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Whats My Investing Fee? A Fustrating Quest

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What’s My Investing Fee? A Frustrating Quest Our reporter thought she had a simple question, but the answers were anything but

Andrea Fuller May 7, 2017 10:17 p.m. ET
IF-AD055_FEES_12U_20170501165446.jpg

A Wall Street Journal reporter was just looking for a simple answer about her investment fees. There was nothing simple about the result. Illustration: Gary Hovland for The Wall Street Journal

By
Andrea Fuller

I thought my question was simple: How much was I paying my investment adviser in fees?

After a series of phone calls that elicited the kind of confusion and frustration I have rarely experienced outside of interactions with cable-company customer-service representatives, I think I have an idea. Barely.

Describing the fee disclosures of my adviser as opaque would be generous. The experience left me wondering whether someone even less savvy than me, a Wall Street Journal reporter, would be able to navigate this system, to ferret out the good information from the bad.

Getting nowhere

In most offices, I suspect that people try to stay up on sports or television to prime for water-cooler gossip. But at the Journal, I was growing increasingly ashamed of how little I knew about the workings of my own investments. So, I decided to research what fees I paid to invest with my financial-advisory company—one of the largest in the U.S.

Investing in Funds & ETFs

 

All of my investments are in mutual funds or exchange-traded funds. Though I don’t have a finance beat—I am an investigative reporter who specializes in data analysis and computer programming—I am still guided by the Journal’s conflict-of-interest policy that aims to prevent conflicts between employees’ investments and the subjects we may cover. So I don’t do any individual-stock investing.

I assumed the fee information I was looking for would be readily available in the documents section of the company’s website. Wrong. I did see a toll-free number for customer support, so I gave them a ring.

I told the man who answered that I wanted to find out what fees I pay. In retrospect, this was a little like asking your spouse how much divorce lawyers cost. As he began to fret, I assured him that, no, I wasn’t unhappy, just curious.

There is a $125 annual flat fee, he told me.

How Much Do You Pay in Adviser Fees?

0:00 / 0:00

Alarm bells went off. That’s it? I asked. That can’t be it. I assumed there was a percentage charge on my investments.

He laughed. We’d love to charge that, he said. But no, $125.

Was that the only fee, I asked? I was increasingly dubious.

Well, he said, each fund in which you’re invested has internal fees.

How did I find those?

And so began our journey into the bowels of the investment firm’s website. He suggested I click on various pages, only to discover that no, the fees weren’t listed there. By the time he suggested that I go to Yahoo Finance and look up various funds to find out about their fees there, I knew I’d had enough.

Twenty minutes into the call, I said I had to go.

I hope this has been helpful, he told me. I assured him: It wasn’t.

I went back to my desk to seethe. There is a local financial adviser at the firm whom I meet with periodically for account reviews, and I decided to shoot him an email asking how I could find out all the fees I pay, and where these were documented. I also wrote an email to a colleague with the subject line, “MAY PULL HAIR OUT.”

An answer of sorts

But apparently my irritation set the company on alert that we had entered the breakup danger zone. The man I had spoken with left me two voice mails promising that he had the information. I conceded to returning their calls after I received a third from his supervisor suggesting that, really, he could help me.

The man I spoke with this time proceeded to tell me the opposite of what the previous adviser had told me. No, there was no annual $125 fee. That was only for people investing in individual stocks. My portfolio had an annual fee of 0.85% of assets, deducted quarterly.

So what about these internal fees? He said those ranged from 0.4% to 0.8% of assets annually.

Well, then, what was my actual number? He said that I was invested in the “moderate” risk basket, so the expense averaged to 0.55%. Fees would have been higher with more-aggressive investments, lower with conservative ones.

I thanked him and asked where I could see all this online.

He said that he wasn’t sure, but that the information would be in whatever packet I received when I enrolled in the program.

I told him this document was either long gone or in the drawer where old IKEA instructions go to die.

He said I could always try looking up the individual fees on Morningstar’s website.

I thought that this was about as much as I could stomach of the fee-finding quest. I finally had an answer to what fees I paid, even if I remained in the dark about where they were documented. But about that time, I received a response from the adviser who normally schedules my portfolio reviews.

He also cited me the 0.85% number. And he said the internal expense fees were “around 0.5%.”

I wrote him back and told him that I had finally spoken with someone who gave me the right answer, and that the number was 0.55%.

He called me, alarmed. It’s actually 0.5%, he told me.

Well, the other guy told me 0.55%, I said.

No, he told me, you’re in an account with “moderately conservative” risk, and the figure is 0.5%.

IF-AD064_FEES_O_P_20170504174403.jpg
I told the man who answered that I wanted to find out what fees I pay. In retrospect, this was a little like asking your spouse how much divorce lawyers cost. Po: iStockpo/Getty Images

The other guy told me I was in the “moderate” account, I said.

Pause. Oh yes, as it turns out, you are in the moderate account, he said.

The 0.55% was correct. My combined fee was 1.4%.

And as for those documents?

“I am trying to find a client approved document that provides you with the internal expenses on the portfolio you are invested in,” my adviser wrote.

I am still waiting.

***

A spokeswoman for Ms. Fuller’s investment-management firm later said she was sorry the reporter had a bad experience. She provided instructions and documents with further information on fees—but no documentation of Ms. Fuller’s internal fund fees—and said the firm updated its statements in recent months to more clearly detail fees paid.

Ms. Fuller is a reporter for The Wall Street Journal in New York. Email her at andrea.fuller@wsj.com.

Appeared in the May. 08, 2017, print edition.

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That's a great story! Thank you Tony--I don't know how you dig up all those excellent articles. This one sure illustrates the uphill battle the innocents have to find out what they are being charged for their non-fiduciary financial hired help.

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Thanks. I hope all these article posts aren't annoying anyone and taking away from the discussion board. I realize not all articles are of the greatest quality but most have at least what I believe is a small new gem of knowledge that can be helpful from reading them. Lately there have been more articles written and published than there were earlier this year.

 

Wall Street Journal has many good articles but they have a paywall which makes it difficult to always post their articles. I think though I figured how to get around that paywall. Sometimes it doesn't work. This time it did.

 

This articles remind me exactly what I had to go through to get information on fees from those annuity guys. It got my antennas up early on in my career that things were not above board when it came to giving out the truth. Fees are not propriety information for the benefit of the company , they are the right of the customer to know.

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Tony,

You, krow and I, and the other frequent posters, fortunately, know all about fee obfuscation as explain in this article.

 

My frustration is that our colleagues are not coming here and reading these articles, and getting informed. This forum has existence since 2000! Not much has changed. Our colleagues just do not go online and read this. I hope I am wrong, but the facts are that our colleagues are not getting the message after all of these years of news articles and this site.

 

Just yesterday (not 20 years ago), our committee got the following letter from a teacher. You better sit down when you read this, it's so hideous:

 

I'm writing out of serious concern about false and/or misleading information being disseminated to teachers by "district authorized" private brokers trying to sell insurance and supplemental retirement plans on district campuses.

Specifically, one such individual proclaimed in my school's cafeteria that he "heard" or "was told" that a huge change occurred in 2013 retroactively negating the retiree health benefits feature for those of us hired under the 1992 "age plus years served equals 80" threshold. Even if you were hired in 2000 under that umbrella, he "believed," the sweeping change said that you'd still qualify ONLY IF YOU HAD 25 YEARS OF SERVICE as of the date of the change! No one would be "grandfathered." As I and others questioned him on this, he repeatedly said "we were told this," etc., etc.

Please correct me -- immediately -- if I'm mistaken, but I don't believe there's any truth in what this salesperson said. If that is so, I believe passing on misinformation like this -- whether intentional, qualified, unintentional -- is a very serious matter and potentially damaging to teachers' morale, which is already being severely tested these days.

Who are these salespeople and why are they allowed on school grounds to sell at all? Where does UTLA stand on this? Is this part of our collective bargaining agreement?

I appreciate and have clipped your "Practical Matters" column from the April 28 United Teacher. I assume that does have accurate information. I
ask you bring this matter to the attention of UTLA staff and officers. We're dealing with enough stress and challenges. We don't need any more negative, harmful diversions.

Sincerely,

Teacher

Name removed

 

This is the REAL WORLD Gentlemen! Our teachers do not deserve this, but it's going to keep happening for a long time. We need to think of other ways to get their attention and the unions. Forums and newspaper articles are not working. This particular sales person will be notified by our committee that he cannot be on campus telling people misinformation by both LAUSD and by CalSTRS, but he will be back on some other campus the next day. Nobody can stop them because they are protected by state insurance code.

 

These sales people are very aggressive, and they have a lot of influence over our colleagues because our colleagues have nowhere else to go. And our colleagues are not going online to get help. They just don't. We need to brainstorm new ways to reform this horrifying system. We have to reach the teachers and the unions some how, some way. Nobody else is going to do this for us.

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This doesn't surprise me. In fact I remember years ago in my early teaching years being told by a annuity salesperson that my defined benefit state plan was not guaranteed and that besides an annuity I needed to buy supplemental pension insurance from him or something like that. I foolishly attended an evening presentation about it. I could tell the company's salesforce had done a good job rounding up many teachers for this presentation. A few hundred teachers were there. To make a long story short, I saw through the sham but others after the meeting were up on stage signing up for this supplemental plan.

 

Lets face it teachers are a large market and easy to find and target. Teachers also have money insecurities early on in their careers. The sharks know this and act accordingly.

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Oh and I remember getting a bunch of free coupons for attending. A free Big Mac, free fries, and the like. I gave them away to my students.

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That's a great story! Thank you Tony--I don't know how you dig up all those excellent articles. This one sure illustrates the uphill battle the innocents have to find out what they are being charged for their non-fiduciary financial hired help.

 

I agree. I've been just lurking around here, but I have really appreciated the articles you have found.

 

Also, I'm quite disturbed by the stories of sales people on K-12 campuses. I'm on a community college campus and I have never seen that here. My issue is, at least on my campus, I feel like I am in a "financial information desert". I was handed paperwork from HR when I was hired, but had no idea what any of it was about or what to do with it. I chose to do nothing for a long time. I'm trying to fix that now. While I'm a little late to the party, I'm very grateful for the information on this site! Thanks again. Keep posting!

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Microbionerd

 

 

Welcome to the site. No need to lurk, instead please participate. Everyone has a story and ever story matters !!!!

 

Tony

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