Here are 5 things to consider when deciding whether to leave your investment advisor (plus one bonus tip). Personal Capital Fee …
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Here are 5 things to consider when deciding whether to leave your investment advisor (plus one bonus tip). Personal Capital Fee …
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22 comments
EJ was going charge me 1.35 percent. plus other crap. i thought about it, nope.
I think the IRA case is more obvious. I wouldn’t use wealth management for that. But when you are dealing with a large net worth in a taxable brokerage account it becomes substantially more complicated. I think in this case there is merit to wealth management. Even more so when you live in certain states such as California. Children in the picture complicates things too. I think the tax side of things is really where their deep knowledge becomes most important.
At that point it becomes less about how fast can you grow your wealth and more about wealth preservation.
The right question to ask is – what value proposition is offered for the advisory fees? If you are convinced they provide real value then there shouldn’t be any problem. Remember not everyone is 7:04 financially savvy or have the desire to manage their own portfolio at old age. Financial advisors have a fiduciary responsibility and they have to abide by strict regulatory standards. you get what you pay for.
There are many reasons to do it yourself.
The MOST IMPORTANT reason is that you know it’s not gonna possibly get stolen from somebody else, like your advisor! Learn it yourself and do it!!
AUM fee ? No way – Whether they make or lose money they still make the fee. A better way is to pay the fee on the spread meaning if you have a million, you will pay them a fee on any gains above the million. But, they will never do it. Instead i am a DIY person and i do the following:
1. I have a financial plan from a firm and paid a flat fee – If you have any changes you can go back to them and pay a small fee for them to rebalance or suggest things for tax efficency. Say once or twice a year depending on your situation
2. I have a CPA for my taxes who is connected to the financial planning firm if needed for confirmation etc-.
3. I paid a estate lawyer to create my living trust (flat fee)
4. Most importantly I spend alot of time on self educating myself on all aspects of investing for retirement, taxes, etc-.
Note: "ALL" the above did not cost me anywhere near that 1% or more fee – Its not hard you just have to put in the time.
Thank you sir
The problem is getting investment advice outside AUM when your advisor already has you in complicated investments with tax implications. Where i live financial planners can't advise you on that stuff.
What a scam. "We do better when you do better. And when you do worse, we are still do just fine." Sure, I'll play with your money if you give me 1% every year no matter what. What. A. Scam.
I think it's pure ego from retail investors, they always believe they are the 5% that will DCA and hold forever. Sure make sure that the underlying assets are low TER, but to say they do not provide a service… The 1% is the stupid insurance, if you find a good FA, they will make sure you don't ruin yourself. The difference between retiring with 3.6m and 4.5m is better than ending with less than 1m. If you want that extra 1% that much just limit the amount of AUM you give to the advisor.
Thank you for your marvelous input, I am 82 female and still working. I have a small micro business, which I love working at.. I enjoy the challenge of being frugal as more of a game. I invested in a log splitter in 2015 to help me process firewood. It’s a learning curve.,, and with a group of people who harvest marvelous food out of exceptional dumpsters,, the college area I live in, provides me with all the necessities of clothing and housewares,, due to the way, college students disposal attitudes. I’m able to save money and because of the rise and CD rates.,, I’m able to create a little more income. My question is.,, I am uncomfortable banking in a virtual cloud,, so I’m looking for a brick and mortar investment company with a lot of integrity. Something well established.. so I’m looking for a brick and mortar,, to invest with people, I can see,, with actual paper saying what the agreements are. What do you suggest?
Thanks
Many, probably most, of my friends, family, and colleagues do not trust their own ability to do math. They just want to hire someone who understands wealth management and investing to handle their finances. They have no clue how much they are actually paying their advisors.
Most people shouldn’t have any capital gains for an IRA or 401K. Only brokerage accounts. Most people don’t have those
CHATgpt also didn't exist 3 years ago
I am a self funded retiree in Australia. Over the years I have had initial discussions with four advisers and all of them indicated they were capable of increasing my wealth for my retirement. The whole four said they could do this if I moved all my assets into their nominated portfolios, which, just so happen to be beneficial for them coincidentally. 1% is ridiculous amount to pay. I wish I could find an adviser who is genuinely interested in my financial welfare and not lining their pockets at my expense . The skepticism grows.
Rob
Good info. We have a fiduciary we pay over 1 % annually with a balanced, diversified portfolio in equities in an IRA. The reason why we engaged this fiduciary is their breadth and depth investment expertise. What I didn’t hear enough from you is how much did the portfolio return for the 1% fee. For us over 16 years in retirement we have almost as much as we started with and an annual net (gross return less fees and withdrawals) withdrawal rate of under 1% annually. Thus we celebrate paying the 1% to achieve 9-12% returns.
Larry
When my advisor told me he could help me with a trust for 3000 dollars,he had some lawyers he uses. I figured he did not need my 1.3% . I will take my chances and do it myself.
1% is absolutely ridiculous with all the great information available to investors these days. These dudes should be paid like accountants and attorneys, on an HOURLY FEE basis……..Like I have my advisor for the past 10 years. $200 an hour and I talk with him about 3-4 times per year so my yearly fees are ALWAYS less than $1000 a year on a seven figure portfolio….
Financial planners are becoming less essential in today’s world. With professional-grade tools available for as little as $100 per year and free AI-powered solutions offering accurate estimates of financial success, individuals can now manage their own finances effectively. Instead of paying high fees for financial planners, consider investing that money in a low-cost index fund. As your wealth grows, the percentage-based costs of professional services can become disproportionately expensive, making self-directed planning an increasingly smart choice.
I had Fidelity wealth management run a plan for me. Something like 30 funds most of their own and a fee of 1.5%. The best way to lock a client is to create a complicated portfolio that creates a fear of ever leaving. Hard to find "trust" in the so-called fiduciary advisor. Is it unreasonable to expect to pay an advisor to produce returns that I wouldn't normally be able to do myself? Love your channel and find so much good information…. thanks for all you do.
My take: a GOOD financial advisor could be well worth the money, if you need comprehensive, turnkey strategic advice and services on complex financial issues which, I hate to say, can tend to be the case when you are retired, have money, and want to maximize your legacy for the next generation. Our financial advisor has helped us tremendously in many aspects of our post retirement financial life, including deciding when to start social security, how to plan out our income schedule on a rolling basis for the rest of our retirement years, optimizing for taxes, social security payouts, and Medicare premiums, costs, etc,etc. These interacting factors can be way trickier than they seem. Then there are the decisions about how to fund the buy in for a life plan community, what type of long term care insurance to buy…. The list goes on. Our advisor is always just a phone call away, helping us build scenarios and brain storm options. I doubt that I, even with an MBA education, can make all these complex analyses as well as she can, nor do I want to do them. I’d rather do the things on my bucket list. Last but not least, a financial advisor can communicate with your family. She is a resource to the family when necessary. A robo advisor can’t do that. All in all, I don’t think of the advisory fee in transactional terms. It’s rather, a “retainer” for a good professional on your team.
So, there you have it. If you have simple, relatively transactional needs, then the DIY approach using the plethora of digital tools that exist nowadays make a lot of sense. I’m recommending that our young daughter do just that. But if you have a more complex financial life and don’t have the skills or will to do the work, then a good financial advisor may be well worth it.
The one thing I think you left out Rob, is that the % charged is based on how much money you have in the "managed" account(s). The more money managed the lesser the % service fee. Yes the absolute vale charged will be higher too. So, it is a matter of the value you are getting for the fee. I am struggling with the same issue about my advisor. I only pay 0.5% annual fee which is relatively low, but I also do not make a lot of buy/sells so I think i may tell my CFP to not manage my account and just pay the transaction fees per event. I think I will save a lot of cash.
just had to update my financial plan again the fifth time over life changes and legal changes which used up about 12 hours in 4 meetings which cost about 6k each time