Investment Fees - Understanding Your Statement

Understanding Your Investment Statement

Since 2016, your advisor’s firm has been required to provide an annual charges and compensation report. Let’s break down what it includes:

1. Account Administration Fees:

• These cover the cost of managing your account.
• Charged by your adviser or firm.
• These are standard and usually are minimal.

2. Account Transfer Fee:

• If you move your account from one firm or institution to another, this fee may apply.
• Your new dealer usually reimburses you for this fee.

3. Fee-Based Compensation:

• Your adviser charges a percentage of your portfolio value.
• Covers ongoing portfolio management.

4. Commissions:

• These apply to stock trades or mutual fund purchases with sales charges.

5. DSCs (Deferred Sales Charges) and Trailing Commissions:

• Paid by the mutual fund company to your adviser/firm.
• DSCs upon selling a mutual fund.
• Trailing commissions as long as you hold the fund.

Remember, transparency matters. So do low fees.

The biggest step that you can take to improve your long term investment outcome is to lower fees and avoid the stock picker’s fallacy. The stock picker’s fallacy is the belief of some advisors and some misinformed investors, that they can predict the market. No one has the proven ability to pick the market, but many advisors sell this along with the crystal ball that they use to make their choices. A stock picker advisor is a hazard, run to safety!

‍