Close Close
Sign In
Newsletters
Popular Financial Topics Discover relevant content from across the suite of ALM legal publications From the Industry More content from ThinkAdvisor and select sponsors Investment Advisor Issue Gallery Read digital editions of Investment Advisor Magazine Tax Facts Get clear, current, and reliable answers to pressing tax questions
Luminaries Awards
Podcast Center Video Center Webcasts Resource Center Events
About ThinkAdvisor Contact Us Advertise With Us Asset & Logo Licensing Sitemap Terms of Service Privacy Policy Copyright © 2024 ALM Global, LLC. All Rights Reserved.
ThinkAdvisor
Fees

Practice Management > Compensation and Fees

Fee Ignorance Is Widespread Among Investors: FINRA

By Michael S. Fischer

X
Your article was successfully shared with the contacts you provided.

Many investors are unaware of or confused about various fees they may pay for investing, according to a survey from the Financial Industry Regulatory Authority.

Twenty-one percent of respondents did not think that they paid any fees on their non-retirement investments, and 17% did not know how much they paid in fees. Thirty-nine percent thought they paid less than 1% annually in fees.

The proportion of investors who reported that they do not pay any fees rose to 21% from 14% in 2018. Those with portfolio values of less than $50,000 were much more likely than those with higher portfolio values to think they did not pay any fees.

Asked what types of fees they paid, 42% of investors believed they were paying account service fees, and 41% said they were paying fees or commissions on trades. Fewer than half thought that they paid either of these types of fees.

Only 23% of all investors surveyed said they paid fees for investment advice.

The findings are from the FINRA Investor Education Foundation’s recently released survey of investors in the U.S. The survey is a component of the foundation’s 2021 National Financial Capability Study, which surveyed some 2,800 U.S. adults with investments outside of retirement accounts between July and December 2021.

The FINRA Foundation noted that further analyses suggest that it is unclear to investors what types of fees they pay for their non-retirement accounts. For example, 47% of mutual fund owners reported paying mutual fund fees or expenses, while 38% appeared to be unaware that they pay these fees, and 15% did not know.

Among respondents who provided an estimate of their annual fees (including those who said “no fees” but excluding those who answered “Don’t know”), 65% were confident that their estimate was correct.

Investors’ opinions were mixed regarding the adequacy of investment industry disclosures, including about fees. Forty-nine percent perceived them as sufficient, but 27% disagreed, and 24% did not know.

A majority of respondents indicated that they believed the purpose of disclosures was to protect both investors and institutions managing investments.

Michael S. Fischer

NOT FOR REPRINT

© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.