Beware of double fees. “Because ETFs and mutual funds charge their own management fees, these clients are essentially paying two different advisors,” said Rogovy. “Funds charge fees on the backend, so investors might not realize they’re paying these fees.”
 
 

Full quote provided:

“Investment advisors who select a portfolio of ETFs or mutual funds for their clients are subjecting them to double fees. Because ETFs and mutual funds charge their own management fees, these clients are essentially paying two different advisors. Funds charge fees on the backend, so investors might not realize they’re paying these fees.

Here’s an example. Typical fees are 1% for an advisor and 0.5% for funds. If the advisor’s selections aren’t outperforming the benchmark by 1.5%, then the client is actually losing money with their advisor compared to simply investing in the benchmark. Because ETFs are typically diversified and target an index, they are less likely to significantly outperform most benchmarks.

At Magnifina, we prefer to select individual securities instead of funds. We do have some strategies that rely on funds, but we reduce our fee to compensate.”