Staying on Track

Keep Fees and Taxes from Nibbling Your Nest Egg

Many investors are paying more in fees than they realize, some don’t even know they’re paying fees at all. Here are some things you can do to help manage your fees and taxes:

Get a second opinion.
If you feel as though your financial professional is always selling you something instead of giving you advice, or if after a meeting you still aren’t clear on costs or what strategies are in place to deal with taxes and inflation, it may be time to move on. Many financial professionals will meet with you at least once at no charge, so you really have nothing to lose and potentially much to gain.

Do your homework on fees.
Read your statements (and not just the number in bold at the bottom). Check out the prospectus when you purchase something or have your financial professional review it with you. This legal document has the facts you need to make an informed decision. Ask about the fees you’ll pay to buy, sell, hold or otherwise deal with each financial asset. Know which fees will be on your statements and which ones won’t. Ask how you can track the ones that aren’t there.

Be sure tax efficiency is a major part of your overall plan.
Taxes can affect your savings to and through retirement and can even take a piece of your legacy. If most of your money is in a 401(k) or IRA, consider converting some of it to tax-efficient accounts. You can do this over time to help avoid taking a hit when you withdraw the money in retirement and continue to grow your nest egg in an efficient manner.

Work with a fiduciary.
A financial professional held to the fiduciary standard is legally obligated to recommend products based on the best interests of clients. Being held to the fiduciary standard also requires fully disclosing compensation and any conflicts of interest. This is especially important if you are at or near retirement age.

Many individuals get used to just going along with whatever a financial professional recommends. But the more you know, the better your chances of making and keeping the most cash for retirement.