Advisor Fees & Charges

Fees and other charges are how your investment advisor’s firm is compensated for the services it provides.

What you pay will take away from your returns, so you need to know what the fees and other charges are, what you’ll get for them, and how you will pay.

When You’ll Learn About Fees & Charges

  • When you open an account with a registered investment advisor, they must provide you with information about:
    • the fees and charges you will pay to your advisor’s firm for operating your account and making transactions.
    • compensation the firm may receive from another organization relating to your investments.
  • Before accepting an instruction from you to buy or sell an investment product, your advisor must tell what you will have to pay.
  • After you buy or sell an investment, your investment advisor’s firm must provide you with information on the fees and other charges you paid to the firm.
  • In your monthly or quarterly account statements, your investment advisor’s firm must tell you which investments might be subject to a deferred sales charge, if you sell them.
  • Every year, your investment advisor’s firm must provide you with a report on charges and compensation, similar to the sample report.

How Your Advisor is Paid

  • If your registered investment advisor earns a salary, then the cost of their advice is built into the products you buy.
  • Some investment advisors charge a fee, or commission, for each trade.
  • If your investment advisor sells mutual funds, their firm may receive a trailing commission from the mutual fund company while you hold the fund.  Some mutual fund charges are built into the cost of the product. Be sure to ask about these charges and take the time to understand them before you invest.
  • Portfolio managers, and many advisors at full-service firms who work with higher net worth investors, charge a fee based on a percentage of the portfolio’s value. The time to negotiate this fee is at the beginning of the client-advisor relationship.
  • Advisors who charge an hourly rate, like fee-for-service financial planners, may or may not be licensed to sell investment products. Be sure to check to see if they are registered.

Whatever the case, it’s your right to know the fees and other charges you might have to pay. Remember to factor all fees and other charges into your calculation of return.

Visit our Fees & Charges page for more information.