Our 2013 Advisor Group Salary Survey coverage shows clients aren’t entirely clear on how you’re paid. And when we asked them to come up with a dollar figure of how much it costs them to have their money managed, the responses skewed low (with 35% unable or unwilling to even take a stab at the number).
Here’s how clients responded to specific questions about how money changes hands.
2013 Advisor Group Salary Survey. n=999. Margin of Error: +/-3.1%, 19 times out of 20
Data illustrations by Lena Diaz
- Sybil Verch,
“I had a client come to me with a mutual fund portfolio, and his MERs averaged about 2.73%. It was a growth portfolio, and I was offering a separately managed account at 2%. I explained the differences between the two, and what you get for your money.
“The client thought the 2% that I was charging was crazy because he didn’t believe he was paying 2.73%. He had never seen a fee in the 20 years he had invested. So I explained that yes, you are paying fees on the mutual funds. So he would have been one of the 9% who thought he paid less than $100 a year.”
- Nicholas Miazek,
Fiera Capital Corp.
“Even clients who know their percentages often have not translated [them] into dollars. So I do a weighted MER analysis as part of our wealth management report for clients to show the fees they’re paying, translated into dollars on an annual basis. And that has really helped us have a conversation about where the value is and what services they’re paying for.”
- Jolene Laing, ScotiaMcLeod
“Regardless of what structure clients choose, they absolutely ought to know what [they’re paying]. We’ve all seen somebody who has half-a-million in mutual funds at their local branch, which may not be the most cost-efficient way for him to have his money tied up. But if he’s told he’s not paying any fees, and he’s dealt with that local branch forever, he’s going to be fine with that. So when he comes in and sees a full-service brokerage firm or an investment counselor, and suddenly he’s slapped with a 1.5% fee to do business, he’s appalled by it. That is not right.”
See Should these clients pay fee or commission? for more Salary Survey coverage.
Originally published in Advisor's Edge
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