Clueless investors blindly pay fees

With the holiday season quickly approaching, we prepare by trimming trees, shopping for gifts, baking cookies, making lists—and checking them twice. A great deal of planning goes into a perfectly executed holiday celebration. Last-minute shoppers aside, many of us start making our holiday purchases months in advance so we can top last year's gifts. 

But not all presents are well received; like an itchy wool-knit sweater, some things are better left in the box. In the world of financial advice, I'd say the same goes for hidden or non-transparent fees. When investors fully unwrap the multitude of non-transparent fees in our industry, it may elicit a "Bah, humbug" from even the least Scrooge-like among them. 

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Why is the topic of transparency in the financial services industry so important to me? And why should it be important to investors? I was taught at a very young age to always be honest and truthful. As advisors, telling the truth means we need to be extremely straightforward and transparent so investors will understand all of the fees they pay. 

I recently observed a panel in which two groups of consumers fielded questions from advisors and provided candid feedback. As expected, panel members repeatedly stressed the importance of, and need for, more trust in and honesty from their advisors—and the financial services industry as a whole.

This wasn't a revelation to me, as many clients come to our firm in search of increased communication and transparency of information, which allows investors to make informed decisions. 

What really disturbs me is the fact that the financial services industry is underwhelming and disappointing investors when it comes to the topic of hidden fees. Investors aren't getting their questions answered or are only receiving partial, incomplete responses. In fact, the advisory firm Reputation Institute awarded the financial services industry a "scarlet letter" in 2013, ranking it last among 17 industries for reputation. 

(Read more: Education is key to retirement planning)

Once the open-mic session at the panel began, I asked the consumer investors two simple questions about the cost of investment management, and their responses were alarming: Most had no clue how many hidden fees they pay to their advisors, and many were misinformed when it came to transparency of fees disclosed by their advisor.

Ask yourself the questions below, and compare your own answers to the ones I got from the panel.

Question 1: "How many of you know the total cost of your investment management?"  

Responses from the investor panel ranged from 50 basis points, or 0.5 percent, of assets under management to 150 basis points, or 1.5 percent. Prepare yourself—the math below calculates how you should be evaluating fees on your portfolio.

Now that we have a foundation of what potential hidden fees are (ranging from 1.5 percent to 3.5 percent), as well as your attention, let's address the next question.

Question 2: "How many of you believe that the fee you pay to your advisor is the only fee you pay?"

Many panelists believed that, yes, the only fee they pay is the fee paid out to their advisor. Others said they were unable to get a straight answer from advisors when asking this question. But brace yourself: In reality, the fee paid to your financial advisor is not, in fact, the only charge incurred with investment management.

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So long as there is a mutual fund, exchange-traded fund (ETF) or note (ETN), structured product, real estate investment trust (REIT), variable or fixed annuity, unit investment trust (UIT) or separately managed account (SMA) in your allocation—and the list goes on and on—there is more than just the potential for undisclosed or buried fees. (Of the above list, there are many holdings and strategies that may be right for investors based on individual needs; I'm in no way claiming that all of them should never be used.) 

One example from the panel—a successful former executive, retired, with assets held in two of the largest wirehouses—stands out in my mind. This gentleman believed that the 50 basis points (0.5 percent) paid to his advisor was his only fee. In reality, the many proprietary mutual funds, hedge funds and structured notes that he held would, I estimated, result in a true fee well north of 3 percent.

In this case, perception and reality were not the same. Even though this investor authorized disclosure documents and hundreds of pages of paperwork, it appears his advisor never fully explained to him the costs associated with his investments. 

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As a business owner and advisor, I appreciate that there are real costs associated with serving clients and helping them achieve both financial and personal goals. But investors can only understand and make informed decisions when all of the facts are truly on the table. Getting back to the basics, investors must demand that their advisors disclose the true costs associated with their investments. 

Keep the itchy wool sweaters in the box this holiday season and give the gifts that keep on giving. Investors shouldn't have to buy their own presents—or be expected to dig to the bottom to find each and every fee they're charged.

Advisors need to take a cue from Santa Claus and provide the welcome gift of straightforward and transparent communication of fees—whether or not it's on their list. 

—By Ron Carson, Special to CNBC.com. Ron Carson is founder and chief executive of Carson Wealth Management Group. A certified financial planner with more than 20 years' experience, Carson authored "Tested in the Trenches" and co-authored The New York Times best-seller "Avalanche: The 9 Principles for Uncovering True Wealth."