The investment product with the lowest expense ratio doesn’t always have the lowest cost of ownership. And “free” is not always without cost. Thorough due diligence remains as important as it ever was to determine total cost of ownership.
Managing price perception, not just pricing structure and price points, has become a critical capability for providers and wealth managers. Clients should have a solid understanding of how investment expenses compare when evaluating mutual funds and ETFs, just as they need to understand an investment’s risk, liquidity profile, volatility and impact on their portfolio diversification.
Advisors have a tremendous opportunity to provide clients with a greater understanding of not only the impact fees have on the overall portfolio, but an understanding of all the factors that could impact performance. A comprehensive understanding of all these factors can give an investor the confidence to know they are not overpaying for returns.
Brie Williams is head of practice management at State Street Global Advisors.