Articles

• Long Term Cost of Retirement Plan Asset-based Fees

  Many bundled 401(k) plans offered to small practices can have very high fees, which include mutual fund fees and other asset-based fees. Fees average about 1.5% but at the high end of the spectrum fees can be as high as 4%. These AUM (assets under management) fees always grow as your account grows. The compounded cost of these fees can reach into hundreds of thousands of dollars for a typical 401(k) account. Read on

• Why We Don’t Charge Asset-Based (AUM) Fees

  Majority of today's advisers, whether they are fee-only (that is, they are paid only by the client, not by third parties for selling products), or fee-based (having a mix of fees and commissions from product sales) are compensated by charging a percentage of assets under management (AUM) fees. AUM fees can range from about 0.25% to as high as 2%, not including the fees paid for mutual funds and other financial products, which can be as high as 2%. Proponents say that this type of compensation is good for the client because the adviser has 'skin in the game' - that is, the adviser makes more if the clients' portfolio performs, and less if it does not. A closer look, however, shows that the AUM model is not what it is made out to be. Read on