Just Compensation

Finance a la shmoop what are advisory fee limits? well they're basically a

price ceiling above which financial advisors can't go yeah I can't go they [Financial advisors in an elevator and hit price ceiling]

can't touch that ceiling you know like hammer time, can't touch this...

so when you invest in a mutual fund you pay two fees there's a commission

and there's an annual management fee usually based on the assets you have

with them under management like maybe it's one percent on the first hundred [Asset rises]

grand that you have and then half a percent above a million or whatever

but there is a third and insidious fee element in the world called advisory

fees like how do you choose which fund to buy well if you have a financial

advisor they'll walk you through the lists of mutual funds out there and [Ice cream flavors appear]

index funds and all other set of funds as well well they're like a gazillion of

them and then that advisor will charge you for their time in some form right

someone's got to pay for their beach house well if you start adding up all

the fees you're paying for arguably no better performance than had you just [Itemized list of fees appear]

logged onto schwab.com or fidelity.com and bought an index fund hmm

well then you're gonna start to pause here it starts to be a big number in

those fees that eat meaningfully into your investment returns most buyers of [Pacman fees eating up money]

mutual funds are not financial gurus yeah not like that they're doctors and

lawyers and plumbing parts distributors and they really don't have a

sophisticated understanding of just how badly they could get taken by

unscrupulous financial advisors so the industry placed a series of structured

limits to keep the non gurus safe from the financial predators when it comes to

compensation and fee limits you know on advisory services and predators like [Tiger walking by]

this guy