"For an investor in the short term maybe that doesn't apply so much because their short term goals might not be fully met by a passive investment portfolio."
He says costs can range from 0.06 to 0.3 per cent for trackers compared with a cost of 1.5 per cent for a discretionary fund management service.
"Also I'm not a fund manager myself, so I'm not looking at going in and out of funds all the time, because that's not what I'm looking to do," he adds.
This means that whenever active investments are needed for a client he would typically outsource it to a managed portfolio service, though he does include active funds in his central investment proposition as well.
The other side, where active funds come into play for Manning Gee clients, is in the field of environmental, social and governance investing.
Manning Gee offers a passive MPS with an ESG overlay, but as more of its clients are looking to invest in companies that take into account specific ESG issues — such as in supply chains and workforce protection — a more costly DFM service is sometimes needed.
"What I'm finding more and more is that clients are looking for that positively sustainable investment compared to something which actually passive might not do. So we would look to cater for those clients as well," Gee says.
In terms of advice fees, Manning Gee charges a fairly typical 3 per cent upfront and a 1 per cent ongoing fee. But there is a cap on fees once they reach a certain level.
Gee says fees are too high for the ordinary investor but he says he does not think advice fees are high per se. "When you see the costs of running the business and providing the service that we do to clients, we would struggle to be profitable if we changed our fees particularly significantly," he says.
However, at the same time he names this conundrum as one of the weakest points of the industry currently.
"A lot of advisers are chasing those people with the hundreds of thousands of pounds, but that's not the reality for most people," he says.
He says serving the less wealthy is something he has considered but not found the right answer to yet. "It's whether we sort of niche down that route or not, but also how we do it and how do we remain in business if we're to go down that sort of route, which is not something we're used to.
"I would say out of everything that's one of the biggest weak points that I can identify in our industry."
