Investment fees can erode retirement savings faster than many realize, sometimes more than market swings, said Phil Huff, a partner with Golden Reserve, LLC, a Detroit-area retirement planning firm.
“A small number ends up being a big dollar figure,” Huff said, noting that a $1 million account paying 1.5% means “$15,000 a year going to the financial advisor.” Because the fee is tied to the account balance, “as your account is growing, [the fee] is going up. So, the more you make, the more you’re paying your advisor as well. And that’s how it can add up over time to be that $500,000 number.”
Advisory fees are only part of the cost picture, Huff said during an appearance on Live in the D. “We also pay a fee for our investments,” he said. “If they’re buying mutual funds, ETFs, variable annuities, there are hidden costs happening behind the scenes that ultimately pull down your returns. And it can have a really big impact when we start double dipping and paying both of those costs.”
For retirees on fixed incomes, trimming expenses is critical. “Every dollar matters in a fixed income, right? Fees are dollars leaving your account,” Huff said. “If we can reduce those costs, that’s just that much more money in your accounts, in your retirement, there for you to spend and enjoy.”
Huff said Golden Reserve’s Roadmap for Retirement starts with a detailed cost breakdown. “We have a fee analysis that breaks down all of your different accounts, all of your different investments,” he said. “It tells you the percentage and dollar that you’re paying your financial advisor … [and] those hidden investment costs. Now you really have a feel for what am I paying? Am I getting the value out of that fee?”
To watch the segment click on the video above. For more information call 313-888-8884 or visit GoldenReserve.com.
Disclaimer: The information provided is not intended to be used as the sole basis for financial decisions, nor should it be construed as advice designed to meet the particular needs of an individual’s situation. Financial instruments involve risk. Actual customer results may vary. Subject to full terms and conditions available at: goldenreserve.com.