SOURCE: Personal Capital

Personal Capital

September 14, 2015 05:00 ET

Personal Capital Report Exposes Cost of Hidden Fees: Investors Losing Hundreds of Thousands of Dollars

Hall of Shame: Analysis Reveals Top Five Fee Offenders: Merrill Lynch, Ameriprise, Ameritrade, Wells Fargo and Morgan Stanley

SAN FRANCISCO, CA--(Marketwired - Sep 14, 2015) - Personal Capital, a new breed of financial advisor, today released the results of a study examining 11 of the leading brokerage firms based on the fees charged to their investors. The analysis reveals how much typical management fees eat away at investment income over the lifetime of a retirement savings account, totaling hundreds of thousands of dollars for an individual. The full results are available in Personal Capital's "Financial Savings Report: The Real Cost of Fees."

"Investment fees can no longer be justified as a cost of doing business, and brokerages can't get away with simply hiding fees in fine print," said Bill Harris, founder and CEO of Personal Capital. "We scrutinized the fees major brokerages charged and demonstrated how the seemingly trivial cost of fees, compounded over decades, adds up to astounding losses for retirement savers. It's time to create a new normal in the cost of investing, a cost that is in line with the actual value created by a financial institution."

Last month, the Department of Labor (DOL) held public hearings focused on its proposed "conflict of interest" rule that calls for greater transparency for investors. The rule would require financial advisors and brokers who deal with retirement accounts to provide advice in the best interest of their investment clients, not the investment funds they serve. Personal Capital's Financial Savings Report supports DOL's rule by showing consumers the cost of investment management fees, to shift the balance of power back to investors. Uncovering previously hidden fees lets investors make better-informed decisions about the investment recommendations of their financial advisors, so they know whether that advice is truly in their best interest.

Report Findings

The Financial Savings Report examines both advisory fees and mutual fund (or ETF) fees charged by 11 of the top financial institutions, pulled from an anonymous pool of 155,924 Personal Capital registered users. Personal Capital calculated that the average total fee percentage ranges from 1.06% (USAA) to 1.98% (Merrill Lynch). By applying the average range of fees documented in the report to an average account value of $500,000, the cost to a portfolio over 30 years of investing spans between $936,390 for Merrill Lynch and $502,407 for USAA. The full list of brokerage firms researched for the Financial Savings Report include:

  • Merrill Lynch
  • Ameriprise
  • Ameritrade
  • Charles Schwab
  • E*TRADE
  • Fidelity
  • Morgan Stanley
  • Scottrade
  • UBS
  • USAA
  • Wells Fargo

For comparison, Personal Capital clients pay an average total fee of 0.99% on their investment accounts, nearly a full percentage point lower than most of the brokerage firms investigated in the report. The Personal Capital mutual fund and ETF expense ratio is 0.10%, and the average Personal Capital advisory fee percentage is 0.89%. Personal Capital charges no account opening fees, no service or maintenance, and no trade fees, and 0.89% is the highest advisory fee Personal Capital currently charges clients.

To download a full copy of the report, please click here.

About Personal Capital

Personal Capital is a next generation financial advisor. The company melds technology with professional advisors to help households manage their wealth. Personal Capital's free app is available for iPhone, iPad and Android.

Disclaimer: Personal Capital Advisors is an SEC registered investment advisor. Any reference to the advisory services refers to Personal Capital Advisors. SEC Registration does not imply a certain level of skill or training.

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