3 Actions You Should Take to Examine Your Investment Fees

Here’s a statistic that may catch your eye (or make it shed a tear): since 1980, total mutual fund assets have increased by 135 times, but the total expenses paid to equity mutual-fund managers has increased 141 times ($170.8 million to $24,143 billion).¹

Have your investment fees, or the fees you pay to your financial advisor, been going up as well?

3 Actions You Should Take to Examine Your Investment Fees

1) Get a Clear Sense of What Your Investment Fees Actually Are

Depending on what type of investments you have, the way you pay financial advisor fees can vary greatly. Mutual funds have “expense ratios” that might give you a good sense—but not always a clear picture—of what your fees are.

Or maybe you pay your financial advisor a percentage of total assets, which can make things simpler, but again may have some additional or hidden fees which make the total cost higher. In order to calculate your investment fees correctly, you really need to break down every investment you have, and run an analysis on each one individually.

2) Is Your Financial Advisor Providing Enough Services and Benefits?

Has your financial advisor helped you create an investment plan to map out your future? Do you get advice about how to allocate your portfolio, how to strategically plan your spending needs in retirement, estate planning guidance or regular updates about how you stand financially relative to your goals? Has your performance over time been in-line with or better than your expectations?

Investors should not consider these questions individually, but all of them together when gauging their experience with their financial advisor.

3) Financial Advisor Fee Comparison

Once you have taken steps 1 and 2 above, it’s important to consider your findings in the context of what else is available to you out there in the investment world. You might find that you’re paying low financial advisor fees but also getting significantly less service than what some other advisors offer. Or maybe in the worst case scenario you’re paying high fees relative to the industry and have poor service and performance to show for it!

This step can take a good deal of time, because you want to be thorough in exploring your other options—Mutual funds, ETFs, financial planning services, financial advisor, separately managed accounts, hedge funds and so forth.

WrapManager Can Help You Evaluate Your Investment Fees and Survey Your Investment Options

Part of creating an investment plan with WrapManager involves evaluating your current fees to help you gain a clearer understanding of how much you’re paying in financial advisor fees. We can also help you ask the right questions about the service and performance you’re getting from your current investment plan and financial advisor, and whether or not there might be something better for you.

One of our Wealth Managers would be happy to assist you and provide you whatever insights we can about your current investment plan and whether you’re “getting what you pay for.” Give us a call today at 1-800-541-7774 to get started, or get started by answering a few questions here.

Sources:

1 Wall Street Journal