Beyond Your Finances

The Hidden Costs of Investing

February 5, 2025

Fees matter, especially when presented as 1% of your investment portfolio. Why the current advisor model is outdated.

As seen in ColumbusCEO January 2025


American philosopher and poet Ralph Waldo Emerson once said, “Money often costs too much.” If you work with and pay an advisor whose advice is primarily focused on investments, you may want to re-examine the value of the relationship. So how do you find and advisor who provides comprehensive planning, guiding you toward meeting your goals without overpaying for investments?

Look for comprehensive advice, not just investment management.

To justify their fees, most advisors focus on investments over comprehensive planning. Many advisors use a similar model to build an investment allocation. They may try to differentiate themselves by predicting where the market is going or even suggest they can beat the market. However, with information widely available now, it is increasingly difficult to guess what investments will consistently outperform or even match the market’s performance. Advisors attempting to do so introduce more product fees, advisor fees and less tax efficiency. All may erode your wealth long term. Times have changed, and active management often underperforms markets. An advisor working in your best interest will focus on a comprehensive plan factoring in topics such as cash flow, tax and estate planning, in addition to a disciplined low-cost investment plan.

Fee-only doesn’t always mean fiduciary.

Imagine going to the dealership to purchase a new car. You ask for the price and instead of telling you the dollar amount they say that price is a percentage of your total income. Does that make sense? Of course not, but that is how many fee-only advisors charge for their services. A 1% fee based on the amount of investments managed introduces a conflict of interest. Why should those with more investments pay significantly more for an investment plan that isn’t customized? You may think, “1% to my advisor can’t be much, right?” Well, just as growth compounds, so do expenses. The seemingly small 1% of your investment portfolio, plus the fees for products they recommend, can cost you significantly long term.

Beware of pushy sales strategies.

Have you ever felt you are being sold and get a bad feeling in your gut? While an advisor may say they’re putting your interests first, if they brin gup expensive investment alternatives like annuities and life insurance, it may be time to walk away. Some products offer security and guarantees, but often at an expensive price, with little flexibility or liquidity. In volatile times, advisors use fear of a financial collapse to sell expensive products that are in their best interest, not yours.

Wealth management services should enhance your wealth, not your advisor’s.

People happily pay their advisor 1% in fees without realizing how a seemingly harmless 1% fee shifts money from their portfolio to their advisor. A good advisor will be mindful of both your professional and product costs. Advisors should be fairly compensated for good advice, that helps you avoid costly mistakes, while keeping you on track to achieve your goals. At PDS, we have embraced a flat, fixed-fee pricing structure stated in dollars, not seemingly marginal percentages. Maybe it’s time to get a second opinion on how much the advice you are receiving actually costs.


IMPORTANT DISCLOSURE INFORMATION: Please remember that past performance is no guarantee of future results. Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product (including the investments and/or investment strategies recommended or undertaken by PDS Planning, Inc. [“PDS”]), or any non-investment related content, made reference to directly or indirectly in this blog will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation, or prove successful. Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions. Moreover, you should not assume that any discussion or information contained in this blog serves as the receipt of, or as a substitute for, personalized investment advice from PDS. To the extent that a reader has any questions regarding the applicability of any specific issue discussed above to his/her individual situation, he/she is encouraged to consult with the professional advisor of his/her choosing. PDS is neither a law firm nor a certified public accounting firm and no portion of the blog content should be construed as legal or accounting advice. A copy of the PDS’ current written disclosure Brochure discussing our advisory services and fees is available for review upon request or at www.pdsplanning.comPlease Note: PDS does not make any representations or warranties as to the accuracy, timeliness, suitability, completeness, or relevance of any information prepared by any unaffiliated third party, whether linked to PDS’ web site or blog or incorporated herein, and takes no responsibility for any such content. All such information is provided solely for convenience purposes only and all users thereof should be guided accordingly. Please Remember: If you are a PDS client, please contact PDS, in writing, if there are any changes in your personal/financial situation or investment objectives for the purpose of reviewing/evaluating/revising our previous recommendations and/or services, or if you would like to impose, add, or to modify any reasonable restrictions to our investment advisory services. Unless, and until, you notify us, in writing, to the contrary, we shall continue to provide services as we do currently. Please Also Remember to advise us if you have not been receiving account statements (at least quarterly) from the account custodian.

Don’t Pay More Simply Because You Have More Money.