Editors' pick: Originally published Oct. 25.
Conventional wisdom among financial planning clients is that management fees aren't negotiable.
The fact is, those fees can and should be on the bargaining table, says Invest Right, an investor advocacy group.
"The good news is that many fees can be negotiated," the company states in an email to TheStreet. "Just how far you get in the negotiation discussions depends on a mix of your relative standing as a client and the questions you ask."
It's in the best interests of financial advisors to be more flexible on fees, too. "In the age of financial uncertainty, investment advisors who are willing to haggle a little to keep you as a customer stand to prevail over those who are inflexible about fees," Invest Right notes.
To start your fee negotiation campaign, know that you have leverage, and likely more than you think.
"Client leverage over advisors has increased over time as the cost of 'passive' strategies - indexing and ETFs - has rapidly declined," says Greg Blotnick, an equity analyst at a private investment firm.
Blotnick states Vanguard and BlackRock have been the main proponents of this trend, cutting annual fees on exchange-traded funds to near-zero. "The active management industry is well-aware how bad this is for their business and having a hard time justifying what value-add their 80- to 100-basis point flat fee provides," he adds. "A client could mention to this fact to their advisor: 'I can own the S&P 500 via an iShares ETF - IVV - for 0.04% per year. Why should I pay you more than that?'"