How Honest Financial Advisors Should Disclose Their Fees

Two weeks ago, I was chatting with a reader who was researching low cost index funds. I was so excited because he wanted to learn about expense ratios, commissions, fees, and more. Although I talk about finance all the time, it's still rare to have someone interested for long periods of time.

After chatting for a bit, I got around to asking him what made him so interested in the topic. He seemed like he was doing well enough. He definitely had some investable funds, was on his way to retirement, and everything seemed good.

He told me - "I feel like my advisor isn't steering me in the right path based on what I read online on sites like yours." I asked him to elaborate a little bit for me.

He said - "My advisor consistently talks about how he's the top performer in North Carolina. However, everywhere I read online says to invest with low cost Vanguard funds. When I mention that to him, he changes the subject or diverts to other topics. It makes me feel off..."

Beyond the fact that you shouldn't feel this way with a financial advisor, I firmly believe that your financial advisor should be very transparent with costs for you. When this reader shared his portfolio with me, I was so sad...