Most financial advisors report gross performance because the number is always higher, perhaps two to three percent higher. And, most investors accept the numbers because they do not know they should be asking for performance reports that are net of all expenses. The higher the expenses, the more likely the advisor is to report gross results.
There are several layers of expense that you should be aware of. If you know all of the expenses, you can add them up and deduct them from your performance yourself. Or, you can use a free tool that resides on the Investor Watchdog website (http://www.investorwatchdog.com/) that will obtain expense data for you. Continue reading →
There are five primary types of fee and commission compensation that are paid to financial advisors.
Most advisors do not like to talk about their compensation unless they have to. That’s because they don’t want you to know how much money they make from their relationship with you for three reasons. First, the compensation may be much higher than you think it is. Second, your expectations for services and results may go up. And third, rising expectations may also mean increasing accountability for results. Continue reading →