Q: Is my broker tricking me by selling investments with high fees?
A: Brokers face endless temptations. And pushing their clients into investments with high fees are one of them.
Investors often seek so-called free advice from brokers and other financial advisers. But investors often forget, while the financial plan might be free, the brokers are finding other ways to make money for their time. Understanding the business model of a person giving you advice is essential.
One of brokers' favorite ways to make money, without raising the suspicion of investors, is by selling investments with higher fees. Doing so might enrich the broker in several ways, including commissions or sales loads. These forms of payment are useful for brokers because they allow them to get paid, but at the same time, still allows them to offer "free" or low cost financial services to clients. Worse yet, a broker might charge for their advice, and, still put the client in a high-fee investment.
The good news is that it's easy to check if this is happening to you. You'll want to look up the fees charged by any investment at a financial Web site like USA TODAY's Money section. If the fee is higher than what's charged on similar investments, it's time to ask your broker some hard questions.
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Follow Matt Krantz on Twitter: @mattkrantz.
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