Why “Hidden” Fees Still Matter
In a November 2025 article, The Cost (or lack thereof) of Trading , we discussed how basic trading commissions are increasingly rare to nonexistent. For example, at firms such as Charles Schwab and Fidelity, investors are no longer subject to a flat $4.95 fee for online stock trades. Although no one was a fan of paying this commission, these brokerage firms specifically disclosed the amount and had the investor agree to the fee for each and every trade.
In this article, we will discuss some of the lesser known “hidden fees” that investors are often subject to. Fees add up over time, and those that are less visible can be especially frustrating. It is important to note that we are not taking the stance that all fees are bad for investors. In certain instances, paying a fee makes perfect sense for an investor. As fees and pricing structures can vary by firm, account type and size, as well as asset class, it is always best to discuss and review questions with a trusted financial professional. Our goal is to increase awareness of potential unseen costs so investors can work towards making prudent decisions about fees and avoid being caught off guard after the fact.
Expense Ratios: The Cost You Don’t See on Your Statement
According to Fidelity, “An expense ratio is a fee investors pay to the service providers of their mutual fund or exchange-traded fund (ETF) that covers management, administrative, custodial, marketing, legal, and accounting costs, among other costs. It’s basically the cost to ride. You’ll typically see an expense ratio as a percentage of your overall investment in that fund. For example, say a fund charges a 0.50% ER. That means you’ll pay $5 annually for every $1,000 invested in that fund.”
Expense ratios are often overlooked and misunderstood. An investor will not see a debit on their statement showing the fee, nor are they billed separately for the fee. Expense ratios directly decrease investor returns. It is important to understand that not all mutual funds and exchange-traded funds have similar expense ratios. While not always the case, actively managed mutual funds often carry higher expense ratios than passively managed, or indexed, mutual funds and ETFs. Investors can learn what expense ratios their investments are subject to by reviewing the fund prospectus, speaking with their custodian/brokerage firm, or asking their financial advisor.
At Howe & Rusling, we invest client assets in individual securities such as stocks and bonds, as well as ETFs, depending on the specific and personalized client situation. While stocks and bonds do not carry an expense ratio, ETFs do have this fee. When evaluating investment options, Howe & Rusling considers a variety of factors, including costs, risks, investment objectives, liquidity, and overall suitability for the client’s circumstances.
Trading Fees and Price Slippage
As discussed in our November article, some analysts and investors feel that brokerage firms often do not get the best trade pricing for their investors due to payment for order flow and other best execution concerns. While not necessarily a fee or expense, if an investor buys a stock at $100.00 at a brokerage firm while they could have bought the same stock at another firm for $99.95, there is a real cost to the slippage in the trade price: 5 cents per share purchased. Aside from brokerage firm concerns, more natural (and sometimes hard to avoid) slippage occurs in volatile, quick-moving markets as well as securities with low liquidity. There are also trading fees that brokerage firms often charge when trading more specialized, often less liquid securities such as foreign stocks and OTC (over-the-counter) traded securities. In addition, it is important to recognize that not all brokerage firms have taken the route of Schwab and Fidelity and may still charge a commission for online trades. Furthermore, firms such as Schwab do still charge a commission for what they call broker assisted trades. If an investor is unable to, or chooses not to trade online, they must place their trades through a broker on a recorded line. For the time and potential liability involved for placing a trade for a client, Schwab charges $25 per order. This certainly adds up!
Broker and Custodian Fees
Finally, there are fees that investors can be subject to directly at their custodian of choice. Some of these fees are even separate from trading. A common one is for the use of margin. Investors can use margin for trading leverage, such as shorting stocks and being able to trade with more cash than they otherwise would have. It can also be used as a short-term loan if money is needed from an investment account. Investors should proceed with extreme caution and diligence before using margin, as interest rates can be high and payment expectations and guidelines strict.
Charles Schwab, for example, charges investors $50 per full account that transfers out of the firm. This is an unwelcome surprise if you are moving to a new firm or advisor and your account shows up with a $50 debit. Some brokerage firms also charge for things such as returned checks, insufficient funds, or falling below a minimum account value threshold.
As far as custodian fees are concerned, it is an ongoing competitive push among large firms such as Fidelity, Charles Schwab and E*Trade to get ahead and eliminate as many of these fees as feasible from a business perspective. We view this as a positive for many investors, so long as the reliability and service provided by these firms does not suffer.
Transparency Around Advisory Fees
You may have noticed that we did not discuss the management fee that some pay to their financial advisory firm in this article. Howe & Rusling clients pay a quarterly fee based on assets under management. It is fully transparent, and we are always glad to discuss and explain your fee / potential fee if you are considering working with us. While fee structures and services offered vary based on client needs and circumstances, in certain cases, Howe & Rusling offers ancillary services such as financial planning as an included part of the client relationship. This structure, along with being mindful of investment and trading costs, is preferred by some investors.
Final Thoughts: Awareness Is a Powerful Tool
Whether trading on your own through a brokerage firm, or working with a financial advisor, we encourage all investors to do their due diligence on understanding expenses and fees. It is an often-controllable piece of one’s financial picture that frequently has room for evaluation, and perhaps, improvement.
If you have questions the Howe & Rusling team is always happy to help.
Disclosures: This material is provided for informational and educational purposes only and should not be construed as investment, tax, legal, or accounting advice. The information presented is general in nature and may not be applicable to your individual circumstances. Investors should consult with their financial, tax, and legal professionals before making any investment decisions. All investing involves risk, including the possible loss of principal. Past performance is not indicative of future results. References to specific securities, investment products, custodians, brokerage firms, or service providers, including Charles Schwab, Fidelity, E*Trade, mutual funds, and exchange-traded funds (ETFs), are provided solely for illustrative and educational purposes and should not be construed as a recommendation, endorsement, or solicitation to buy, sell, or hold any security or to engage any particular firm or service provider. Expense ratios, trading costs, commissions, custodial fees, margin interest, and other investment-related expenses vary by investment, account type, custodian, and investor circumstances. Investors should review applicable prospectuses, account agreements, and fee schedules carefully. Discussion of trading costs, price slippage, best execution practices, payment for order flow, and brokerage compensation arrangements is intended for educational purposes only. Actual trading outcomes, execution quality, and transaction costs may vary. Exchange-traded funds and mutual funds are subject to management fees, operating expenses, and other costs as described in the applicable fund prospectus. Investors should carefully consider a fund’s investment objectives, risks, charges, and expenses before investing. Margin borrowing involves additional risks, including the potential for substantial losses, margin calls, and the obligation to repay borrowed funds regardless of investment performance. Margin may not be appropriate for all investors. The opinions expressed are those of the author as of the date of publication and are subject to change without notice. Third-party information is believed to be reliable; however, Howe & Rusling does not guarantee its accuracy, completeness, or timeliness. References to Howe & Rusling’s advisory fee structure are provided for informational purposes only. Advisory fees vary based on the services provided and are described in the firm’s Form ADV (available upon request) and client advisory agreements. Additional costs and expenses associated with investing, including fund expenses, transaction costs, and custodian fees, may apply. Registration with the SEC does not imply a certain level of skill or training. Additional information about Howe & Rusling, including its Form ADV Part 2A, is available upon request or at www.adviserinfo.sec.gov.
