Quilter Cheviot and Rathbones have joined forces to create a standard methodology for calculating total account costs, expressed as an annual percentage.
The pair said the process is not unlike that used for the ongoing charges figure for collectives.
The benefit of having this figure is that it means costs are transparent, the effect of deductions can be easily understood and most importantly it makes price comparison easier for financial advisers and clients, said the firms.
Quilter Cheviot and Rathbones hope this methodology will encourage the creation of an industry standard for discretionary managed portfolios.
A survey of potential private clients, commissioned by Rathbones, found that a high proportion of those questioned were unsure about exactly how much a discretionary investment management service would cost them.
The same survey revealed that whilst this was the case, a large number thought that a discretionary service would be of value to them.
Quilter Cheviot and Rathbones both often provide their services via financial advisers, who as part of their due diligence, increasingly want to understand total account costs over and above the annual management charge.
Quilter Cheviot executive director Pamela Reid said: "We feel there is a need to ensure that advisers and clients can compare apples with apples.
"For too long discretionary investment managers have responded to the same due diligence questions using a variety of assumptions, making it difficult for an adviser or client to see the difference in terms of total costs. Capita Financial Solutions are also keen to adopt this method for their new comparison tool, Fusion."
Rathbones head of investment management Paul Chavasse added: "We are keen to encourage other discretionary investment managers to adopt this methodology and have had a number of initial discussions with other industry participants.
"We believe that this level of transparency is essential so that the value of a discretionary investment manager is clear for the client.
"It is hoped that by introducing a standard total account charge calculation that financial advisers will be able to compare relative costs and services provided, enhancing the quality of service they deliver to their clients as a result."
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