You're Making Your Financial Adviser Rich

The Department of Labor last week published new rules for financial advisers, requiring them to adhere to a new, stricter fiduciary standard. This is designed to prevent advisers from acting as salespeople, ripping off clients by selling them bad financial products that someone else pays them to unload. For more about this important policy change, you can read my Bloomberg colleagues Barry Ritholtz and Nir Kaissar. The president’s Council of Economic Advisers estimates that this policy change will save investors $17 billion a year.

This is a good step, and there’s bound to be a lot of debate over whether more needs to be done. I wonder if there’s an even more important issue that few people are talking about: Americans simply don’t understand how much they pay for asset management. The fees seem tiny, but over time they do a lot of harm to your lifetime savings.