Posted about 4 years ago

A Phone Call with Fidelity...

At the end of 2014 I was reviewing my Fidelity statements and noticed something summary of fees. I called and asked the gentleman at Fidelity if I could have a sheet summarizing all the fees I paid in 2014. He seemed confused by my request and asked exactly what I'm looking for. I repeated, "I want to know how much of my money went to paying fees in 2014." His reply shocked me, "Oh, we don't do that."

"You don't tell clients how much of their money was used to pay mutual fund fees, sales fees, cash drag costs, etc.?"

"No sir," he gargled with some shame in his voice. But he quickly followed with, "But no one does that."

"I understand, and that's the problem. If you were more transparent with how much investors are paying in fees, the mutual fund managers and financial advisers wouldn't be able to sit on their yachts in the Bahamas. They are slowly robbing me of my financial goals and I can't even get a piece of paper showing me how much money they're taking?"

"Sir, they aren't robbing you of your financial goals..."

"Do you know how much a 2.5% mutual fund fee effects an investment over 60 years?"


"If you made a onetime investment of $10,000 at age 20 with a 7% return then at age 80 you would have $574,464. But if you paid 2.5% in management fees your ending balance would be $140,274 over the same period, which is 77% of your potential return."

"That doesn't sound accurate. Where did you get those figures?"

"Jack Bogle, founder of Vanguard," I replied with sharp, direct tone. He was speechless. "May I make a suggestion? If you truly want to help people reach their financial goals then be transparent with how much money they're paying in fees. An informed person makes better financial decisions."

Our conversation wasn't verbatim as stated above but it was very close. I wanted to share this to make everyone think about those seemingly minuscule fees. A financial advisor will gladly tell you the percentage of fees you pay (usually ~3%) but if you ask for a dollar amount they won't tell you. It’s a psychological game they're playing, 2.5% doesn't sound like that much but $250 (on a $10,000 investment) does.

If you don't believe me call your financial advisor or brokerage firm and ask them for a summary of the fees you paid last year, not a percentage, but a dollar amount. Before you call check out the True Cost of Fees tool from Vanguard to see just how detrimental fees can be. This will give you some ammunition.

To those of you who call their financial advisor and ask about fees, please share your experience below! 

Happy investing!