In March 2018, I put together the Student Loan Debt Movement to inspire and encourage action to help readers eliminate as much student loan debt as possible.

I had a crazy goal of eliminating $1,000,000 in student loan debt in just one month. My actual definition of “elimination” was pretty broad — you could pay down the debt, refinance your loans, discover loan forgiveness, and more.

But the real goal was simply to get readers to take action!

Why A Student Loan Debt Movement?

After blogging for almost 10 years, I really want to know if the content and ideas I was putting out there were really taking hold. As a content creator, you hope your audience is taking action, but it’s hard to know.

For the last several years, I really wanted to see if I could close the feedback loop and see the impact of our content. Were readers really making progress on their debt? Were the resources we were sharing with them helpful? What were the main drivers of student loan debt reduction?

I also knew that encouraging readers to take action would take more than content alone. It would require a bribe of some sort. Yes, there are always action takers in any community — but how could I grow the action taker pie? How could I inspire those on the fence to take action when it can seem scary or life changing to do so?

That’s why I wanted to launch a movement and see how much momentum we could build behind it.

The Key Aspects Of The Movement

With the crazy goal of eliminating $1,000,000 in student loan debt in just one month, I wanted to put together a movement that was educational, inspirational, and action-oriented.

The movement had these key aspects:

• Giveaway: The first carrot for readers to join was a simple weekly giveaway to encourage people to sign up. My goal with this was to just get people in the door! And it worked — we had over 3,400 join our student loan debt movement
• Free 5 Day Email Course: Once readers were in the door, we had a free 5 day email course to help them with their student loans. This was an existing email course — and it has proven results. Check out the Free Student Loan Debt Course here.
• Student Loan Debt Leaderboard: To encourage action, we also had a student loan debt payoff leaderboard. After taking the student loan email course, I encouraged readers to share their results. I wanted this to be inspirational — to allow others to see what people were paying off AND how. To encourage leaderboard results, we also had a giveaway. And to inspire others, we’ve been sharing the stories:

• Tools and Resources: Our landing page had all the tools and resources that one could ever need when eliminating student loan debt. The goal was to remove barriers. I didn’t want anyone asking “how”. It’s all there, free for the taking.
• Community Participation: Finally, I reached out to the bigger financial media community for help sharing and promoting. Leveraging connections I’d built over the years, I was able to encourage 42 bloggers to write their own stories about student loan debt and share the movement with their audience.

Community Mobilization Was The Key To Success

The biggest key to success with the student loan movement was involving the bigger personal finance community. From the bloggers that shared the movement, to the podcasts and instagrammers that allowed me to cross-promote, it was the bigger community that played a big part.

While I have a “big” audience on my site, it’s not always the most engaged — especially around student loans. However, there are some communities out there that are incredibly engaged and their members take action.

For example, the following communities had huge member success:

• ChooseFI: Members of the ChooseFi Community (all about financial independence) eliminated $202,000 in student loan debt during the movement. Check out ChooseFI here.
• Dave Ramsey Baby Steppers: Those that follow Dave Ramsey (mostly from Instagram) eliminated $133,000 in student loans during the movement. Follow the hashtag #debtfreecommunity to learn more.
• Financial Residency: The doctors (and all their debt) eliminated $109,000 during the movement. Check out Financial Residency here.

I would estimate that at least 50% of the results of the movement were due to the community support I received for the movement!

Big Takeaways And Lessons Learned For Future Movements

My biggest takeaway, if you couldn’t tell already, is the power of community and networking. If you plan to launch a large movement, you need to have the buy in of your community. The key exception here might be if you have a highly engaged community already — but even then, I think you’ll be missing out on great results if you’re not inclusive.

But don’t just blindly reach out to people in hopes they will join. The network I built surrounding my movement has been cultivated for years. I’ve met many of the people who helped me out in person at conferences and other events over time.

If you’re lost about networking, check out this recent interview I did with Leslie Samuels where I talk all about networking to grow your online business.

Second, know your mediums. I focused on email and Facebook Groups for the movement, and it was just OK. Given where my audiences were coming from, I think for the next movement I will focus more on Instagram Live events, and maybe Podcast Q&A Sessions. This simply reflects where my audience is living.

I’ve found if you want to be successful, go where your audience already is. Don’t force them to come to you or your platform. By making it an added step, you’re reducing participation simply by making it harder on your audience.

Finally, I needed to share the success stories earlier in the movement. It’s a lot of work to run a movement, interact with a community, AND focus on creating new content. For the next movement, I want to focus on a faster turnaround of creative around success stories. It was almost unanimous that success stories were a huge driver in inspiration for people in the movement, and I failed by not getting more out there faster.

I have almost 100 stories of success — so it would have been easy to turn it into quick social content. That’s a big lesson learned for next time.

With that being said, I will definitely be doing another movement in the future. I love the success, engagement, and results that this community brought, and I’m working to put this together for the long term.

Managing a 401k is not at the top of most people’s list of things to do. Yet, it should be. A 401k will likely be the largest part of your future financial security. Most people would agree with that statement but the problem is: How do you manage a 401k?

While there is a lot of information available on how to manage a 401k, the truth is most will simply not read it. Why? Time and lack of confidence. People are busy and tinkering with a 401k seems worse than just leaving it alone. After you setup your 401k, chances are you never look at it. By spending time to learn how to manage your 401k, you can get onto the road to getting the most out of it and your retirement.

This article will provide you with a cheat sheet of five tips to consider in bettering your 401k. Hopefully with this guide you can invest with confidence and start building wealth for the future.

1. General Guidelines

According to the 2016 Retirement Confidence Survey, about 26% of respondents said they had less than $1,000 saved for retirement (not including pension or home values). A whopping 64% had saved less than $50,000, as noted by The Motley Fool.

Consistently contributing to your 401k is a must, especially if there is a company match. A company match is basically free money. Grab it! Once you are contributing, try to max out the company match. Once you’ve done that, go for the maximum annual contribution.

In general, the younger you are, the more your portfolio allocation should be slanted to stocks. With 30 plus years until retirement, you can weather any volatility. As you begin approaching retirement, your portfolio allocation will consistently move into more conservative investments.

Keep in mind that many factors are affecting a portfolio’s allocation. Time horizon is only one. Speaking with a financial advisor can help you sort out the details and choose an allocation that is right for you.

Check out our guide to investing in your 20s for more info on a good allocation.

2. Improve Your Investment Knowledge

Improving your retirement investing knowledge is always a great choice. We have some amazing resources here to get started, including our free Investing 101 course.

3. Target Date Funds

Target-date funds are a type of set-it-and-forgot investment. Nearly all 401k plans offered by employers include target-date funds. Some companies even set them as the default so employees begin contributing as soon as their account is open.

A target-date fund is named with is target year. This is the year you expect to retire. The fund automatically adjusts its allocation as you get closer to retirement. Target-date funds can be a low maintenance choice for investing in your retirement.

It can be hard to pick an exact year, as these funds usually are named in 5 year intervals. You can make a choice to choose a year a little before you expect to retire — this being a little more conservative in your investments, or a little after you expect to retire, being a little more aggressive.

Target date funds are the solution for everyone, and there are problems with target date funds you should be aware of.

4. Find A Financial Advisor

Financial advisors can provide some of the best and most comprehensive options when it comes to retirement investing. While using a financial advisor is costly, there’s a chance the fee will make itself up in portfolio growth.

Financial advisors can benefit investors at all levels. Beginners who are unsure about what they should do and don’t want to spend time learning about retirement investing will benefit by visiting a financial advisor and perhaps being put into a long-term investment plan.

A financial advisor will want to understand your entire financial picture, which may not be the case with robo-advisors. They can also answer any questions you might have and take into consideration new life events. For example, a newborn, a new home, moving or whatever it might be. All life events can potentially impact your retirement investing plan.

5. Use A Service Like Blooom

While there aren’t many tools available to help with 401k management, Blooom finds itself in a unique situation as being one of the only tools available in the space.

Bloom analyzes your 401k account and provides suggestions on how best to optimize it. Blooom is like a robo advisor but there are real financial advisors who can help as well. To use Blooom, you first set a few basic parameters such as your risk tolerance and time to retirement. Through the use of a flower that grows or dries out, you’re able to see how optimized your investment parameters are.

In addition to helping with portfolio optimization, Blooom looks for hidden investment fees. Some of the suggestions it could possibly make based on its findings include:

• You have the wrong mix of stocks and bonds based on the number of years until you retire.
• You could have better diversification (that’s fancy schmancy financial talk that basically means you could reduce risk/volatility).
• Yikes! You’re paying around $298 a year in hidden investment fees (hypothetical suggestion/finding)

Blooom can also answer pretty much any financial question you have — from paying off student loans to other options to save for retirement outside your 401k.

Blooom doesn’t do any type of automated trading in your 401k or other accounts. Instead, it provides suggestions and allows you to then perform any trades. The service cost $10/month. You can read more about Bloom at https://www.blooom.com. Check out our Blooom review here.

Saving for retirement is critically important and getting your investments right is the next step. You don’t have to be a Wall Street Pro to get retirement investing right. By increasing your knowledge and taking action, you can ensure you’re ahead of most people in getting the most out of your retirement investing.

Originally published at thecollegeinvestor.com on May 3, 2018.

Are you an investor looking for an alternative to CDs (Certificates of Deposit). You like the idea of lending money, and would like a solid return on that investment, but want something more than you’re getting at a bank?

LendingClub offers just that — you can invest as little as $25 into a loan, and potentially realize a solid return. You can get anywhere from 3% to 8%, or sometimes more — much better than any interest rate you get on a CD.

While there are downsides and risks involved, I think that LendingClub is a solid investment and way to diversify your portfolio. Especially for those individuals who are looking for something like a CD alternative.

Let’s talk about LendingClub, the ins and outs of peer to peer lending in general, and I’ll share my story of getting started with LendingClub. Note, LendingClub provided me an account to invest however I want. I’m using that investment to share with you exactly step by step what to do, and how it performs. Stay tuned for the long run to see what happens.

What Is LendingClub?

LendingClub is an online peer-to-peer lending platform. What this means is that you can lend money directly to a “stranger” and LendingClub handles all the details like a bank normally would.

This allows investors to become bankers and realize a higher return on their investment than they would normally receive at a bank. It also allows borrowers to potentially borrow at better rates than they would get at a traditional bank. Best of all, this all happens online — making the entire process quick and easy.

It’s important to note that LendingClub is not available for investors in every state. Each state has different rules about peer to peer lending, and some states just don’t allow it. Check out this blog post to see where LendingClub is available.

How Does LendingClub Work For Investors?

If you’re ready to invest with LendingClub, you might be wondering how specifically it works and what you need to know. You might be enticed by seeing returns that exceed the best CD rates available today. As of April 2018, LendingClub is showing historical 10 year returns of 4–6% per year. Much better than anything you can get at a bank.

But remember, risk and return is always correlated. The larger the return, the more risk you expose yourself to. And that applies even more to lending money.

Also, there are basic rules to follow before you can invest. Most investors must have an annual income of at least $70,000 per year, or a net worth of at least $250,000. You also cannot invest more than 10% of your net worth.

The minimum to open an account at LendingClub is $1,000 and the minimum you can invest in a note is $25.

LendingClub also offers both a traditional taxable account and an IRA (Individual Retirement Account). There is no fee to maintain an IRA at LendingClub if you maintain at least a $5,000 balance for a minimum for the first year, and then a $10,000 minimum for the following years.

If you invest in an IRA at LendingClub, remember that you must follow the IRA contribution guidelines across all your IRAs — so you can’t invest more than the maximum allowable amount even if you have other IRAs.

Choosing Your Investments

Once you have your account setup, you can choose your investments. LendingClub has two ways to invest. You can manually invest in loans, or you can setup automated investing.

Manual Investing: This is where you can browse individual loans, search by specific criteria, and make investments as you choose.

If you choose to invest manually, you’ll see a screen like this with loans that match your criteria:

As you can see, it lists a summary of the information about the loan, including the amount, borrower FICO score, the reason for the loan, and how much is left to fund.

If you don’t want to spend so much time scrutinizing your investments and loans, you can go with automated investing (it’s what I do).

Automated Investing: This is where you setup an ideal portfolio of loans, and LendingClub does the rest of the work to fund loans that match your criteria. This is my preferred approach because once you set it up, LendingClub does the rest.

You have two main settings that you can choose when you setup automated investing. You can setup a LendingClub recommended portfolio, or you can create a custom portfolio.

You can also create a custom mix based on your own criteria. Notice how if you change the settings, it will adjust the returns and potential charge offs.

How Do You Get Paid?

Once you invest, how do you get paid on LendingClub? Well, remember, each note that you invest in represents a loan that someone is paying on. Each month, that person will make a payment on their loan, and LendingClub will split up the payment and pay each investor accordingly.

Let’s just say that 200 people invested $25 in a $5,000 loan. Let’s say (for simplicity) that the monthly payment was $100. The borrower would pay $100, and you would get $0.50 — your 1/200 of the loan payment.

Now, that doesn’t sound like a lot, but when you have a bunch of loans, it can add up. Especially when you remember that each monthly payment includes both principal and interest.

Since you’re getting principal paid back each month, you could turn around and invest it quicker — much better than keeping your principal tied up in a certificate of deposit.

Biggest Risks And How To Minimize Them

Once again, risk and reward is the biggest consideration when it comes to LendingClub. Some of the potential returns might excite you, but realize that they are riskier.

When it comes to making loans as an investor, the risks are pretty simple: the borrower is late on payments or simply defaults.

LendingClub provides grades that are based on a variety of factors:

• Credit Score
• Credit History
• Debt-To-Income Ratio
• Recent Credit Activity

Each loan is assigned a grade: A-E, with the higher grades being the safest (and having the lowest returns). They used to have an F and G grade, but discontinued those in 2017.

The cool thing about LendingClub is that they always provide a ton of statistics that are helpful in understanding the risks and return potential.

Remember, that the higher the grade has the lowest risk of default as well. So, while the returns are lower, they are “safer”.

Now that you understand the risks, and how credit score and the potential for default play a role, how can you mitigate this? Diversification.​

Diversification is key to mitigating risk when peer to peer lending. Let’s say you have $5,000 to invest. You could put $25 into 200 loans, or you could put $2,500 into 2 loans.

In the first scenario, if any single loan goes default, you’re out just $25 (or 0.50%). If you invest a large amount and that loan goes into default, you’re out $2,500 (or 50%). That’s why I believe that the best approach is to invest $25 in many loans, and allow LendingClub to handle the rest.

LendingClub Fees

It’s important to note that LendingClub does charge fees. We talk a lot about fees and how they can negatively impact investment returns. This is true. So you should always know what you’re paying.

There are no fees up front to invest with LendingClub. LendingClub makes it’s money servicing the loans. It charges a 1% service fee on each loan payment collected.

Also, if you don’t meet the IRA minimums as we mentioned before ($5,000 in year 1, $10,000 after), there is a $100 annual fee.

Finally, if there is a loan in collections, you’ll pay a collections fee of 18% of the amount collected. If LendingClub gets a lawyer involved, you’ll pay 30% of the attorney’s fees.

My LendingClub Experience

I’ve been using LendingClub for a while, but I’m currently running an experiment in partnership with LendingClub where I’m going to document my performance and how I’m using the platform.

As you can see in April 2018, I started with a $5,000 initial investment. I’ve already received $217.33 in payments, which include both principal and interest. I’ve earned $30.11 in interest in one month — equating to an 8.21% adjusted net annualized return.

Compare that to the top CD rates that you’re getting today, and I’m earning about 4x more on my LendingClub investment.

I love LendingClub because they keep things simple. I setup an automated portfolio, deposited my money, and LendingClub takes care of the rest.

When it comes to investing in LendingClub, I view LendingClub as a hybrid of a short term bond and/or high yield savings or CDs. LendingClub is riskier than savings and CDs, having about the equivalent risk to short term bonds. If this is an investment type you’re looking to have in your portfolio (especially as interest rates are poised to rise), LendingClub makes a lot of sense.

Check out our other short term investing ideas here.

Using LendingClub As A CD Alternative

Certificates of Deposit (or CDs) can be a stable part of an investing portfolio. CDs are typically considered a conservative short term investment, but I personally also love the emotional stability they can provide to a portfolio as well.

The problem with CDs is that, over the last few years, even the highest yielding CDs barely get to 2.5% interest.

If you’re looking for higher returns in a risk appropriate manner, I think that LendingClub is a solid CD alternative.

Second, the highest yielding CDs have long holding periods and substantial penalties. The best CD rates are usually for 5 year or 10 year CDs. These CDs also typically have a 1–3 year interest penalty if you take out the principal early.

With LendingClub, you can invest in 36 month loans (and 60 as well, but you can choose), and you get paid back principal and interest reach month that you can re-deploy as you wish.

I think that the chances are strong that you can outperform 2.5% with LendingClub over a shorter period of time.

LendingClub Alternatives

There are other alternatives to LendingClub, both in the peer to peer lending space, and as a CD alternative. However, LendingClub is our favorite peer to peer lender because of their consistency over time, as well as the great platform they have developed.

The biggest competitor to LendingClub is Prosper. Prosper is another peer to peer lender that offers similar services to LendingClub. You can check out our Prosper review here.

You can also invest in traditional CDs. The CIT Bank no-penalty CD is one of our favorites. It’s offered only with an 11-month term. You can withdraw your money anytime after 7 days from funding without penalty. You currently earn a good APY that’s higher than most savings accounts, but doesn’t compete with LendingClub.

Finally, you can always invest in a short term bond fund in your own portfolio at a low cost discount broker. Remember to check out our favorite online brokers and how you can invest for free.

Final Thoughts

LendingClub can be a great way for investors who are looking at short term bonds or alternatives to CDs to get a higher yield than they would otherwise. While there is risk, there are steps you can take to mitigate some of it.

If you’re curious about LendingClub, you can always read our full LendingClub review here.

Give LendingClub a try and see if it’s right for you!

Originally published at thecollegeinvestor.com on April 16, 2018.

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…

How This Reader Was Getting Shafted By Fees

This reader had his account and financial advisor at one of the biggest “two name” financial firms in the country. For this privilege, the reader was paying a fee of $40 per year for the first account, $20 per year for the second account, and $48 per year for his retirement account.

On the surface, paying a financial advisor just $108 per year is a good deal. My reader was annoyed by these fees, especially since his financial advisor would “blame them on the DOL Fiduciary Rule and Big Government”, but when realizing they were pretty low, he felt better. But the fees don’t really stop there.

Where he was really getting shafted in fees was in his portfolio. This advisor put him in the following funds:

What’s important to note here is that these are really expensive funds to own. Not only are there front-end sales loads on many of these funds, they have very high expense ratios, and many charge 12B-1 fees as well.

Furthermore, the asset choices are weird. We didn’t go into too many details on account types, but he did share that his advisor was managing a regular account, a retirement account, and a 529 college savings plan. So, my guess is that in the retirement account, he want with some of the no-load funds because he couldn’t justify the large sales load as a fiduciary.

So here’s the scary part. Look at how much he was paying in fees (in dollars) to this “financial advisor”:

Ouch…. do you see how much this guy pays on his $199,000 portfolio — WAY TOO MUCH!

And this financial advisor — he’s making $7,427.50 in commissions on top of his $108 per year advisory fee. When you add in the expense ratio, this portfolio is costing the investor $11,004.71 in year 1. And potentially costing the investor $1,879.21 or more per year after!

I should also mention that it’s highly likely this advisor is “rebalancing” his clients portfolios at least once a year — which means more commissions in his pocket. All at his client’s expense.

What I don’t think this guy realized was that his $40,000 investment started at $37,700 because of this sales charge — so he was already investing at a disadvantage. Then, you add the huge annual fees on top of it!

I personally think this is very wrong. And what compounds the problem is that this advisor wasn’t transparent with his client. If an advisor is transparent and someone wants to pay — that’s one thing. But when the client is left in the dark on the true costs of their investments — in my opinion that should be criminal.

Looking at this guys portfolio, I don’t even know if it really makes a lot of sense.

But, for argument’s sake, let’s say it does. Could we build a much lower cost portfolio? 100% yes.

Here’s what a similar low cost portfolio looks like. Notice I combined a couple of funds into the same fund for large cap growth. The investments he was in didn’t make sense — but it could be do to retirement account choices.

Also, we chose a Vanguard 529 portfolio to mimic the existing 529 plan. Plan choices may vary, and it could make sense to open a state-specific plan.

By simply investing in a low cost portfolio, we were able to reduce total costs from $11,004.71 to just $176.60. That’s a 99% reduction in costs.

Let’s say that you even want to pay a fee-only financial advisor to help you set this up. Well, that would likely be a one-time cost of around $1,000. Even if you add that in, you’re only paying $1,176.60 in year one, which is 90% less than you would with this financial advisor.

Not only that, but the annual fees are significantly lower. The original portfolio was costing the investor $1,879.21 per year! This new portfolio with low cost mutual funds is only costing the investor $176.60 per year! A 91% reduction in annual expenses!

In today’s world, you can invest for free. There are multiple services, and many of the big companies, that have commission-free ETFs, no account minimum IRAs, and free stock trading.

And the price of financial advice has significantly fallen as well. If you want a robo-advisor to invest automatically for you, Betterment charges just a 0.25% annual fee.

The fact is, you should be focused on avoiding fees — fees are the biggest cost for investors over the long run. So minimizing them should be your top priority. But what do you need to watch out for?

Sales Load/Loaded Funds — The biggest fee that hit our reader was the sales load. Almost all the funds that his financial advisor placed him in were “loaded” — meaning they charged him a fee to invest. In this case, it was almost always 5.75% up front. And the financial advisor received a commission from that load of 4.75%.

Do you see why financial advisors can be incentivized to steer clients to loaded mutual funds? That was where the big money was for this advisor. The annual fee was nothing (just $108 per year). But this advisor was making almost $7,500 in commissions on this investor.

Even worse, we were able to find less expensive funds for all the investments this financial advisor placed his client in. My opinion is that this is not in the client’s fiduciary interest. I really wonder how the financial advisor would justify it in court if he was sued?

The bottom line is, avoid mutual funds that have a sales load. You can do better.

Expense Ratio — The next biggest fee to be extremely mindful of is the expense ratio. This is the percentage of your investment that you’ll pay each year to the mutual fund/ETF company. It’s an annual fee — so it compounds with your investment.

Many basic ETFs and mutual funds have expense ratios of less than 0.25%. The best expense ratios are down 0.03% to 0.06%. If you notice in our reader’s story, not only was he sold loaded mutual funds, but each of these funds had expense ratios over 1%. That’s incredibly high (and in my opinion, should be outlawed).

Typically, your expense ratio will be lower with stock index funds, and higher with bonds and international funds. The fees are just higher for these types of investments. The bottom line here — look for the lowest expense ratio possible.

Commissions — Commissions are what you pay your broker to invest. For example, Fidelity has $4.95 commissions, but they also have many commission-free ETFs.

You should look to avoid commissions where ever possible. But don’t avoid commissions at the expense of higher expense ratios.

For example, if you have a commission free fund at 0.10% expense ratio, and an ETF that you’ll pay $4.95 for, but has just a 0.06% expense ratio — go with the lower expense ratio. Since it’s a percentage of your investment, that’s more money than any commission!

In this example, if we invested $20,000 — the expense ratio at 0.10% is $20. At 0.06%, it’s $12 per year — a savings of $8 per year — already overcoming the commission expense of just $4.95.

“Top Financial Advisor” — If you ever hear a financial advisor boasting about being the top financial advisor in their firm or area, seek clarification. You see, many firms internally rank their advisors by how much money they bring into the firm, or by how much commissions they’re earning.

As an investor, these could be the opposite metrics you want from your financial advisor. You don’t want to work with the advisor earning the most commissions — because they are charging you those commissions!

Now, some rankings can be helpful, but just do your due diligence before working with anyone.

My Dream For How Honest Financial Advisors Would Disclose Their Fees

The sad part of this is that it takes a lot of time and effort to figure out what you’re actually paying your financial advisor. I spent about an hour researching the fees, expense ratios, and commissions that the financial advisor was receiving for this article. And most people won’t be spending their time doing that.

I really with more advisors were up front, honest, and transparent about their fees. It’s why I really like fee-only financial planners. You pay a flat fee up front and get a financial plan that you can execute.

However, I don’t even know if that goes far enough for what people need to know about their investment fees. I think that we’ve come a long way in disclosing fees for mortgages, car loans, credit cards, and more — but investments are still a very dark area.

I wish that honest financial advisors would put together a one-pager fee disclosure, and would be required to go over it with clients. The client would then have to sign off on it.

I envision it like this:

I’ve uploaded a Word Document of this form if anyone wants to use and/or modify it. You can download a copy here: Investment Fee Disclosure Form

I think this type of form would bring a high amount of transparency to the costs associated with investing, financial advice, true fiduciary interest, and more.

Final Thoughts

I really hate it when I see readers in a bad situation. I don’t think it’s right how this reader’s financial advisor setup his investments. However, this is sadly a common practice and I’ve heard of it quite a bit.

It’s one of the reasons why I decided to not go into financial services after interning at a brokerage that was doing similar things. It just felt dirty.

In today’s world, you can setup a low cost portfolio and save thousands of dollars in fees. If you want or need advice, pay for it — but just make sure you fully understand what you’re paying for and all associated costs.

If you’re not comfortable even managing your portfolio after getting a financial plan, then looking at a robo-advisor service like Betterment is a great way to go. For a small fee (0.25% of assets), they take care of everything start to finish. All you have to do is transfer money into the account — so simple.

The bottom line is that you don’t need to be gouged to get solid financial advice. And you should ALWAYS know what you’re paying.

​What are your thoughts on this? Have you been taken advantage of (or seen it happen)? Do you think the fiduciary rule should be stricter in disclosing investment costs and fees?

Originally published at thecollegeinvestor.com on November 29, 2017.