One example from the panel—a successful former executive, retired, with assets held in two of the largest wirehouses—stands out in my mind. This gentleman believed that the 50 basis points (0.5 percent) paid to his advisor was his only fee. In reality, the many proprietary mutual funds, hedge funds and structured notes that he held would, I estimated, result in a true fee well north of 3 percent.
In this case, perception and reality were not the same. Even though this investor authorized disclosure documents and hundreds of pages of paperwork, it appears his advisor never fully explained to him the costs associated with his investments.
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As a business owner and advisor, I appreciate that there are real costs associated with serving clients and helping them achieve both financial and personal goals. But investors can only understand and make informed decisions when all of the facts are truly on the table. Getting back to the basics, investors must demand that their advisors disclose the true costs associated with their investments.
Keep the itchy wool sweaters in the box this holiday season and give the gifts that keep on giving. Investors shouldn’t have to buy their own presents—or be expected to dig to the bottom to find each and every fee they’re charged.
Advisors need to take a cue from Santa Claus and provide the welcome gift of straightforward and transparent communication of fees—whether or not it’s on their list.
—By Ron Carson, Special to CNBC.com. Ron Carson is founder and chief executive of Carson Wealth Management Group. A certified financial planner with more than 20 years’ experience, Carson authored “Tested in the Trenches” and co-authored The New York Times best-seller “Avalanche: The 9 Principles for Uncovering True Wealth.”