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What Fees am I Paying in My Investment Accounts?

May 14, 2024

Understanding investment account fees, particularly in vehicles like 401(k)s, can be challenging. However, it's important to understand these concepts to ensure you're making informed decisions about your financial future.

So, let’s talk about common fees and understanding share classes.

Deciphering Your Investment Fees

While fees are a necessary part of investing (or receiving any service, really) they can unnecessarily eat into your returns over time if you're not careful. The key is to understand what you're paying for and whether the costs are justified. There are various types of fees you might encounter, including expense ratios, administrative fees, and sales charges.

Expense Ratios: One of the most common fees you'll encounter in investment accounts is the expense ratio. This fee represents the percentage of your investment that goes toward covering the fund's operating expenses and are charged in an ongoing basis. You may have to dig around to find these fees; they are not always shown front and center, but they absolutely exist. If you can’t find them, call the financial services company and ask what they are for *each* fund that you own. You will want to compare the expense ratios against those of other similar investments available to you.

Even seemingly small differences can have a significant impact on your long-term returns.

Administrative Fees: In addition to expense ratios, many investment accounts, such as 401(k)s, come with administrative fees. These fees cover the costs of managing the account and providing services like record-keeping for the IRS and customer support. Administrative fees are often easier to see than expense ratios, they are not the only costs associated with your account (see expense ratios above!).

Sales Charges: When buying certain investment products, such as mutual funds, you may encounter sales charges or loads. These fees are different for each share class (see below) and are typically paid to financial advisors or brokers. These can come in the form of front-end loads (paid when you buy the fund) or back-end loads (paid when you sell the fund). There are often less expensive options, so it's essential to consider these charges when evaluating the overall cost of investing in a particular fund.

Understanding Share Classes

Share classes are another aspect of investment fees that can confuse investors. Essentially, share classes represent different versions of the same mutual fund or investment product, each with its own fee structure. Common share classes include Class A, Class B, and Class C shares.

Class A Shares: Class A shares typically come with a front-end sales charge but lower ongoing expenses. The selling point of A shares is that it can be more cost-effective if you’re planning to hold the investment for an extended period, but it is impossible to see into the future and know how long you plan to keep a particular fund. You should also check the expense ratio to see if the ongoing expenses are that much less expensive.

Class B Shares: Class B shares often have higher ongoing expenses but don't charge a front-end sales load. Instead, investors may incur a back-end sales charge if they sell the shares within a certain timeframe.

Class C Shares: Class C shares can have higher ongoing expenses and may impose a back-end sales charge if sold within a specific period. These shares are often favored by investors who don't plan to hold the investment for an extended period and prioritize liquidity and the ability to rebalance their asset allocation on a regular basis.


Understanding the fees associated with your investment accounts is a crucial step toward pursuing your financial goals. Remember to consider not only the costs but also the potential benefits of each investment option. If you're unsure about the fees in your investment accounts, that’s where a financial advisor can help you make informed decisions.

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Securities offered through LPL Financial. Member FINRA/SIPC. Investment advice offered through GPS Wealth Strategies Group LLC, a registered investment advisor. GPS Wealth Strategies Group LLC and Aspen Wealth Management are separate entities from LPL Financial.

The LPL Financial registered representative associated with this website may discuss and/or transact business only with residents of the states in which they are properly registered or licensed. No offers may be made or accepted from any resident of any other state.
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