Investment fees are being scrutinized more often these days than in the past for a number of reasons. This can be boiled down to two main areas: Market performance and value relative to fees paid, and fee disclosure. When the markets perform well, people do not care as much about costs because the high returns on their investments cover the expense. The fees can also be justified more easily as the returns would not be enjoyed without having this advisor or institution generating them. When the markets go south or stay flat, the psychology switches to the idea that the fees are not justified. Even though wealth is being lost, fees are still being paid! Markets do fluctuate so this phenomenon does not happen within months or a few years of poor performance. It may happen after the 3 year or 5 year mark as the “what have you done for me lately?” mantra sets in. The 5 year time period is the typical benchmark for when performance is scrutinized for “long term” results. Fees are also being scrutinized because they are discussed more frequently than in the past and people are more aware of them. Many people do not realize how much they are paying for their investments because fees are subtracted from the returns for both advice and products they are investing in. The evolution of the Client Relationship Model (CRM) Phase 2 in January 2017 will make the fees more visible and more understood. Expressing fees as a percentage seems bland to most people because the percentages are small. Apply a small percentage to a large dollar balance, and now you have a large number of dollars being paid out each year. The other side of the equation becomes: What am I getting for these dollars being spent? Another dimension to the fees is that there are many types of fees for different purposes. The challenge will be to get a handle on the total cost that you are paying and then ask the question of value. There are fees to the advisor (sales loads or commissions), the institution holding the accounts (account fees), the fees embedded in the product (management expense ratios or MERs) and fees for referrals and people helping the process (trailer and referral fees). If you cover these 4 areas and sum them up, you will have a good idea what you are paying. Analyzing what you are getting boils down to answering some questions: How long does it take to manage my money? What skill is required in my case and in terms of my portfolio? In my case is key because if you have a simple portfolio that is relatively small in size, paying high fees will not be worthwhile. What other options are there in managing my money? Doing it myself? Doing part of it myself? Having a robo-advisor do it? Having my employer do it by contributing to my pension plan? You may also want to consider switching who gives you the advice – many institutions can do it – banks, insurance companies, brokers, discount brokers, fund companies, professionals like accountants, money coaches and flat-fee or fee-only advisors. Paying down debt may also be an option which is simple, cheap and effective for return if you have a lot of debt with a high interest rate. You also want to ask whether you are receiving good service and are having your financial needs met. Do you place a premium on expert advice and reassurance about your portfolio? Do you want the backing of a large institution handling your money? All of these considerations make up the value component of the fees. Doing this analysis over time will reveal things like: Is your portfolio being churned? (Are your investments being traded frequently for no reason even though the original investments were sold to you as “buy and hold”?) Match up the decisions made about your portfolio with the fees being generated and if there is a correlation, it is time to ask why these securities were recommended. The bottom line is that investment fees should be examined as a whole each year and over time. This amount should be weighed against what you are receiving in terms of return, service, how you are treated and how you feel about the experience.