In March 2013, Becky Quick interviewed Warren Buffett on CNBC and asked about investment fees. Buffett made some interesting comments on Berkshire’s portfolio managers, Todd Combs and Ted Weschler. He spoke about individual investors in the exchange below, and his advice is applicable to institutional investors as well.

Becky Quick: A lot of Main Street investors think they can’t get a fair shake on Wall Street. Can they?

Warren Buffett: Well, they pay a lot of expenses in many cases. They don’t need to. They should buy a low-cost index fund and they can participate in the growth of America over the next 20 or 30 or 40 years and they’ll do fine. But if they’re paying high fees to achieve that same result, they’re going to get hurt. They should look very carefully at costs. But they should hold a diversified group of really high-class companies, which you can do by buying an index fund. And then they should forget it. They should just pretend the stock market closes for five years and they shouldn’t look at prices every day…

The people selling you securities are often selling you things they make a lot of money in. The first question you should ask of anybody selling you securities is, ‘How are you getting paid and how much are you getting paid?’ The truth is you can own index funds with a very, very low cost and you will end up getting the same performance that you get from people who charge you a lot more.

So, you always want to look at costs. When somebody comes around to you and says, ‘I’m going to sell you this wonderful security but there’s this big chunk in it for me,” you get suspicious.