I just did a “fee audit” for a client that has a couple of accounts with other advisors.  During such a fee audit, I take a thorough look at all the fees the clients are paying for their investments.  This includes explicit advisor fees as well as the better hidden internal costs of mutual funds, etc.

Their LPL “SAM” account has them paying a total of 2.41% per year in fees (advisor fees + weighted average mutual fund fee) and their variable annuities are charging fees of 2.55% per year before cost of benefit riders which could add another 1-3% per year.

In an average year where the market returns 10%, they’re paying approximately 25% of their potential return in fees.  In more recent years of much less than average market performance, these fees add insult to injury by “piling on” these fees in addition to already negative market returns.

Please be sure you understand ALL the fees associated with your savings and investments.  These include both explicit and internal costs.

I’m going to not so delicately let these clients know that, in my opinion, they’re getting screwed by their other advisors.  Make sure you’re not getting screwed too.