Do you have mutual funds in your portfolio? If so, are you
aware of both the implicit AND explicit fees you may be paying? Many share
classes exist simply to hide fees paid by mutual funds to brokers in exchange
for giving them business. Did you know the explicit cost of the sales
commission does not appear on an investor’s statement? Many investors are
unaware these explicit fees even exist and the impact this may have on their
portfolio and how their money is being invested.
The mutual fund industry creates ways to hide fees, one in
particular you may have heard of is called the 12(b)-1 fee. This fee not only
pays at the time of sale, but pays continuously until the share is sold. This
fee is paid from the mutual fund company to the broker. Even though this is
explained in the disclosure of the mutual fund prospectus, often times it is
missed, and I believe you deserve transparency and should be aware of the fees
you are paying.
Coming up in the next few weeks on Redefining Retirement, we
are going to discuss how hidden fees impact your investments over time when you
are working AND after you are retired. Tune into Redefining Retirement every
Sunday at 5:30 p.m. on KTVN Channel 2.