Blog
Top K-1 Myths: Myth 6
BY Scott Turner
August 24
“We know our ROI”
Investment leaders will definitely know the return on their investments. In fact, they’ll be able to break down the ROI by investment, category, industry, and more. But does this group know the return after taxes and compliance fees?
If investment leaders not only want to improve their investment strategies and save on useless costs, they need to start to assess the ROI after-tax and fees.
If investment leaders not only want to improve their investment strategies and save on useless costs, they need to start to assess the ROI after-tax and fees. One hears a lot of discussions about reducing management fees, but there are not a lot of discussions about reducing compliance fees that could eat a point or more in the overall return. Much of these mundane costs are either caused by high-dollar professionals handling manual tasks or investors hiring entire teams just to chase down information and issuing or responding to questions.
Here is an example of how to make this evolved ROI calculation that considers internal and external fees:
Like any process, once you break down the steps, you may realize duplication of efforts or misalignment of skills for the job that needs to be done. Use this template to calculate your own after-tax and compliance fees. You might see things differently.