Transparency can seem liked a mixed blessing. On the one hand, you are telling clients what they are paying when they have their money managed. Many other products have hidden fees. On the other hand, that number is “out there,” and it is human nature to want to pay less if possible. How does that 1% fee stack up against other fees clients pay in their everyday lives?

Taxes Your Client Pays
Income taxes are an obvious expense, as are property taxes. If your client files a money management fee in the same category as a tax to get something, what other taxes are they paying in their day to day lives?

1. Federal income tax: 24%. That is the marginal Federal income tax bracket for joint filers earning over $190,750. The top bracket is 37% for joint filers earning over $693,750.

2. State income tax: 3.07%. According to nerdwallet.com, that is the average state income tax. Eight states do not charge any. The rate can vary considerably. California tops out at 12.3%. Hawaii is 11% and New York is 10.9%.

3. Property taxes: 1.08%. That is the national average for property taxes in 2022. This also varies by state and county. Rocketmortgage.com ranks state averages, lowest to highest. Hawaii is 0.28%. New Jersey is 2.49%.

4. Sales tax on purchases: 5% to 7%. That is the range for average state sales taxes in the U.S. It varies by state. Four states charge no sales tax. Rocketmortgage.com provides a chart.

5. Taxes on gasoline: 18.9 cents/gallon. That is the Federal excise tax on gasoline. If gas is averaging $3.83/gallon (8/7/23), this means the 18.9 cent tax is about 5%.

6. Taxes on airline tickets: 22%. That is what you may be paying in taxes on fees on domestic plane flights in the U.S. Airlines.org explains in detail.

7. Taxes on your wireless bill: 25.4%. That is the combination of Federal and average state fees on cellphone bills, according to taxfoundation.org.

8. Taxes on your cable TV bill: 23%. This may be the amount of tax and company-imposed fees you are paying on your cable bill. Here is the source of those numbers, using 2018 data.

9. Taxes on beer: 11 cents to 58 cents/gallon. That is the U.S. excise tax on beer. State beer taxes range from .02/gallon to $1.29/gal.

10. Taxes on alcohol purchases: $2.00 to $36.55/gallon. In addition to the Federal government, states charge excise taxes on alcohol.

Fees Your Client Pays
Sometimes fees are costs of doing business.

1. Average credit card annual fee: $128. That is the average annual credit card fee. According to Forbes, the average person has 3.84 cards.

2. Average buyer’s commission at auction: 25%. If your client is a collector, this is what they are likely paying at online or in person auctions.

3. Average ATM fees for cash advances: $3.00/transaction. That’s the average per transaction bank ATM fee for cash advances, according to bankrate.com. That is 3% on a $100 withdrawal or 1.5% on a $200 withdrawal, assuming it’s not your bank.

4. Average interest rate of revolving charge card balances: 20.68%. According to wallethub.com. (8/7/23) that is the average interest rate for current customers when carrying a balance month to month.

5. Bridge and tunnel tolls in New York City: $11.19. That’s the rate for a non-NYC EZ Pass using a toll bridge in NYC. $11.75/13.75 is the off- peak/peak rate on the Holland and Lincoln Tunnels.

6. Subscription fees for TV: $20–$30. That’s what the majority of people using streaming services pays per month. The average American family has four streaming service subscriptions.

Although clients might complain about investment related fees, paying fees is built into their everyday life. Many are far higher percentages and deliver little or no personal service. You deliver service in the hope of a long-term relationship.

Bryce Sanders is president of Perceptive Business Solutions Inc. He provides HNW client acquisition training for the financial services industry. His book Captivating the Wealthy Investor is available on Amazon.