Fri Jun 28 2024, by Tyler Gardner

5 Fees That Could Sabotage Your Retirement with a Financial Advisor

If you're considering working with a financial advisor, you need to watch out for these five fees that absolutely could sabotage your retirement. I'm Tyler, a former financial advisor and portfolio manager, and now I create financial content for free, so you don’t have to pay for it.

1. Commissions

There are many self-proclaimed financial advisors with very little actual financial knowledge who will push products on you like annuities and whole life insurance. Why? Because they earn 75% to 90% commissions on your first year’s premium. Run for the hills.

2. Surrender Charges

What’s that? You want to get out of that annuity you just purchased? Sorry, you most likely have to wait 10 years to get out of it without paying a hefty fee. Keep running.

3. Trading Fees

Beyond the advisor’s fee, if you’re working with a broker dealer, you pay for every single trade they make. This frequent trading, or churning, is completely unethical.

4. Tax Drag

In taxable accounts, like a brokerage account, every sale for capital gains triggers a tax event. If your advisor is frequently selling your winners, your tax bill grows, while unsold unrealized gains are not taxed and can continue to grow.

5. Cash Drag

If your advisor is holding any of your assets in cash and telling you they are just waiting for the right time to invest your money, remember that you're still likely paying assets under management fees for that cash. It’s eroding under inflation and fattening your advisor’s wallet, not yours.

If any of this information is helpful, please like and follow, and I’ll keep sharing insights to help you get one step closer to where you need to be.

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