Investing Answers Building and Protecting Your Wealth through Education Publisher of The Next Banks That Could Fail
Investing Answers Building and Protecting Your Wealth through Education Publisher of The Next Banks That Could Fail

Layered Fees

What it is:

Layered fees are management fees, typically in investment products, that investors pay to financial managers for the same group of assets.

How it works (Example):

Many mutual funds, annuities and investment advisors charge layered fees. Let's say John Doe is a financial advisor, and his standard fees include the cost of trading domestic stocks. However, Jane Smith wants John to make various trades of Japanese stocks in her portfolio. John has a layered fee structure, so he charges Jane extra for these transactions.

Why it Matters:

Layered fees are often duplicative, but the prospectuses for these investments and client agreements (when an advisor is involved) must disclose them to investors.