If your accounting practice clients are concerned that they’re paying too much in investment advisory fees and other portfolio expenses, then they aren’t alone. Despite a rapid reduction in the overall level of investment advisory fees levied on investor accounts and funds during the last decade, there’s still a very large component of the investor population who are stuck with an old-guard advisor or firm that has not kept pace with technological and economy-of-scale advancements in the industry. These people continue to (often unwittingly) suffer the consequences of middling returns due to endless overpayment for investment advice. Consider the following as they apply to your clients:
- Do your clients know the total they're paying annually in investment advisory fees, fund expense ratios, custody and brokerage charges, and other expenses? (Probably not.)
- Are your clients getting hit with fixed-dollar nickel-and-dime custody and brokerage costs in addition to their ongoing advisory fees, or are these included in a wrap fee arrangement?
- Are the advisory fees and other expenses your clients pay proportional to the portfolio performance and level of client service provided?
- Are your clients’ portfolios composed of high-expense-ratio actively managed open-end mutual funds, or low-expense ratio index-tracking exchange traded funds and individual securities?
- Are your clients paying a premium for “active” management that really isn’t very active (or effective)?
If your answers to any of the above questions are concerning to you, then your clients should re-evaluate their current investment professional relationships, and possibly consider developing a new one. With advances in technology and persistent downward pressure on fees in the industry during the last decade, high-service active portfolio advisory and management services no longer have to be an expensive drag on returns. As a trusted CPA advisor, you have the power to help your clients break free of the old guard and explore their options.
If your clients are sick of paying high fees for lackluster investment management, please contact 4Thought Financial Group Inc.