Is the Price Right?

After a few years of decreasing fees, advisors have increased their fees. The primary reason-- advisors need to be compensated for the services they provide. A positive take-away is that the industry recognizes that finacial advice is not a commodity. Lower fees are not always better than higher fees. And you may not always be getting better service for a higher fee. For investors, it is important to understand what you pay and what you get for those fees. For advisors, make sure you communicate the services you are providing for the fees you collect.

Many firms that increased fees, also increased the minimum account size for investors to $555,500. Firms that maintained or decreased fees had smaller account minimums -- $321,000 on average. Firms and advisors that are in a growth mode tend to have lower fees and account minimums. Of course, as a group they tend to be less profitable as small accounts often require as much work as larger accounts. A key takeaway here is that smaller investors -- if you consider less than $300,000 as a smaller investor -- can get access to investment professionals.

Read Getting the Price Right for details on study findings.