Hidden Fees Your Financial Advisor Won’t Tell You About


The danger of hidden fees

There are many risks lurking behind some investment options. These can’t guarantee a safe retirement income for many reasons. One of these reasons are the fees connected to some financial products which can compromise your earnings and cause a drastic reduction of your retirement income. 

Getting educated on the variety of investment opportunities you have to grow your nest egg is necessary to know how the different products work but very often it is not enough. Asking a financial advisor about the risks connected to mutual funds, for example, is not always the best choice as an unscrupulous advisor will not tell you about.

It is not unusual that people planning their retirement are stimulated to pick an investment product by a financial advisor who is interested in earning profits from their account but they don’t know exactly how that product works. Many people don’t know what is the real cost of their investments until they get to lose a considerable amount of money.

The fees associated with your account are the main cause to negative returns. Very often, even if your investments are doing well you might end up with miserable earnings because of the high fees you have to pay. Maybe the worst thing about investment vehicles is that sometimes several different fees concentrate in one single product, including management and expenses fees.

Which products might contain hidden fees?

Very often the fees you are not told about are management fees. These are necessary to keep a securities-based account. This kind of fees are generally associated with stocks and mutual funds, but there are other investment options which are constitute a security subaccount and therefore include the same fees.

  • 401k plans

Have you ever wondered how 401k plans grow your nest egg? Such plans are all funded in securities  , so if you want to choose one of them to invest your money you’ll need to get prepared to pay extra fees.

These are usually hidden, meaning that those promoting 401k plans won’t tell you how much money will be used to pay such fees and you will not even know that you have to pay them. 401k plans include management fees which are regularly connected to securities such as mutual funds and stocks and that are not included in other investment vehicles

  • Variable annuity fees

This investment option is part of annuities, with which shares many similarities. However, despite the features of this appealing product, it is a securities-based investment vehicles like those included in the 401k plans. Variable annuities are mutual funds subaccounts and therefore include the same management and expenses fees associated with this financial product.

Author Bio

Federica is a guest blogger from FSFG providing safe investment options to retirees with a team of Philadelphia professional financial advisors.

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