of whatever funds are held inside the bond — typically 0.5-1.5% for active funds, though bond-specific share classes can carry additional loadings.
• Platform or administration charges: commonly 0.10-0.45% for UK platforms, higher (0.2-0.7%, sometimes more) for offshore platforms often used with offshore bonds.
• Historic commission structures on offshore bonds: some offshore bond providers still offer charging structures with total adviser commission of up to 9-10% spread over a 5-10 year term — largely paid upfront to the advice firm, funded by exit penalties if the client leaves early. Onshore bonds sold via UK-regulated advice are subject to RDR's commission ban, but this legacy structure persists in parts of the offshore/expat market.

Taken together, industry analysis puts the total ongoing cost of a typical investment bond portfolio — fund charges plus wrapper charge plus platform — commonly in the 2-3% a year range, and higher for poorly structured offshore arrangements. The tax deferral benefit most often cited in favour of bonds (the 5% tax-deferred withdrawal allowance, and their use in inheritance tax planning via trusts) is real, but needs to be weighed against the cost actually paid each year to access it. For an investor with a long horizon and no specific inheritance tax or trust planning need, an ISA or a low-cost GIA will usually come out ahead once the wrapper and platform costs of a bond are accounted for.

The impact of costs over time: a numerical comparison

To make the difference tangible, here's a simplified example: £10,000 invested as a lump sum, with a hypothetical gross market return of 6% a year for 30 years, identical across every scenario — the only thing that changes is the annual cost taken by the chosen instrument.

Simplified example for illustration only: capital invested as a single lump sum, gross market return assumed constant at 6% a year across all scenarios, no additional contributions, no tax or inflation considered. The IFA cost (0.95%) is an estimate combining a typical fee-only advice charge (0.5-1% a year of assets, per Unbiased/industry survey data) with the OCF of a low-cost ETF; the active fund cost (1.00%) reflects Morningstar UK's finding that most actively managed UK funds sit within a 0.5-1.5% OCF range; the investment bond cost (2.50%) reflects industry analysis of typical total costs (fund charges, wrapper charge and platform combined). For reference, FCA data puts the market-wide average cost of full advice (advice fee plus underlying product and platform charges combined) at around 1.9% a year — higher than the fee-only-plus-ETF estimate above, since it includes advisers who place clients into costlier products rather than low-cost ETFs. The real cost of any specific product or service should always be checked in its own disclosure documents.

The central point isn't that an active fund or an investment bond "loses money" in absolute terms — in the scenario above, every option still grows relative to the starting capital. The point is that a substantial share of the market return generated by the economy as a whole is retained by the intermediary rather than reaching the person who put up the capital — a quiet, constant erosion that doesn't show up on any single statement but compounds enormously over long horizons.

Why complexity hides more than it protects

There's a technical mechanism, rarely discussed, that helps explain why the impact of costs is so hard to notice: the ongoing charges on a fund or investment bond aren't billed as a separate line on a statement — they're deducted continuously and in priority from the unit price (NAV), before any return is ever reported to the client. The number you see — "the fund returned +4% this year" — is already a net figure: the cost has already been quietly removed, without ever appearing as an explicit deduction. This makes it nearly impossible, looking only at a periodic statement, to separate how much of a disappointing result comes from market movement and how much simply comes from the cost taken every year regardless of outcome.

A product that's hard to understand isn't inherently dangerous — but it makes it easier to trust blindly whoever explains it, rather than evaluating it with your own tools. And that's precisely where the most concrete risk shows up for anyone investing through a bank or restricted adviser: the moment of discovery.

It happens a few years in, when the return on an investment falls short of expectations. At that point, a detailed, technical explanation often follows — unfavourable markets, the horizon not yet playing out, a scenario that didn't pan out as expected — which shifts attention away from the simplest, most constant factor: the structural cost paid every year, regardless of market outcome. This isn't necessarily individual bad faith — it's also a structural incentive of the system. According to ESMA, where inducement arrangements exist between a fund manager and its distributor, payments to the distributor average 45% of the product's ongoing costs — a substantial share of what the client pays ends up with the network that sold the product, not with whoever actually manages the investment. A complex explanation, when you don't have the tools to question it, tends to be accepted as-is — not necessarily because it's wrong, but because it's more comfortable than the follow-up question: "exactly how much did I pay for this result?"

The advantage of simplicity: aim for less, but actually understand it

This site's starting point is a simple idea: a more modest goal you fully understand beats a "promising" instrument you don't. A portfolio built from one or a handful of low-cost ETFs, with a clear equity/cash allocation matched to your risk profile, doesn't promise to beat the market — but it does let you know, at any point, what you own, what it costs, and why it behaves the way it does.

This isn't a shortcut to avoid learning the basics of investing — if anything, it requires knowing them. But the learning curve needed to understand a low-cost global ETF is incomparably lower than the one required to properly evaluate a multi-fund active portfolio or an investment bond with several stacked layers of cost.

The real advantage of DIY: being able to act

Beyond the cost savings, there's a less-discussed but equally concrete advantage: a self-managed ETF portfolio can be corrected. A "closed" bank or advised product — a fund, an investment bond — usually offers few real levers, often only a switch between funds within the same provider's range.

Someone investing on their own, by contrast, can: rebalance the portfolio when the allocation drifts from target; change the equity/cash split as risk tolerance or life stage changes; start or stop a regular investing plan based on their own savings capacity; turn the portfolio, in the drawdown phase, into an income stream through scheduled withdrawals. None of this requires an intermediary — it just requires knowing how, which is exactly what this site's guides are for.

The Independent Financial Adviser: an alternative if you don't want to do it all yourself

Anyone who'd still rather have professional support, without giving up an incentive model aligned with their own interests, has a concrete alternative: the Independent Financial Adviser (IFA). Unlike a restricted or tied bank adviser, an IFA surveys the whole of the market rather than a limited panel, and — since RDR banned commission on investment advice at the end of 2012 — must be paid directly and transparently by the client, typically an hourly rate, a fixed fee, or a percentage of assets under management (commonly 0.5-1% a year, tiered down for larger portfolios), agreed and disclosed upfront rather than folded invisibly into product charges.

This model removes the conflict of interest described in the sections above at the root: an IFA has no financial incentive to recommend an expensive product over a simple, low-cost one, because their fee doesn't depend on which product is chosen. In practice, this often translates into portfolios built from a small number of low-cost ETFs or index funds — the same approach described throughout this article, with the addition of professional support for planning, rebalancing, and more complex decisions (tax wrappers, inheritance planning, multiple goals).

To check whether an adviser genuinely operates this way, ask directly whether they are independent or restricted — the FCA requires this to be disclosed clearly at the outset — and verify their registration on the FCA Register (register.fca.org.uk), a free, public lookup. Total cost tends to run lower on average than the typical cost of a bank/restricted advice route once underlying product charges are factored in (FCA data puts the market-wide average, across both models, at around 1.9% a year including product costs), and — crucially — it's disclosed upfront rather than absorbed invisibly into the cost of whatever product gets sold.

Practical checklist to get started on your own

If the idea of managing your own investments is appealing but you're not sure where to start, here are the practical steps in order:

• Build an emergency fund first, kept separate from your invested portfolio, before investing anything.
• Define your own allocation between equities and cash based on your time horizon and risk tolerance.
• Open a share dealing account with a regulated broker, with low fees and access to the ETFs you want, and use your ISA/SIPP allowance first where it applies.
• Choose a small number of low-cost ETFs, checking the OCF, fund size and replication type before every purchase.
• Set up a regular investing plan if you're contributing periodically, and a rebalancing discipline if the capital is already invested.

If you'd rather have professional support without giving up transparency, the alternative is to confirm an adviser is genuinely independent (not restricted) via the FCA Register, as described in the section above.