The true cost of MPS: why the cheapest option isn't always the best

A guide for advisers on evaluating discretionary fund managers beyond headline fees

The managed portfolio service (MPS) market has undergone a dramatic transformation in recent years. With fee compression driving some providers to offer headline rates as low as 10 basis points, it's tempting to assume that cheaper automatically means better value.

But as Evelyn Partners' Kate Morrissey recently warned: "A really low-cost managed portfolio solution can end up being neither profitable nor sustainable... You are given a static asset allocation on a passive basis."

The MPS market has expanded from virtually nothing 15 years ago to a £131bn market today. But for advisers choosing a discretionary fund manager (DFM), the question isn't just about the lowest headline fee – it's about understanding what you're actually paying for, and whether it delivers genuine value to your clients.

The problem with passive portfolios on autopilot

In recent years, passive investing has surged in popularity - and for good reason. It offers broad diversification, low costs, and efficient market exposure. But there's a growing misconception that all passive portfolios are built the same.

While ultra-low fees sound attractive, there are serious questions about sustainability. As Morrissey noted: "You have to question the prices and ask yourself if it is worth it. Is it sustainable and profitable, what am I getting for the price?"

When a DFM charges ultra-low fees, something has to give - usually the level of research, monitoring, and active portfolio management that advisers and their clients should expect from a professional service.

At Crossing Point, we challenge that assumption every day.

Looking beyond the headline fee

Smart advisers know that the DFM fee is only part of the story. The total cost includes:

●     DFM charge (the headline management fee)

●     Ongoing Charges Figure (OCF) (the underlying fund costs)

●     Transaction charges

●     Incidental costs

We offer a highly competitive 0.15% DFM fee, making us one of the most cost-effective discretionary fund managers in the UK.

But low fees don't mean low effort or corner-cutting on diligence.

Consider two scenarios:

Provider A: 10bp DFM fee, but high underlying fund costs and minimal ongoing management. Total cost: 0.80%+ with static allocation.

Provider B: 15bp DFM fee with competitive underlying costs and active management. Total cost: 0.50% with dynamic risk management.

Provider B offers better value – lower total cost and significantly more oversight. Yet many advisers focus only on the headline fee.

For independent verification of our competitive positioning, you can use Mabel Insights to compare total costs across the market. This independent platform consistently shows our total portfolio costs below market averages - demonstrating that competitive fees don't require compromising on quality or service.

What 'passive plus' really means

While our portfolios use passive building blocks, they are actively constructed and monitored. Unlike many providers who simply ‘set and forget’, we offer what we call 'enhanced passive' or 'passive plus' strategies:

Active construction and monitoring

●     Use in-house economic indicators to inform asset allocation decisions

●     Continuously review and rebalance our portfolios to stay aligned with market dynamics

●     Apply active management in fixed interest to better navigate interest rate and credit risk environments

Rigorous fund selection process

●     Screening over 6,000 funds on FE Analytics and 10,000+ on Morningstar

●     Applying our proprietary Consumer Duty analysis to assess both performance and cost

●     Reviewing trend analysis, drawdown statistics, and Morningstar ratings

●     Ensuring platform availability across all major providers

Our global asset allocation typically holds 22 carefully selected funds compared to the market average of just 8-15 holdings per portfolio (based on an average portfolio size of up to £500k). This enhanced diversification reflects our commitment to thorough research and optimal risk distribution, rather than taking shortcuts with limited fund selection.

Evidence-based decision making 

Every fund inclusion is backed by data, including:

●     Share class analysis to ensure optimal cost structure

●     1, 3, and 5-year performance comparisons

●     Volatility and drawdown analysis

●     Our proprietary Consumer Duty scoring system

This blend of passive cost efficiency with selective active oversight gives our clients the best of both worlds.

Built for the new regulatory era

Consumer Duty has raised the bar - and rightly so. That's why we've built our own consumer duty monitoring ratios in-house. These tools help us:

●     Track fair value and suitability across all client segments

●     Ensure performance, costs, and risks remain within expectations

●     Maintain transparency and accountability at every stage

It's not just compliance - it's culture.

The hidden costs of 'cheap' providers

When evaluating ultra-low-cost providers, advisers should be asking:

●     How often do they review holdings? If portfolios remain static for extended periods, what value are clients really paying for?

●     What research supports their fund selection? Basic passive allocation requires minimal ongoing oversight - but is that what your clients need?

●     How do they ensure Consumer Duty compliance? Simply choosing the cheapest funds may not deliver the best client outcomes.

●     What happens during market stress? Static allocations offer no protection during downturns - particularly problematic for clients in drawdown.

Recent NextWealth research supports this concern, finding that "fee pressure has flattened out" and suggesting the market is recognising that sustainability matters more than simply driving fees to zero.

Results that speak for themselves

Our approach has delivered excellent performance, particularly in volatile markets where thoughtful allocation and fixed income decisions have made a meaningful difference.

Independent analysis by Defaqto shows our passive strategies consistently ranking in the top quartile for performance (see Defaqto In Focus: MPS Report, July 2025, pages 60 and 62), proving that competitive costs and superior outcomes can coexist.

The bottom line

The MPS market has matured beyond simple cost competition. Today's advisers need providers that combine competitive total costs with genuine added value – sophisticated research, active monitoring, and intelligent risk management.

As the market recognises that ultra-low fees often mean ultra-low service, the focus is shifting back to value: what you get for what you pay.

At Crossing Point, we believe our enhanced passive approach delivers exactly that balance – competitive total costs with genuine active oversight. Because in a market where fees have bottomed out, what matters most is the value you deliver to clients.

If you're an adviser looking for cost-effective portfolios that don't cut corners on diligence, Crossing Point may be exactly what you've been looking for.

Let's talk.

To learn more about our cost structure and investment approach, visit crossingpoint.co.uk/costs-and-charges or contact Carl Hagger our Business Development Manager, to discuss your specific requirements.