The general rule for financial advisors' fees is around 1%. For investing, time is all this gap can be explained by the time when investors buy and sell their mutual fund positions and by the time they hold them. For more specific information, one resource that is available to potential investors and clients of an advisory firm is the company's ADV form, which a company submits to the Securities and Exchange Commission (SEC) with specific requirements. If you're hiring a financial advisor with an actively managed strategy, make sure you know the types of securities the advisor will invest in and whether those shares fit your long-term financial objectives and your level of risk tolerance.
By evaluating the flow of investments into and out of mutual funds, you can calculate the average investor return and then compare it with the fund's real returns. If you work with a financial advisor and you're not sure how much you're paying in total for your services and investments, you should ask. If you add the investment advisor's commission rates and mutual fund expenses, your total annual fees can easily exceed 2%. When developing these strategies, companies also consider factors such as risk tolerance, time horizon, liquidity and revenue needs, and any specific financial or investment objectives they may have.