Data shows that investment portfolios with lower annual fees ultimately offer investors the best value.
Consider that over a 20-year period, an investment portfolio that's generating a 4% annual return but assessed a 1% fee could lose nearly $30,000 more than a similar portfolio with a 0.25% annual fee, according to theIndeed, costs are going down as asset management firms compete for clients' dollars. Expense ratios on equity mutual funds averaged 1.04% in 1996, according to the"In the retail fund market where products compete to be bought… costs have never been lower.
"That's put a lot of pressure on the asset management industry to come up with lower-cost solutions because that's what investment advisors are requiring," Rhoades said. These rules require retirement plan service providers to disclose fees to plan sponsors and called for employers to issue fee disclosures to individuals participating in workplace retirement plans. This led savers to pay closer attention to costs, Rhoades said.Investors need to assess their fees in relation to the value they are receiving from their investments, Hauptman said. Most financial advisorsbased on how much money they manage for them, which is typically about 1% of assets.
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