NEW YORK ( TheStreet) -- Secret broker fees can cause on retirement savings to be lower than expected because investors often don't realize they were paying them or because the fees are higher than investors thought.
With an average total fee percentage ranging from 1.06% to 1.98%, the cost to an average portfolio over time can reach hundreds of thousands of dollars, according to data from Personal Capital, a money-management firm.
“Trying to assess hidden fees is complicated even for the most experienced investors,” Personal Capital CEO Bill Harris said. “Advisory fees are typically calculated as a percentage of the assets under management, and fund-related fees or expense ratios are more challenging to assess since the details are often not included on account statements. This leaves investors in the dark, not knowing what they’re paying for or where their money is going.”
That could be changing soon, however, with the Obama administration’s proposed regulation called the Fiduciary Rule, which is designed to curb hidden fees and broker conflicts of interest that can siphon off savings.
“The likelihood is very high that it will be passed into law, but there will probably be many variations of it from where it stands right now,” said Bryan Slovon, CEO with Stuart Financial Group, a financial-planning firm that serves clients in the Washington, D.C., area.
If approved, the regulation would broaden the definition of which investment advisors are considered fiduciaries, putting them under greater scrutiny of the Department of Labor if they don’t put their clients’ interests ahead of their own.