The Skinny on Fat Investing Costs
Do you know how much you're paying to invest your money? Several factors are pushing prices down for consumers, so savvy retirement savers have options.

Recently, a new client joined my practice and her investing costs dropped by almost 70%. She was paying far too much for a big, old brand name with their fancy suits and high-rise office space. Her accountant finally convinced her that the “value” she was receiving was not worth the cost.
She’s not the only investor coming to this realization. As you may already know, the financial services industry is undergoing a massive reinvention as technology and government involvement are forcing narrowed margins. Transparency is causing “fee compression,” where costs to the consumer are coming down, but expenses for financial professionals are increasing, reducing gross profit. With shrinking income and increased regulatory costs, broker-dealers and advisers must decide what to do with their businesses. Some are adjusting willingly, but others are digging their heels in. Some insurance and investment companies are reducing costs by reducing the number of investments they offer. Financial advisers are deciding to cut segments of their less-profitable clients.
The reality is that the industry has long operated with a set of rules and expectations that I do not think hold true any longer. The seismic shift created by technology has plunged transaction costs, and the average investor can access mind-boggling piles of information. The speed at which innovative and useful investment products can be crafted and brought to market has increased dramatically. (Don’t forget, only 50 years ago you had stocks, bonds, whole life insurance and a few mutual funds. Look at the options now!) And the expectations of consumers continue to shift, often to the unreasonable, in all parts of life.

Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
Are investors reaping the benefits of these changes yet? Possibly, but there are some challenges as some costs aren’t as easy to pull out as others. Here is a quick overview of the costs of investing:
Please note that these costs are each independent of one another. You can pay high transactional costs and get no relationship (not ideal). You can also pay modest relational costs and receive innovative products. Or you may choose to forgo the relational costs in the name of the lowest transactional costs. You get to decide what makes sense for your situation and your expectations.
However, please let me be abundantly clear — there is a cost to relationship. You want highly qualified, high-character people handling your money. And those folks will not work for free, at your job or in the financial industry. But do not resign yourself to believe the only way that you can get relationship is to pay exorbitant fees.
Here are a couple of ideas you might use to find an adviser who is right for you:
This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.
Andy Burdsall is the president of Riverbend Financial Group in Jeffersonville, Ind., a firm that focuses on income creation and legacy planning for its clients. He is a Registered Principal with Securities America, Inc. and an insurance professional.
-
-
Are You Overlooking Your Most Valuable Retirement Asset?
Selling your home and relocating could become a bigger part of the retirement conversation, given how real estate markets have boomed over the last decade.
By Julie Virta, CFP®, CFA, CTFA • Published
-
Insuring Your Plan for Retirement Income
‘Longevity insurance’ ensures you don’t run out of money in retirement. How to figure out how much you need, the types of annuities to use and when the income should kick in are tricky questions, though.
By Jerry Golden, Investment Adviser Representative • Published
-
Insuring Your Plan for Retirement Income
‘Longevity insurance’ ensures you don’t run out of money in retirement. How to figure out how much you need, the types of annuities to use and when the income should kick in are tricky questions, though.
By Jerry Golden, Investment Adviser Representative • Published
-
Retirement Planning with Life Insurance
An indexed universal life insurance policy can help you with tax mitigation and extra retirement income in addition to death benefits for your beneficiaries.
By Mike Decker • Published
-
Which Retirement Accounts Should You Withdraw From First?
Here’s a standard order for when you should tap which account when you’re in retirement.
By Evan T. Beach, CFP®, AWMA® • Published
-
Nervous About the Markets and Economy? Consider History
To put things in perspective, focus on what you can control and remember that the ups and downs of the markets and economy can be cyclical.
By Erin Wood, CFP®, CRPC®, FBSⓇ • Published
-
Expecting a Recession? Seven Steps to Help You Power Through
Instead of panicking, consider opportunities to add flexibility and resilience to your financial position. These steps can help you enter a potential recession from a position of strength.
By Christian Mitchell • Published
-
What Is Indexed Universal Life Insurance and How Does It Work?
This permanent life insurance provides a death benefit to your beneficiaries but also offers a cash-value component that can grow over time.
By Mike Decker • Published
-
How to Fail as a Leader
The authors of the new book 'Real-Time Leadership' outline the traits of effective leaders (kindness is key) and what will ensure a leader’s failure.
By H. Dennis Beaver, Esq. • Published
-
Are You Worried About Running Out of Money in Retirement?
Planning that integrates income annuities can help alleviate the No. 1 fear of retirees, even in worst-case investment scenarios and when living way beyond your life expectancy.
By Jerry Golden, Investment Adviser Representative • Published