Thrifty Thinking: Investment Fees

Consider this:

The average American pays more than $369,000 in bank and investment fees over the course of their lifetime. 

Netvest [www.netvest.com] — an online platform where wildly successful amateur investors share their best investment insights and make public their own personal portfolios — can help investors gain the confidence they need to ditch the financial advisor's fees and manage their own portfolios. 

Here are just a few of the financial advisor fees investors could ditch with a little help from Netvest.

1. PERCENTAGE OF ASSET UNDER MANAGEMENT

Many financial advisors take a percentage of the total assets under management (AUM). The amount can vary depending on the advisor and the amount under management but many are as high as 2%. The average fee for a $50K account is 1.18% or $590 each year.

2. COMMISSIONS

Many financial advisors will take a percentage of the money made for each trade that they perform on a client's behalf. Some advisors combine commissions with AUM fees and may also be getting paid from third-parties for that trade as well. 

3. PERFORMANCE-BASED FEES

When fund managers reach a certain benchmark of value-added it triggers a fee. The standard management fee structure that incorporates this is known as 2 and 20 — 2% AUM, 20% of added value when the benchmark is reached. 

4. FIXED FEES

There are some services that financial advisors will charge a set fee for. Often the creation of a financial plan regardless of whether they will be managing that plan will come with a set fee that does not change depending on assets under management or trades. 

5. HOURLY CHARGES

Like many other service providers, financial advisors can charge hourly for their services though this is usually for consulting or special projects and rarely the norm for general asset management services because it is not nearly as lucrative.