By Stephen L. Thomas | October 23, 2023 | In
When seeking financial advice and guidance, investors often turn to financial advisors for their expertise and assistance. However, it’s essential for investors to be aware of the various fees associated with working with an advisor. While many advisors provide valuable services and tailor portfolios to their clients’ needs, some may charge fees even when placing clients in pre-designed funds with expenses of their own. Let’s delve into this aspect of advisor fees to shed light on its implications. 1. Fee Structure: Financial advisors typically charge fees based on a percentage of assets under management (AUM), known as the asset-based fee structure. This fee structure is designed to align the advisor’s compensation with the client’s investment portfolio size. However, in some cases, advisors charge fees on top of the expenses associated with pre-designed funds. 2. Pre-Designed Funds: Pre-designed funds, such as mutual funds and exchange-traded funds (ETFs), are investment vehicles managed by professionals who construct portfolios to replicate specific benchmarks or strategies. These funds come with their own expense ratios, which include management fees and operational costs associated with managing the fund. 3. Double Charging: Some