Financial Advisors Need to Gain the Trust of Investors First

When it comes to the cost of investments, 21% of American investors who have at least one investment account know they pay investment fees but do not know the amount paid.

“Too many traditional players in this industry are prioritizing their products, commissions and fees before the client’s best interests, and that is putting consumers’ hard-earned savings and retirement security at risk,” Personal Capital CEO Jay Shah said in a note. “Typically, this is not the customer’s fault, as many advisory firms bury fees in fine print and jargon that is difficult to understand. We encourage all firms to meet a higher standard when it comes to offering objective, personalized financial advice in a more transparent manner, so that we can empower Americans to better manage their financial lives.”

Many inaccurately believe that higher fees translate to higher returns, with 32% of Americans believing higher fees for investment accounts will generally generate higher returns, despite studies showing otherwise. Around 28% of American investors don’t look at fees all together.

“Americans count on financial advisors to help them manage their money and achieve their goals, whether that’s sending their kids to college or achieving a comfortable retirement,” Personal Capital Founder and Chairman Bill Harris said in a note. “Achieving these critical life goals is a roll of the dice if the advisor is not a fiduciary. The financial wellbeing and best interest of the customer should be the top priority, and a legal obligation, for any firm managing consumers’ money.”

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