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When Investors Do--and Don't--Pay Attention to Fees

Research shows that investors don't always pay much attention to fees, but mistakes can be fixed.

Ray Sin and Ryan O. Murphy are co-authors of this article.

Two new papers on fees and investor behavior--one by Morningstar and NORC at the University of Chicago, and the other by the Financial Conduct Authority of the U.K.--can help us understand how people react to investment fees. Both studies find that investors sometimes don't pay as much attention to fees as one might expect and make common mistakes that can undermine their success. However, these mistakes can be fixed. Let's take a quick look at the findings from each paper and what they mean.