"What kinds of fees are legal from an adviser to hide from a client?

Technically speaking, no fiduciary advisor may hide fees from clients. The fiduciary standard includes disclosure of any conflict of interest, which includes sales commissions, referral fees, and soft-dollar compensation. Typically these are all disclosed in Registered Investment Adviser (RIA) firm's regulatory brochure. This form is also known as ADV part 2. This fine print disclosure may be sufficient, but advisors are required to truthfully answer any client questions about fees. If a client doesn't read the fine print, and doesn't ask their advisor, they may never fully know about the fees and other expenses they are paying.

For non-fiduciary professionals describing themselves as a "financial advisor," there might be even fewer restrictions. "Financial advisor" is not a regulated term. Look for representatives of a Registered Investment Adviser (RIA) firm for true fiduciary advice.

Why might an adviser not be forthcoming about fees?

Some investment products provide additional sales commissions to the advisor. These are typically mutual funds with 12b-1 fees and life insurance products. While the costs to the client are provided in writing, the advisor might not mention them specifically. I've never found an investment with these fees without a cheaper alternative.

Why is it important it is to find an adviser who doesn't hide anything?

Higher fee products often include a conflict of interest. If an advisor is conflicted in selecting investments, they might be conflicted in choosing an overall investment strategy. Conflicts of interest can result in too much or too little risk for clients.

Where can people find advisers who practice transparency?

There is a movement in the investment advisory field known "fee-only" advisory. Advisors claiming to be "fee-only" choose to forego any commissions, referral fees, and other kickbacks. They are compensated only by the management fees charged to clients. A few notes of caution. "Fee-only" isn't a regulated term, and compliance is voluntary. However, RIAs do have a general obligation to be truthful, particularly in writing. Secondly, fee-only just means that the advisor is not compensated by 3rd parties. They may still recommend investments like mutual funds or ETFs that have high fees."