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.
