Why You Should Ask Your Financial Professional About Fees

As a financial professional, I know there are many different ways to compensate investment advisors.

With the different fee structures, the question I always encourage my clients to ask is: are the costs fair, reasonable, transparent, and do they help improve their long-term investment results?

With this in mind, I encourage people to be courageous and ask themselves and their financial professionals a question they’ve probably never asked before: How much do I pay. in costs?

This is a question you might expect to have a simple answer, but if you dig in you might find it isn’t. In the world of financial services, there are different types of fees: transaction commissions, mutual fund fees and charges, and advisory or management fees, to name a few. While cost is only one factor when it comes to dissecting the value of an investment or your relationship with a financial professional, it’s important that investors understand what they’re paying, why, and how these costs affect their returns.

According to a 2013 Schwab study, 83% of investors research before making a major purchase. Yet only half of investors say they know how much they are paying for their investments and only 16% who work with an investment professional asked how fees and commissions impact their portfolio returns. But the point is, a seemingly small difference in fees can make a big difference in your performance, especially over time.

It’s important to understand the value you get for what you pay for. You might be willing to pay slightly higher fees for different types of services that add value, like more personalized financial planning or a more tactile relationship. Perhaps you are a small business owner with a specialized set of financial needs that require more help and attention from a financial professional.

Two ways to be more aware of the fees you pay are to regularly review your statement and ask your financial advisor directly what fees you pay, why you pay them, and how they affect your financial goals. Starting with these questions will help you learn more about and be confident about your finances and the value you receive, but don’t stop there! Keep asking questions and stay engaged. Your investments are essential to your financial well-being and your long-term success.

If you are curious to know more, give me a call today. At Charles Schwab, we offer free, no-obligation financial consultations and portfolio reviews. Our goal is to make investing more affordable and accessible to everyday investors.

Mark E. Engberg, CFP, is an independent branch manager of Charles Schwab in Rehoboth Beach with over 20 years of experience helping clients achieve their financial goals.
For more information, call 302-260-8731 or visit schwab.com/rehobothbeach.


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