Reclaim your trail commission

If you received financial advice or used an intermediary to buy an investment product before 31 December 2012, you may be paying trail commission.

Trail commission is an annual fee paid to financial advisers by their customers over the lifetime of products such as pensions, with-profits bonds and unit trusts. It is also paid to intermediaries, such as discount brokers and fund platforms, that recommend or enable the purchase of funds or other investments.

Trail commission is a percentage fee, typically 0.5 per cent, which is taken out of the sum of your investment each year. It is usually included in the annual management charge, so it is not always clear that you are paying it or how much it costs you.

The trail commission is intended to cover an ongoing service but is often paid to advisers each year without them reviewing their customers' investments or paying further advice.

Half a per cent may seem like a small amount but it can add up to thousands of pounds when it is compounded over the years. So, unless you are continuing with the advice service, you need to find a way to stop this trickling out of your investments.

No one is going to help you do this for free. If you stopped your advice service it is not in the interests of that adviser or intermediary to contact you again, as they will trigger a regulatory requirement to inform you about the trail commission you are paying. So if you have had an adviser in the past they may be ignoring you on purpose.

Several companies offer 'reclaim your trail commission' services. These include Massows (http://www.paymemy.com/mission) and Commission to You (http://www.commission-to-you.co.uk). However, these either make you pay a fee for the service or they retain a small portion of the trail commission as payment.

A guaranteed way to stop trail commission is to sell the investment and buy it back again using a fund platform or discount broker that doesn't charge trail commission - again, you may have to pay a small annual platform fee but this will work out much better than paying trail commission. Companies to consider include Alliance Trust Savings (http://www.alliancetrustsavings.co.uk/), Cavendish Online (http://www.cavendishonline.co.uk/) and TD Direct Investing (http://www.tddirectinvesting.co.uk/).

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