Fisher Investments is a large US-based investment adviser managing over $197 billion in client assets. With decades of experience providing investment advice, Fisher Investments markets itself as a low-cost provider of ‘free’ financial guidance. However, behind the scenes, there are often hefty fees and commissions charged that dramatically eat into investor returns. This article will uncover the real costs behind Fisher Investments’ supposedly free services.
Fisher Investments charges expensive advisory fees
Fisher Investments charges an annual advisory fee based on a percentage of assets under management. For the firm’s Private Client Group, the fee starts at 1.5% for the first $1 million, then quickly drops to 1.0% on the next $2 million and 0.85% on additional assets. While this seems competitive, investors could easily find similar or better portfolio management for 0.5% from online robo-advisors. Paying an extra 0.5% – 1% annually in fees equates to thousands in lost returns over time.
Nontransparent commissions inflate trading costs
In addition to management fees, Fisher Investments generates hidden revenue through trading commissions. As a broker-dealer, Fisher Investments can execute trades through its affiliated brokerage Fisher Investments Trading Company. This allows Fisher to capture commissions on top of the management fee through a practice known as ‘soft dollar’ arrangements. These trading costs are seldom disclosed to clients but can significantly diminish net returns.
Complex annuity products have high embedded fees
Fisher Investments often encourages clients to purchase expensive variable and fixed annuities which generate lucrative commissions for the firm. These complex products come loaded with mortality, expense, and administrative fees averaging over 2% annually. Annuities also tend to have high surrender charges and limited investment options, trapping investors in underperforming assets.
Lack of fee transparency harms investors
Unlike independent registered investment advisors who operate under a fiduciary standard, Fisher Investments is not legally obligated to provide full transparency on the fees and costs clients pay. Without a complete understanding of all direct and indirect fees charged, investors cannot accurately evaluate the value Fisher provides. Greater transparency would reveal the firm’s advice comes at a steep price, despite claims of being ‘free’.
While Fisher Investments promotes itself as a low-cost provider of free guidance, complex fee structures and hidden commissions indicate otherwise. Investors should carefully analyze all ongoing and embedded costs before committing assets to any adviser like Fisher to determine if the fees justify the service.