According to a study conducted by benefit consultant Aon Hewitt and advice firm Financial Engines, investors who did not use the help of a financial advisor tended to underperform with their investments. The study looked at the 401(k) returns of more than 425,000 savers from 2006 through 2010, and found that the median annual return of those who got professional help was almost 3% higher than the return for those who invested on their own, even after taking fees into account.1 Why Did Investors Without a Financial Advisor Underperform? According to the study, one of the reasons for the performance gap was that the investors who self-managed were far more likely to be too aggressive or too conservative, instead of a diversified balance of the two. [+] Read More

It’s important to ensure you are getting appropriate value for the financial advisor fees you pay. Ultimately, money spent on financial advice should lead to more informed decisions about how to structure investment accounts, how to allocate your portfolio, what investments make sense and what steps need to be taken to reach your financial goals. In order to justify the cost of a financial advisor, we believe investors should expect these four things in return: 1) Sound Financial Advice There is a wide range of information your financial advisor should be able to provide you, including how to structure your accounts, deciding which accounts to use for income, assisting with important financial decisions and events, and helping with your estate plan. It helps if your financial advisor is a Certified Financial Planner (CFP)—they should be able to offer advice pertaining to more areas than a normal financial advisor, including insurance and tax planning.1 [+] Read More

In a previous post, we examined various investment products and the potential investment fees associated with each. Many of those investment products—like mutual funds and annuities—may have fairly complicated fee structures. In some cases, it may be difficult to ascertain what the investment products actually cost you. We believe there is a potentially better solution for high net worth investors when it comes to investing and understanding the investment fees you’re paying. How Investment Fees Work in Separately Managed Accounts A separately managed account is one in which you give a money manager or financial advisor discretion over what investments to make on your behalf. The financial advisor or money manager may purchase individual stocks, bonds, ETFs, mutual funds, and so forth. Typically, separately managed account fees are a percentage of your assets under management which are deducted or paid every quarter. There are often no commission charges for trades, and the fees are often easier to understand than many other investments out there. [+] Read More

How much you’re paying in investment fees can depend on what type of investments you own and the services offered by your financial advisor. Below, we’ll break down some of the more common investments and offer you tips on how to calculate the fees you’re paying. Mutual Funds The annual fees for investing in mutual funds are known as a fund’s “expense ratio.” These are calculated by dividing the fund’s operating expenses by the average dollar value of its assets under management. Operating expenses are taken out of a fund's assets and lower the return to a fund's investors.1 There can also be other fees associated with mutual funds, such as those incurred through investor purchases, mutual fund exchanges and redemptions, investment advisory fees, marketing and distribution expenses (also known as 12b-1 fees), brokerage fees, and custodial, transfer agency, legal, and accountant’s fees.2 [+] Read More

An investment plan, amongst other things, can help you establish where you stand financially, how you should invest, and how and from where you should generate retirement income. But it can go further than that. An investment plan can help establish what your family’s income needs are, and help you ensure they are provided for. 3 Estate Planning Features of an Investment Plan An investment plan can help you do the following: 1) Map Out Your and Your Spouse’s Retirement Income Needs By establishing your spending needs in retirement as well as your spouses, and inputting them into an investment plan, you can keep track of how your assets stack up against your long-term income needs. [+] Read More

PBS FRONTLINE’s recent special about financial planning(1) in the retirement industry should be watched by anyone planning for or currently in retirement. It suggests that these investors need to take control of their financial futures by 1) ensuring their advisor acts as afiduciary and makes recommendations in accordance with the investor’s best interests, and 2) specifically knowing and understanding the fees associated with those recommendations. We couldn’t agree more. There is a difference between the responsibilities of a FINRA Registered Representative and a SEC Investment Advisor Representative. Although one could make the argument that both have to act prudently, it’s crucial to understand the difference in the roles as they could impact your long-term retirement goals. [+] Read More