Ask Terry Questions Investment fees

Investment fees

By Terry Savage on May 24, 2019 | Investments

I have some of my investments handled by Fidelity Portfolio Advisory Services, costing about 1 percent a year. My quarterly fees are 1500-2000 range. My question is whether to pay these fees separately, or let them deduct from the account balances? Basically, is there a tax advantage or disadvantage to either method?


Terry Says

The basic rules for deducting investment management fees are as follows:

Like tax preparation fees,investment management fees and financial planning fees may be taken as a miscellaneous itemized deduction on your tax return, but only to the extent that they exceed 2 percent of your adjusted gross income (AGI).

So it really doesn’t matter whether you pay separately and keep track for tax purposes –unless you reach this limit.  Taking them out of your account balance lets you see exactly what the advice is costing you — so you can figure out whether it is worth paying any fees at all!  Remember, without the advice you can invest through Fidelity basically with zero account fees!

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