What do I do with investment management or administration fees?

Your investment management company or platform may charge you an aggregate total for combined investment funds and fees.

The fees need to be accounted for as expenditure, while any other amount needs to be recorded as an investment transaction (these do not affect income or expenditure).

For example, £505 may be paid out from your current account, with £500 being the investment and £5 being a financial or administrative fee. In this situation, £5 needs to be separately accounted for and recorded as an expense.

There are two options of how to account for this:

Option 1:

You can split the unmatched single transaction of £505 from your bank statement into two separate transactions of £500 and £5. Then:

• Match the £500 as Money Invested
• Reconcile the £5 as a Direct Debit purchase to the category where you would code bank and other financial fees.

Option 2 (recommended):

We recommend you set up an additional bank account in ExpensePlus called Investment Control Account (or something similar). This will represent the investment company's bank account where the money goes across to get split.

In effect, it is a holding (or suspense) account. This may also be needed when investments are being actively managed by a third party or platform.

Money is removed from one investment account, but instead of being returned to your current account, it gets moved/split into other investments (within the company or platform), so never returns to your own bank account. 

In the example outlined above, the outgoing amount of £505 from your current account is reconciled as a bank to bank transfer to the investment control bank account. To enable this to happen, you would need to manually enter the following statement transactions to this 'dummy' Investment Control Account:

• The top £505.00 transaction is the transfer between bank accounts;
• The middle £500.00 transaction is Money Invested;
• The lower £5.00 transaction is a Direct Debit expense allocated to the category where you would code bank and other financial fees.

This process can be completed in reverse for the scenario (mentioned above) where money is returned from one investment and then reinvested in a different product, with fees attached.

To help you better understand the Investments module as a whole, please visit the module overview page here.