The majority of advisors don’t know what fees they're charging clients, according to a new survey.
Nearly 63 percent of advisors surveyed underestimated their fees by an average of more than 30 basis points, according to the survey by Peak Advisor Alliance and Cerulli Associates. The advisors believed their fees were below 1.5 percent of assets, while the actual average was about 1.83 percent.
“This stat should alarm every advisor and force them to go back and look at how they are presenting their fee structure to clients,” said Ron Carson, CEO of Carson Wealth Management Group and founder of the Peak Advisor Alliance.
In addition, Cerulli says that 60 percent of clients do not understand how their financial advisor is charging them.
“Advisors must be transparent about the fee structure with their clients to help build trust early in the relationship,” added Carson. “If a client doesn’t know or understand the fees they are being charged they most likely will not ever fully trust their advisor, which can be toxic to the relationship in the long run.”
Peak Advisor Alliance and Cerulli Associates surveyed 159 financial advisors.