Understanding Investment Management Fees
Learn how advisory fees, fund expenses, transaction costs and other charges can affect an investment portfolio over time.
Investment fees may appear small as percentages, but they reduce the amount of money that remains invested and compounds over time. Understanding both the services received and the total cost is an important part of evaluating an investment relationship.
Common types of fees
Advisory fees: An investment adviser may charge an ongoing fee based on assets under management, a fixed fee, an hourly fee, or another disclosed arrangement. Ask which services are included.
Fund expenses: Mutual funds and exchange-traded funds generally have annual operating expenses, often expressed as an expense ratio. These costs are deducted within the fund and reduce returns.
Transaction costs: Some accounts or investments may involve commissions, markups, markdowns, trading charges, sales loads, or other transaction-related costs.
Account and product charges: Additional costs may include custody fees, maintenance charges, retirement-plan expenses, surrender charges, insurance expenses, or optional rider charges.
Where to find fee information
Review Form CRS, Form ADV, account agreements, fee schedules, prospectuses, shareholder reports, account statements, and trade confirmations. Ask for an explanation of both direct and indirect costs.
Questions to ask include what services are included, what underlying expenses apply, how the professional is compensated, whether lower-cost alternatives are available, and whether a change could create taxes or surrender charges.
Cost is important, but not the only factor. Services, investment approach, risk, tax considerations, and available features also matter.
Disclosure: Investment advisory services are offered through West Wealth Group, LLC, an SEC Registered Investment Adviser. Investing involves risk, including loss of principal. Fees and expenses reduce returns. General education only.
Source: SEC Investor Bulletin, How Fees and Expenses Affect Your Investment Portfolio.
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Investment advisory services offered through West Wealth Group, LLC, an SEC Registered Investment Adviser. Investing involves risk, including loss of principal.
General education, not personalized investment, tax or legal advice. Insurance and annuity guarantees depend on policy terms and the issuing insurer’s claims-paying ability. Annuities are not FDIC insured.
