By Geoff Hafer, Spring 2017 Student Intern
In our last post in this five part series on “Opening your first Brokerage Account,” we tackled the question “Who will be managing my account?” This week we will be addressing the question “Do I really know all the fees associated with my account?” Investment and brokerage fees can quickly eat into your investment returns. Whether they’re tied into the funds you’ve selected as an expense ratio, added on as a brokerage commission when you buy or sell, or charged by an adviser who is helping you sort through it all, it’s important that you know what you’re paying. Here are some of the more common fees to be aware of:
- Brokerage account fees: These include annual fees to maintain a brokerage account, subscriptions for premium research to help with trading strategy, and fees to access trading platforms.
- Trade commissions: Charged by a broker when you buy or sell certain investments, such as stocks.
- Expense Ratios: Annual fees charged by all mutual funds, index funds and exchange-traded funds, as a percentage of your investment fund.
- Management or advisory fees: Typically a percentage of assets under management, paid by an investor to a financial advisor.
- Sales loads – A sales charge or commission on some mutual funds, paid to the broker or salesperson who sold the fund.
Added up these and other fees can become quite hefty. Not only should you speak to your investment adviser or broker about all the fees associated with your account but you should know where to look yourself to confirm. Typically all of the fees mentioned can be found on the financial professional’s website, in a prospectus, or on your account statements.