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Intelligent Advisor

Investors Still Clueless on Fees

Despite widespread calls for fee transparency, investors are still uninformed about the fees they pay their brokerage.

In a recent survey of over 1,000 Americans by the North American Securities Administrators Association, one in four investors said they had no idea if their firm charged fees to maintain their brokerage account. About 30 percent said their firm had no such charges, although most do.

Of the 43 percent who did know that the firm charged service and maintenance fees, over half (52 percent) did not know the amounts charged.

At the same time, a vast majority of investors (81 percent) say service and maintenance fees are important. So how does the industry bridge the gap? Nearly eight in 10 investors say they would prefer a separate chart or table that lists all the fees in a format that’s easy to read and understand. Only 9 percent of investors say their firm currently provides such charts.

“While broker/dealers may be complying with the technical requirements governing fee disclosures, our research shows that improvements are needed to raise awareness among investors of the costs associated with their brokerage accounts,” says William Beatty, Washington Securities director and president of NASAA.

The organization has set up a working group consisting of state securities regulators, as well as representatives from the Financial Industry Regulatory Authority, the Securities Industry and Financial Markets Association, the Financial Services Institute, and broker/dealers to work together on the development of standardized and uncomplicated broker/dealer fee disclosure. “Greater transparency and improved disclosure would allow investors to quickly and easily compare prices, products and firms,” Beatty said.



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