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Deciphering Fees: Assessing Your Advisor’s Costs

The subject of investment fees is becoming a big part of the discussion between the regulators and public. When it comes to your investment returns, the fees you pay really matter. Overpaying in fees can reduce the value of your portfolio over time.

Before any investment fees are discussed, every investor should be aware how advisors are compensated. There are two main categories:

In Commission-based Accounts

Clients pay their advisors through commissions associated with investments. These commissions are generally a percentage of the investment bought or sold. Commissions may be paid up front or may be buried in the cost of owning the investments.

In Fee-based Accounts

Clients pay fees based on a fixed percentage of the value of their portfolio. Fees are often paid on a monthly or quarterly basis.

What is important to know when it comes to your investment fees?


Make sure that your Financial Advisor is fully transparent when it comes to all fees. He/she should provide you with regular and detailed reports, keeping you up-to-date with constant communication, so you never have to wonder what and how much you are paying for. Your Financial Advisor should also educate you about what each of the services he/she provides entails and what fees are associated with them. If you don’t learn what you are paying for, then you will never really know what value you are receiving for your money. Full transparency creates trust and means no surprises.


The fees related to your financial investments can be very confusing. Your Financial Advisor can help you identify the sum of all the fees you currently pay and show you how you can reduce them significantly. This includes both the disclosed advisor portion as well as the embedded (hidden) portion. When working with any Financial Advisor, you should have a clear understanding of all the fees you’ll be responsible for and what you receive for the money you spend. You have a right to know exactly what you are paying for, from advice from your advisor to the management of your portfolio, and more.

So, What is a Reasonable fee?

It depends on a variety of factors, including portfolio size, management strategy and whether or not you are working with a Financial Advisor who has the ability to negotiate his/her fees. Educate yourself about the industry standards, what products charge what fees, the structure of your holdings and do not be afraid to ask for a second opinion. We believe transparency of all costs is the best situation and avoid the use of any investments that have any embedded (hidden) fees or costs.

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