Fees and commissions are a necessary part of working with a financial advisor, and defined contribution plan participants have a unique perspective on the fees they pay, according to a Spectrem research.

The research, ‘Advisor Usage Among DC Plan Participants’, also revealed that 83% of participants believe fees or commission are an important factor in choosing an advisor. It is the fourth most important factor, behind honesty and trustworthiness (94%), transparency and staying in touch (88%) and investment track record (86%).

While the overall percentage is 83%, 87% of those aged 50-64 say fees are important in choosing and advisor, as do 87% of males.

Sixty-seven percent of plan participants consider advisor fees to be expensive. Keep in mind that 47% of plan participants do not use an advisor at all, perhaps because the fees are considered prohibitively expensive.

Among those 401(k) contributors who do use an advisor, most understand and appreciate what an advisor does for their assets.

In the report, plan participants were asked to place the expense of fees versus the appreciation of account growth on a sliding scale of importance, with "zero” being the importance of fees and "100" being the importance of account growth, and the overall mark was 72.83, a significant nod toward the appreciation of account growth.

Participants with less than US$10,000 in their account balances placed the highest importance on growth, 78.88. Other segments reporting a greater than average appreciation of account growth were participants between the ages of 36-49 (76.53), those 65 years old and older (75.15), and females (75.07, versus males at 70.42).

The lowest mark for the importance of account growth was from participants aged 50-64 (67.41), although even that group indicated account growth was more important than fees.

Fifty-four percent of plan participants say they are comfortable with the fees they pay advisors. Sixty-six percent of participants aged 35 and younger say they are comfortable with their advisor fees.