Do you know how much you are paying your current investment or financial advisor, or how much the recurring expenses are for the mutual funds or annuities you own? Investment and financial advising/planning is one of the few fields where consumers often have no idea how much, in total, the services they are buying cost them.
Fees and expenses are major culprits in destroying the performance of investment portfolios. For example, a $250,000 portfolio earning 8% annually grows to $592,000 over ten years with total fees and expenses of 1% per year. However, increase those costs to just 3% per year and the same investments are worth only $493,000; virtually $100,000 less for the investor!
Advisors, brokers and planners often use high-expense mutual funds and annuities in addition to charging commissions, loads and other fees. To make matters worse, they refuse to provide their clients an itemized list of fees and expenses. Investors end up frequently paying 3% or more each year unaware that their pockets (or portfolios) are being picked.
According to recent information from Morningstar, average annual fees for equity mutual funds range from 1.31% for large-cap US stock funds to 1.57% for international stock funds, with average annual fees for bond funds over 1.00%. Those expenses do not include broker fees, commissions, loads or other costs imposed on investors. Moreover, it represents the costs of owning the funds only with no planning, counseling or advice as to what investments are appropriate for you.
Annual fees for annuities are typically around 3.00% and often much more. Moreover, annuities usually impose large surrender fees if you need to draw on your money. That restriction is imposed largely because the annuity salespeople and their companies usually take seven, eight or more percent of your money up front in commissions.
These mutual fund and annuity fees do not include personalized financial planning, or ongoing management and in-depth reporting to you on the performance of your portfolio.
Most people do not realize how much their 401(k) plans are costing them. Despite efforts by regulators and lawmakers to make those fees and expenses more transparent, the industry is still able to avoid full disclosure to investors. The United States Department of Labor, which is responsible for regulating and overseeing qualified retirement plans, has published some information on fees that consumers should read.
The Public Television documentary series, "Frontline" produced an excellent report on IRA and 401(k) fees and other practices detrimental to consumers' financial health titled, "The Retirement Gamble." You can watch it here.
No Insight Wealth Management client is paying more than 1.3% annually in total fees and expenses, including our fees, trading commissions, and fund expenses. Many clients pay significantly less than that amount. This is all-inclusive of our planning, advising, investment management, quarterly analysis, rebalancing and client reporting, and other services. Moreover, we do not use a "robo" or automated process for portfolio rebalancing, which is becoming trendy in some circles. Client portfolios are reviewed and rebalanced as necessary each quarter by an experienced professional who is familiar with both changes in the markets and our clients' personal needs, goals and constraints. This process includes any tax-loss harvesting that might be appropriate.
We use securities with no or only very low annual expenses such as index and exchange-traded funds, stocks and bonds to implement the investment strategies we tailor to the specific needs of each client. Moreover, our investment philosophy emphasizes long-term investments with low turnover to minimize investor costs and taxable capital gains. We are a fee-only, fiduciary advisor, which means that our compensation comes solely from the fees our clients pay. We receive no commissions, referral fees, or any other form of compensation that creates a conflict of interest in always doing what is our clients' best interests.
Beware advisors claiming to be "fee-based." That means their compensation comes in part from fees but also from commissions for selling financial products. The inherent conflict of interest of profiting from the recommendations provided is eliminated only by the use of "fee-only" advisors.
Insight Wealth Management, Inc. provides quarterly invoices to all clients that detail every penny we have charged you. Moreover, since our fees are for professional services, unlike commission payments, and fund and annuity expenses, they may be tax-deductible.
Please schedule a free, no-obligation initial consultation and portfolio review to see what we can do for you. We will provide an analysis of the fees you are paying now and even give you an itemized statement of all fees and expenses you will pay as an Insight Wealth Management, Inc. client before you sign up.