The use of a financial advisor can be very helpful at many stages of life to receive guidance and ensure that your individual financial goals are met.
An investment type that is often promoted is a mutual fund.
They are widely popular for their ability to diversify the portfolio.
“When individuals have an advisor, there is a fee associated with their service to provide their clients with financial recommendations,” Reeves says.
“When an advisor invests your money in a mutual fund, this creates what we call a double dip account. Mutual funds alone are loaded with a variety of annual fees that can seriously add up over time. When you add advisory fees along with mutual fund fees, this creates even higher expenses.”
On average, advisor fees are around one to two percent. Mutual funds can be anywhere from one to three percent.
When you combine these, on an annual basis, the fees can be enormous and have a drastic impact on your lifestyle and future retirement.
It is important to be knowledgeable about how much you are paying in fees.
Advisors will disclose how much you are paying in their advisory fee but might not present you with the total fees you are paying to include those from the mutual fund.
“There are many ways to invest your money that do not involve ongoing fees,” Reeves says.
“Investment options such as individual stocks and bonds, annuities, ETFs, and many others, are a more efficient way to grow your wealth. When investing in these options and using an advisor, double dipping in fees is not occurring. Advisors are a great resource, but you want to make sure that you are working with someone that has your best interest in mind.”
Double dip accounts are easily avoidable and allow investors to maximize their earnings by averting tremendous fees.
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