SEC Says Investors Need To Know More About Fees


The SEC has issued an investor bulletin, raising concerns over fees and whether or not clients understand how their financial adviser is compensated.

The bulletin, released Wednesday, warns that clients may not be aware of all the fees on their accounts or understand the long-term effects of fees attached to financial advice or investment products. Seemingly small or hidden fees of as much as 1% can reduce a $100,000 investment by nearly $30,000 over 20 years, the Securities and Exchange Commission's notice cautioned.

“Fees may seem small, but over time they can have a major impact on your investment portfolio,” the bulletin said. “Along with the other factors you think about when choosing either a financial professional or a particular investment, be sure you understand and compare the fees you'll be charged.”

While the bulletin is aimed at educating investors, the SEC is hoping that advisers will take note as well, said Mindy Rosenthal, president of the Institute for Private Investors.

“To me what this is saying is, 'We're letting you know that this is important to us and this is something we're really thinking about,'” she said. “It's about disclosure and do people understand what they're paying and how it impacts them.”

While the SEC did not name specific products or investment strategies, it defined a number of different types of fees that clients should be aware of, including investment advisory fees.

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