Personal Capital, a robo-advice provider, recently unveiled its “hall of shame,” highlighting several firms accused of excessively charging investors with investment fees amounting to “hundreds of thousands of dollars” each.
The list includes “11 of the leading brokerage firms based on the fees charged to their investors. The analysis reveals how much typical management fees eat away at investment income over the lifetime of a retirement savings account, totaling hundreds of thousands of dollars for an individual.”
Personal Capital says it calculated that the average total fee percentage ranges from 1.06% (USAA) to 1.98% (Merrill Lynch).
“By applying the average range of fees documented in the report to an average account value of $500,000, the cost to a portfolio over 30 years of investing spans between $936,390 for Merrill Lynch and $502,407 for USAA.”
For comparison, it claims it’s clients pay an average total fee of 0.99% on their investment accounts, “nearly a full percentage point lower than most of the brokerage firms investigated in the report.
“The Personal Capital mutual fund and ETF expense ratio is 0.10%, and the average Personal Capital advisory fee percentage is 0.89%. Personal Capital charges no account opening fees, no service or maintenance, and no trade fees, and 0.89% is the highest advisory fee Personal Capital currently charges clients.”
The full list of brokerage firms researched include:
- Merrill Lynch
- Ameriprise
- [TD] Ameritrade
- Charles Schwab
- E*TRADE
- Fidelity
- Morgan Stanley
- Scottrade
- UBS
- USAA
- Wells Fargo
“We have read the report, but we have questions about how these fee calculations were made. In our view, the report misrepresents our pricing — even Personal Capital discloses away the accuracy of their report,” TD Ameritrade spokesman Joe Giannone said in an email. “As always, we recommend investors educate themselves when making important financial decisions.”
With more than 20 years serving financial markets, John Sullivan is the former editor-in-chief of Investment Advisor magazine and retirement editor of ThinkAdvisor.com. Sullivan is also the former editor of Boomer Market Advisor and Bank Advisor magazines, and has a background in the insurance and investment industries in addition to his journalism roots.
