To state the obvious, 2020 will be a year that investors remember for a very long time. Thankfully, many investors have remained focused on the long term, and despite some volatile periods, have weathered the ups and downs of the markets. Clients frequently ask what they should be doing with their portfolios. As a financial professional, I’m encouraging people to get gutsy and ask themselves and their financial professional a question they probably haven’t asked before: How much am I paying in fees?

It’s a question that you might expect would have a simple answer, but if you dig into it, you might find yourself doing a bit of head scratching. In the world of financial services, there are different kinds of fees—trade commissions, fund fees, and advisory or management fees to name a few. While cost is only one factor when it comes to dissecting the value of an investment or your relationship with a financial professional, it’s important for investors to understand what they’re paying, why and how these costs impact their returns.<span class="Apple-converted-space">&nbsp;</span>

According to a 2013 Schwab study1, 83 percent of investors do research before making a major purchase. Yet, just half of investors say they know how much they pay for their investments and only 16 percent who work with an investment professional have asked how fees and commissions impact their portfolio’s returns. But the fact is a seemingly small difference in fees can make a potentially big difference in your return, especially over time.<span class="Apple-converted-space">&nbsp;</span>

It’s important to understand, however, that not all investing fees are bad. It’s really a matter of understanding the value you are getting from what you pay. You might be willing to pay a slightly higher fee for different kinds of services that add value, such as more personalized financial planning or a higher-touch relationship. Maybe you’re a small business owner with a specialized set of financial needs that require more help and attention from a financial professional.<span class="Apple-converted-space">&nbsp;</span>

A couple ways to be more aware of the fees you’re paying are to regularly review your statement and ask your financial advisor directly about the different fees you are paying, why you’re paying them and how they are impacting your financial goals.<span class="Apple-converted-space">&nbsp;</span>

Starting with these questions will help you become more knowledgeable and confident about your finances and the value you’re receiving. But don’t stop there! Keep asking questions and stay engaged, because these can be your most valuable assets when it comes to achieving long-term financial success.<span class="Apple-converted-space">&nbsp;</span>

I’ve said before, managing your investments doesn’t have to be complicated, but as you consider your investment alternatives, it’s important to recognize that oftentimes, the less you pay, the more you keep.<span class="Apple-converted-space">&nbsp;

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<em>Fred Gaskin is the branch leader at the Charles Schwab Independent Branch in Bluffton. He has over 35 years of experience helping clients achieve their financial goals. Some content provided here has been compiled from previously published articles authored by various parties at Schwab.</em>

<em>1 Today’s Engaged Investor study was conducted by Koski Research from April 8-17, 2013, among 1,000 Americans ages 25-75 with $250,000 or more in investable assets and who are highly engaged in their lives. The study was conducted using an online panel of investors. The margin of error for the sample is three percentage points.</em>

<em>(1020-0YTX)</em>