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While many people may think the main determinant of your investment success is picking the winning stock or getting in and out of the market at the right time, it is actually the fees you pay for your investments that can help you reach your goals more quickly or cause you to spend additional time in the workforce. In August 2010, Jeannette blogged about a study in which Morningstar found it wasn’t a fund’s star rating, but internal costs which were the best predictor of a fund’s success.

Studies like these have led to a more educated consumer, and in turn, fees have decreased on everything from the commissions paid to buy and sell stocks and bonds to the management costs and other internal fees charged by mutual fund companies. I found it interesting that last week, a Wall Street Journal article discussed the fact that Merrill Lynch plans to raise the fees it charges its current and future customers. As brokerage firms continue to lose clients to Registered Investment Advisors, my thought would have been that they would try to make themselves look like a more attractive alternative, not the opposite.

The Asset Advisory Group is a fee-only Registered Investment Advisor. This means that we are solely compensated by the fees paid to us by our clients. We never receive additional compensation from any company whose investments we recommend. In the past, brokers at firms such as Merrill Lynch were paid mainly based on the transactions that occurred in their client’s accounts. More recently, the brokerage industry began to change its practices to resemble firms like ours. They started offering managed accounts, where clients were charged a fee based on the assets which were being managed. But, their brokers also continued to receive additional compensation from the investments they were recommending, which oftentimes could mean their clients were paying 3% or more in total annual fees.

For Merrill to increase fees even further does not bode well for their client’s ability to reach their goals. According to the Wall Street Journal article, some investors could be paying as much as 55% more to have their portfolio’s managed in 2015.

The bottom line is to know all of the fees you are paying for investment advice – what your advisor receives to manage your portfolio (both from you and the investments they recommend) and how much the mutual fund company and custodian are receiving. After all, the person you entrust with your financial future should help you reach your goals more quickly – not make you broker (pun intended).