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Many Pay High Investment Company Fees For Services They Don't Use, Survey Shows (consumerreports.org)
Penelope Wang, writing for Consumer Reports: If you are investing in stocks, bonds, or mutual funds, you have a wide range of options to help manage your portfolio -- everything from traditional brokerages to mutual fund companies to online financial firms. But as consumers search for an investment company, many pay little attention to the fees they're being charged, according to a just-released Consumer Reports survey of more than 46,000 CR members. Four out of 10 surveyed said they weren't sure what they paid in fees. And of those who knew the costs, only 60 percent rated their investment company in our survey as Excellent or Very Good on the amount charged.
"Hidden and confusing fees are proliferating across the marketplace, making it hard for consumers to know what they're getting for their money, and to comparison shop across providers," says Anna Laitin, director of financial policy at Consumers Union, the advocacy division of Consumer Reports. "It is concerning that so many investors don't know how much they are paying in fees and that many of those who do understand the fees don't appear to think they are getting their money's worth," she says.
"Hidden and confusing fees are proliferating across the marketplace, making it hard for consumers to know what they're getting for their money, and to comparison shop across providers," says Anna Laitin, director of financial policy at Consumers Union, the advocacy division of Consumer Reports. "It is concerning that so many investors don't know how much they are paying in fees and that many of those who do understand the fees don't appear to think they are getting their money's worth," she says.
Am I on the wrong website? Since when is this news for people who exchanged all their humanity for money?
Yeah. Nobody is really an investor. If you are not giving the company a substantial chunk of its start capital you are just a speculant. Investors are not invested with money only but with emotion and have interest for the company to grow and make and improve products. Speculants on the other hand don't actually care.
Everyone knows it and they expect it. If people didn't expect to get ripped off on some level they'd be moron's.
--
I wake up laughing -- Bruce Willis
No, I do not expect anyone to be a criminal.
And ye, make no mistake, theft, robbery, fraud, usury, racketeering and profit, interest and "intellectual property" are all crimes, and the same kind of crime too: Taking money, and giving nothing back in return. (Every case of giving back something of non-equal value can be split into a case of a fair deal and a case of giving nothing back. E.g. in the case of a sale, the latter is called "profit".)
And if somebody *is* a criminal, I can expect me and my social group to punish him.
Of course, if the ones with the biggest sticks *are* said criminals, then they write rules (laws) that say that they are not criminals, but nice people, with happy feelings, ALL of the time, and we have no way of punishing them. At least until we manage to get the bigger stick.
Obviously the survey didn't include people in Australia... cause in Au, you pay for services which are never even offered!
even better, when your dead, your billed for services which you couldn't use (as your dead), even though no such service is actually provided anyway.
WOAH, sounds just like Comcast and CenturyLink!
Unless you're a very high net worth individual, you probably don't have access to the sorts of funds that charge a percentage of assets under management and even if you did you'd be better off without the professional traders. Instead you probably pay commission on trades and the financial industry is setup to get you into a trading mindset. They're always trying to get you into this or rotate out of that so that they can make extra trade commissions off of you. Warren Buffet was right when he observed that you should treat trades like an extremely scarce commodity. The example he used was of a punch card with 25 punches on it representing all of the trades that you will make in your lifetime. If you don't want to own a security for 10 years then you sure as hell don't want to own it for 10 hours or 10 minutes. If you think that's crazy then consider this. Warren Buffet defeated all challengers in his ten year charity benefit investment competition starting in 2008. How did he do it? He bought the S&P 500 Index fund and sat on it. Buffet won handily with an average 7.1% return, including the time period of the Great Recession, against a runner up of 2.2% average return for the next best actively managed portfolio. Think about that the next time an investment broker pitches you a financial product or a trade. The old adage still applies. If it sounds to good to be true it probably is.
Lie to potential customers about the price then tack whatever you can think of on the bill?
Doesn't every bussiness do that?
The banksters are getting their share from your money anyway, whether you invest it yourself or have it invested by them.
But I'd bet there is a start-up out there ready to disrupt the banksters with a blockchain solution.
Or A.I.
I always seem to confuse those 2.
Just remember that people...a 0.5% reduction in fees is often a 40% INCREASE in your pension when you retire. The numbers are so small i.e 0.5% that most people don't seem to do the math or care. But here's how it works
Your average return is probably around 4-6% each year if you are 60/40% bonds/equities or similar (this can be higher or lower obviously) for general employee 401Ks that most people don't look
So your REAL return is minus inflation lets say that's around 2.5% - so you are actually only getting 1.5%-3.5% ..
Your 401K provider then takes 0,5-1.5% of this!! That's basically saying they take no risk and can take 40-100% of your return for providing an IT platform, some customer service and linking to exchanges and brokers...
Frankly its ridiculous - its like Microsoft charging you a % fee for how much you make from its products...investment products should obviously be charged at a flat fee i.e 40USD/ mth like any other service...but then, that's why they can afford to lobby politicians and drive a porsche whilst the people who retire on their 401Ks live out a meager lifestyle and wonder where their money went!? All because they can't be bothered to look at their 401K or plan for the future...its a great system for the motivated to rob the unmotivated.
Take heed...investigate what your paying and move to index trackers or trusted funds that charge more BUT RETURN MORE TOO!
In Europe the fees have to be stated explicitely by law. People still don't get it. Morons.
QED
Shaddap Clive.
...investment products should obviously be charged at a flat fee i.e 40USD/ mth like any other service...but then, that's why they can afford to lobby politicians and drive a porsche whilst the people who retire on their 401Ks live out a meager lifestyle and wonder where their money went!?
No. People aren't going to PAY 40$ a month (or any amount for that matter) to invest. That's silly and you know why because you explained the reason people don't seem to "care" about the 0.5% yourself. They don't even notice it. It'll hurt when they run the numbers once it comes retiring time; but not as much as if they didn't invest for retirement at all, like most people nowadays seem to do.
I tend to rant.
Seriously, just use Vanguard.
less than 10 basis points for alot of the mainstream indexes and no commissions...
This is a very real problem, but in what universe is this within the Slashdot remit?
Next up - refrigerator shelving that cracks and yellows before its time!
For normal people, investment companies are a racket. They exist to take your money...and keep it.
If you go to an investment brokerage that actively manages your money, they not only have their own fees, they also love to buy into high-fee mutual funds that give them a kick-back. My mother had her money with a name-brand brokerage, with a broker she considered a friend - and they still kept buying and selling these high-fee mutual funds. The buying is bad enough, but cashing out and buying into another fund a year later is... Well, it's very clever. For the broker. Who is fulfilling their primary goal of keeping their clients' money for themselves.
Normal people wanting to invest really have only two choices:
- Take charge of your own investments. Learn what you're doing, and buy stuff for the long-term. If you buy a stock, buy it with the intent to keep it for several years.
- If that's not your thing, they buy low-fee index funds. In addition to the market index funds, there are also more specific ones out there. The point is, they are funds with little management, and hence very low fees. Buy into index funds, and sit on them for the long term.
Enjoy life! This is not a dress rehearsal.
You are absolutely correct.
However, obviously percentage is too difficult a concept for most Americans to understand -- https://science.slashdot.org/s...
so it IS really too much to expect the average American to understand how to compare one percentage against another percentage.
When you don't have enough money to pay your rent for the next month and keeping the lights on is a difficult proposition funding your retirement isn't exactly high on the list of priorities.
There is no shortage of low cost alternatives for those that wish to invest on their own.
Indeed, there is at least one service (Robin Hood) that enables people to trade stocks and options for free. Literally, zero commission to trade stocks. The catch? It's not a full service broker, so you don't get all the services features, bells, and whistles that a full service and "over priced" broker provides.
If you're feeling the need to roll the dice there are options. Pun not originally intended.
Once you are kicked into the gutter it will be too late. There is short window where America's side into a third world country can be reversed, but it won't last long.
The current set of Republican grifters must be unseated and then prosecuted for their crimes. That, unfortunately, is only the beginning, because they will only be replaced by a different set of professional looters. The only way out of this mess is for voters to elect candidates who are more honest then what we have now. It's going to take decades, but it's that or dictatorship will prevail.
Why is Snark Required?
Those are really high fees too. That is one of the elements I strongly look at when purchasing. Thankfully, my provider has several no transaction fees along with very low fees. (Mutualism and ETFs). There are also some bracketed funds which reduce fees even further depending on your investment. They had closed one of those out several months ago and bumped me to the cheaper fund for free. I think they launched with a little too much granularity.
Costs are easy to analyze, but it does require reading.
Everyone accepts a huge percentage of their paycheck going to the government, why would they care about 0.5%?
If you do not put your retirement money into Vanguard Index 500 Fund that tracks the S&P 500, you're not playing the odds. It's automatic, so nobody at Vanguard's compensation is likely to be increased by decreasing your total return, low-fee and tracks 500 stock-index so it's diverse and transparent.
In terms of time-periods similar in length to a normal American's career, the returns earned from dollar-cost averaging into the market are probably the best you're going to do with the lowest risk. Over short terms, volatility and risk increase. But retirements now, routinely go more than 15 years and you won't need to spend all of your money at one time, just about 5% per year, for most of us, so even in the first 5-10 years of retirement having a large portion of your liquid net worth in Vanguard Index 500 is likely a winning strategy.
Another popular retirement investment strategy is to buy canned beans & ammo by the pallet.
that investment firms would be legally required to have their clients best interests at heart (Fiduciary Responsibility and all that).
/.? I get that we're an aging demographic but is this a slashvertisement or something? Does the parent company of /. own the linked article? Ah well.
I'll give you 3 guesses what happened to that rule when the administration changed....
BTW, what the *bleep* is this doing on
Hi! I make Firefox Plug-ins. Check 'em out @ https://addons.mozilla.org/en-US/firefox/addon/youtube-mp3-podcaster/
Maybe 10 years ago.
Does slashdot even know what this site is about anymore?
With retirement funds, it's common - almost universal - for the IRA or 401K manager to take a monthly or quarterly (rarely, only annual) fee on top of whatever % comes off the fund assets. It's extremely rare to find one that charges no fee, and if it in fact doesn't that's usually compensated for by other fees or a higher expense %.
Bottom line: you're gonna pay Wall Street no matter what. Your job is to minimize that payment while gaining some of the general price increases that occur over time (hopefully beating inflation in the process). There are lots of low-commission brokers, and most don't charge a maintenance fee once you have more than some reasonable minimum account balanced (after all, your account stocks are being used as backing for other transactions when you're not trading them). If you manage your own investments (which can't be done totally on autopilot, but should not be day-trading either) those brokers are a good place to be. ALL mutual funds, though, take a % for management; some take other fees as well (commissions, marketing charges, etc.) - again, do your homework and pick a decent alternative. Index funds are very good for most people, but there's a place in most portfolios for a little active management too (be VERY careful to read all the fine print!) as a hedge against following sentiment-drive market moves.
Dont watch any financial news channels, There is not enough info to fill 24x7. They fill it with fluff, speculation and misinformation. Makes you trigger happy, second guess yourself and trade. You lose time and money.
Most retirement planning advice is bullshit. They assume you will spend in retirement as much as you are spending when you were earning and have no flexibility in spending. Estimate you expenses into a four categories: Essential (food, shelter, clothing, medicine) Discretionary (travel, entertainment, charity), Indulgence, Principle Protection (money to be reinvested on good years). First goal, save enough for essential without touching the principle, then discretionary. Then for Principle protection. Then for indulgence. Spend less on lean years. Spend more on good years. Reinvest in good years to hedge against inflation.
sed -e 's/Chuck Norris/Rajnikant/g' joke > fact
and you don't even have to rebalance.