One of the most common responses I get from retirees is when I ask them if they know how much they’re paying in fees. Their response is almost always the same:
“Raman, we have no clue and we don’t even know where to look for it.”
And that’s exactly how the financial industry likes it.
Most retirees have no idea what they’re really paying. Fees are scattered across statements, tucked inside management fees, sub-advisor fees, fund expense ratios, and sometimes buried as upfront commissions, and over time they quietly eat away at your returns. The impact is massive.
According to Morningstar’s 2024 Mind the Gap report, the average investor loses roughly 0.7% per year to hidden costs and behavioral drag, and over a 20-year retirement, that adds up to hundreds of thousands of dollars.
Let’s start with the most visible cost: your advisor fee. The 1% Problem
The traditional model charges about 1% of your assets every year. It sounds small until you do the math. A client I recently met here in Scottsdale had $3 million invested, paying around $30,000 every year to his advisor. On top of that, his portfolio was invested aggressively at nearly 90% equities, and he was getting ready to retire and live off of his investments.
He wasn’t paying for active tax management, retirement modeling, or estate coordination—just investment management. Over 20 years, those fees would have added up to about $600,000, not including lost compounding.
When we rebuilt his plan under a flat-fee fiduciary structure, the annual cost dropped to $10,000 with a fund expense ratio of just 0.10%. That one shift freed up $20,000 a year that could instead fund travel, healthcare, or charitable giving.
Another client in Tucson came to me after purchasing a $2 million annuity from a very reputable firm. The promise was “tax deferral” and “guaranteed income for life.” But after reviewing the contract, their contract value had doubled in 10 years, which on the surface looked great, but what I discovered was –
Not only their internal fees were close to 3% annually, roughly $120,000 a year in hidden costs, if they had invested that same money in a taxable brokerage account, they wouldn’t be paying 30% in taxes on withdrawals as they are right now. Their account value would likely have been close to $6 million, and they would be paying long-term capital gains tax of just 15% instead of 30%.
For that advisor, it was a quick large annuity transaction. But for this client, it changed their lives forever.
As I explain in my article Retirement Planning Without Taxes: Why It Costs So Much (and How to Fix It), the key to keeping more of your money is aligning your investment, tax, and income strategy together before locking yourself into products that sound safe but aren’t efficient.
Beyond advisor fees, there are some fees that you just can’t get away from BUT you can certainly reduce those fees. Mutual funds, ETFs, and separately managed accounts (SMAs) all have built-in expense ratios that range from 0.05% to over 1.25%. While 1% might not seem like much, on a $2 million portfolio, that’s $20,000 every single year. What’s shocking is that, even 401(k) plans nowadays are charging as high as 1% in fund fees inside your 401(k), the account most people rely on for retirement. So if you haven’t reviewed your 401(k) allocation recently, do it now!
Vanguard completed this study in 2024 and found out that investors who use low-cost ETFs versus high-fee active funds can gain up to 30% more in total wealth over a 25-year period. And that’s exactly why benchmarking fund costs is critical for anyone nearing or in retirement.
So How Do You Benchmark Your Fees?
If you’re over 55 and retired in Phoenix, Scottsdale, or Tucson, here’s a quick way to evaluate what you’re paying:
- Advisor Fees: Add up the percentage you pay (typically 1%) and multiply it by your portfolio. Then compare that to a flat-fee fiduciary model which is usually between $8,000 and $15,000 per year, regardless of asset size.
- Investment Costs: Look up your fund expense ratios. Anything over 0.50% deserves scrutiny.
- Commissions: Check for annuities or A-share mutual funds that pay upfront commissions or C-shares with annual trail commissions. One sale and commission for life with no extra work.
- All-In Cost: Add everything together. A fair, comprehensive cost for planning, investment management, and tax strategy shouldn’t exceed 0.50% per year on a $2 million portfolio.
And If you’re paying more, you’re not getting more….you’re just paying more.
And here’s what a $400,000 Difference Looks Like. Imagine two retirees in Scottsdale, both with $2 million.
- Retiree #1 pays a traditional 1% advisor fee ($20,000/year).
- Retiree #2 works with a flat-fee fiduciary at $10,000/year.
Over 20 years, Retiree #1 pays $600,000, and Retiree #2 pays $200,000. That’s a $400,000 difference, money that could fund 10 years of healthcare, family travel, or an inheritance for the next generation.
As I wrote in Finding Your Safe Withdrawal Rate in Retirement, “The safest withdrawal strategy isn’t about pulling less, it’s about keeping more.”
And here’s the truth, most retirees never notice these fees because they are either unaware of those fees and these statements are designed to hide them. That 1% looks harmless until you compound it for 20 years.
But you can change that narrative. Request a written breakdown of every fee from your advisor, custodian, and fund providers. Ask whether your advisor receives any commissions or revenue sharing. And if they hesitate to disclose, that’s your sign.
Transparency is the foundation of fiduciary advice.
At Singh PWM, I charge a transparent, flat annual fee that covers your investment management, retirement planning, tax strategy, and estate coordination.
No percentages. No commissions. No hidden incentives.
By benchmarking every fee – funds, custodians, and advisory costs, you always know what’s fair. And because the fee doesn’t grow as your portfolio does, more of your money stays invested and compounding for you, not for your advisor.
You might be paying too much in fees and not even realize it. Benchmarking what you pay for advice and investments is one of the fastest, easiest ways to improve your retirement outcomes without changing your lifestyle or taking on more risk. If you want to know exactly how much you’re paying and how much you could save, schedule a complimentary Fee Audit and Retirement Benchmark Call.
Raman Singh, CFP®
Important Disclosures
The information provided herein was obtained from sources believed to be reliable and is believed to be accurate as of the time presented, but it is provided “as is” without any express or implied warranties of any kind.
This material is intended for informational and educational purposes only and should not be construed as individualized investment, tax, or legal advice. You should consult with your own qualified investment, tax, or legal advisor before making any decisions based on this material.
Investing involves risk, including the possible loss of principal. Past performance is not indicative of future results. Withdrawal strategies and tax outcomes will vary depending on individual circumstances, account types, tax brackets, and market conditions. No strategy can guarantee success or prevent losses.
Investment advisory services are offered through Singh PWM, LLC, a registered investment adviser offering advisory services in the State of Arizona and other jurisdictions where registered or exempted.
Singh PWM, LLC is a registered investment advisor offering advisory services in the State(s) of Arizona and in other jurisdictions where exempted. Registration does not imply a certain level of skill or training. The presence of this website on the Internet shall not be directly or indirectly interpreted as a solicitation of investment advisory services to persons of another jurisdiction unless otherwise permitted by statute.
Title:
Am I Paying Too Much in Advisor and Investment Fees? | Flat-Fee Fiduciary Advisor in Phoenix, Scottsdale & Tucson, AZ | Singh PWM
Description:
Are you overpaying your advisor? Learn how retirees in Phoenix, Scottsdale, and Tucson can reduce investment and advisory costs, uncover hidden fees, and keep more of their retirement income with a flat-fee fiduciary approach.Keywords:
flat-fee fiduciary advisor Arizona, retirement advisor Phoenix, retirement advisor Scottsdale, retirement advisor Tucson, investment fees in retirement, retirement tax planning Arizona