Where’s Waldo

On several occasions over my career providing wealth management counseling to clients, I have run across the phrase from new clients that, “My broker doesn’t charge me.”  I usually ask, “Do you work for free too?”

The confusion comes in when one does not explicitly “write a check” for services, but instead, has fees that are embedded in investments and the advisor then gets paid by the fund or other entity that is managing the investment product.  So, they don’t “see it.”  It’s like, “Where’s Waldo”!

The financial advice industry has evolved over the years and recent movement in the industry has led to more transparency on fees and pricing than in the past.  Still, it is not always easy to find out how much one is actually paying for advisory services.  We believe it is appropriate to ask every advisor how they get paid.  They should be able to answer quickly and concisely.  At Sigma, if asked, we respond that the only revenue we receive is that which our clients send to us, explicitly by either writing a check or asking us to take the fees out of their account after sending them our invoice.

All questions and comments are welcomed.

Bob Bilkie, CFA®