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What Investment Fees are You Paying? Use an Investment Plan to Find Out

Posted by WrapManager's Investment Policy Committee
February 25, 2014

Financial Advisors should run a detailed analysis of your current financial situation before creating an investment plan for you. Part of that analysis includes taking a look at your portfolio’s asset allocation and examining each investment’s purpose, efficacy, and cost.

When was the last time you asked a third-party investment professional to take a look at your portfolio, examine its investment fees, and offer their thoughts?

Get a Second Opinion on Your Current Investment Portfolio

Like going to a doctor for a second opinion, it makes sense to have an investment professional (other than the one that advises you) take a look at your current portfolio and provide you with an analysis of what you pay in investment fees.

This is important to consider for two reasons: 1) your investment fees reduce your overall total return, and 2) you can get a better sense of the services and level of service that your financial advisor is providing.

Examining Investment Fees in Your Portfolio

A financial advisor can help you run an analysis of the investment fees you pay. That means taking the time to examine fees paid over the course of the year and running an analysis to find out what percentage of your assets under management it amounted to.

Because most people’s investment holdings are different, there’s no one-size-fits-all approach to examining investment fees and it takes a lot of work. If you own mutual funds in your portfolio, for instance, there could be many more fees than just the “expense ratio” of the fund. There are also things like 12b-1 fees, loads, and commissions associated with trading.

In brokerage accounts, financial advisors may charge a percentage of assets under management, but there also may be account maintenance fees and transaction charges that may not be well published.

Then there are the intangibles, like client service. If your current financial advisor calls you regularly, updates your investment plan on a frequent basis, and provides you with advice on retirement income strategies and estate and tax planning, then your investment fees could be worth whatever you pay.

Call WrapManager to Have Us Examine Your Investment Fees

One of our Wealth Managers would be happy to serve as that “third party investment professional” to take a look at your current portfolio, your fees and overall asset allocation. We work with a number of money managers as well, and could also offer ideas about other investment strategies that may make sense for you. Give us a call today at 1-800-541-7774.


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