- My Forums
- Tiger Rant
- LSU Recruiting
- SEC Rant
- Saints Talk
- Pelicans Talk
- More Sports Board
- Fantasy Sports
- Golf Board
- Soccer Board
- O-T Lounge
- Tech Board
- Home/Garden Board
- Outdoor Board
- Health/Fitness Board
- Movie/TV Board
- Book Board
- Music Board
- Political Talk
- Money Talk
- Fark Board
- Gaming Board
- Travel Board
- Food/Drink Board
- Ticket Exchange
- TD Help Board
Customize My Forums- View All Forums
- Show Left Links
- Topic Sort Options
- Trending Topics
- Recent Topics
- Active Topics
Started By
Message
Should I be offended by this offer from my financial advisor?
Posted on 1/28/15 at 1:32 pm
Posted on 1/28/15 at 1:32 pm
My advisor, who manages my retirement savings account (IRA), makes about $4K/yr from me for his fixed fee-based service. When I asked him if he would take a look at my holdings and investment choices in my 401K and advise me on how to invest/reallocate, he offered to do it for an additional $500.
15
Posted on 1/28/15 at 1:34 pm to TXTigerDad
Sounds rather shitty, yes.
Posted on 1/28/15 at 1:38 pm to TXTigerDad
Yes, you should absolutely be offended by that offer.
Posted on 1/28/15 at 1:46 pm to TXTigerDad
quote:
My advisor, who manages my retirement savings account (IRA), makes about $4K/yr from me for his fixed fee-based service.
You pay $4000 a year to someone to invest a max of $5500/year account?
Posted on 1/28/15 at 1:47 pm to TXTigerDad
Why doesn't the OP begin with "My former advisor?"
Posted on 1/28/15 at 1:56 pm to TXTigerDad
People get offended way too easily.
You and your advisor have a contract. You pay him X, he will perform Y. If you want him to perform Y + 1, I don't see it unreasonable for him to ask you to pay X + 1.
Now, if this is something he can do in 30 seconds, yeah, charging is obnoxious. But my guess is your advisor will take the time to study the funds, look at your 401K as part of your entire picture, and then issue a written recommendation. All that takes time.
If a client calls me in November with a tax question and it takes 10 minutes to answer, I don't charge any time for that. If it takes 2 hours of analysis and research, yes, I'm sending a bill and I'll tell them ahead of time how much it will cost.
EDIT: If you are my best client or one of my best clients, I might be more likely to do it gratis. If you are one of my smaller clients... I would probably charge.
"Scope creep" is a big issue with fixed price agreements.
You and your advisor have a contract. You pay him X, he will perform Y. If you want him to perform Y + 1, I don't see it unreasonable for him to ask you to pay X + 1.
Now, if this is something he can do in 30 seconds, yeah, charging is obnoxious. But my guess is your advisor will take the time to study the funds, look at your 401K as part of your entire picture, and then issue a written recommendation. All that takes time.
If a client calls me in November with a tax question and it takes 10 minutes to answer, I don't charge any time for that. If it takes 2 hours of analysis and research, yes, I'm sending a bill and I'll tell them ahead of time how much it will cost.
EDIT: If you are my best client or one of my best clients, I might be more likely to do it gratis. If you are one of my smaller clients... I would probably charge.
"Scope creep" is a big issue with fixed price agreements.
This post was edited on 1/28/15 at 1:58 pm
Posted on 1/28/15 at 2:01 pm to Clyde Tipton
Seems like his fixed fee may be determined by asset level.
That being said it will take time and effort and he may be using an hourly rate computation.
There are many advisory companies that specialize in managing your 401(k) and they charge an asset based fee. This fee can go over 1%. It just depends on what you are getting for the value.
If you are just asking him to take a look and give you a shoot from the hip opinion then I would say that he should be able to do that for free.
He is in business to make money after all and if he is at a big firm then he is going to charge for any time he gives you. If he is an independent RIA I would think he would have the flexibility and value the relationship enough to give you some free guidance.
Many people roll their 401(k) into an IRA and they can get quite large. Multiple millions.
That being said it will take time and effort and he may be using an hourly rate computation.
There are many advisory companies that specialize in managing your 401(k) and they charge an asset based fee. This fee can go over 1%. It just depends on what you are getting for the value.
If you are just asking him to take a look and give you a shoot from the hip opinion then I would say that he should be able to do that for free.
He is in business to make money after all and if he is at a big firm then he is going to charge for any time he gives you. If he is an independent RIA I would think he would have the flexibility and value the relationship enough to give you some free guidance.
quote:
You pay $4000 a year to someone to invest a max of $5500/year account?
Many people roll their 401(k) into an IRA and they can get quite large. Multiple millions.
This post was edited on 1/28/15 at 2:02 pm
Posted on 1/28/15 at 3:28 pm to Clyde Tipton
quote:
You pay $4000 a year to someone to invest a max of $5500/year account?
No, he manages my much larger personal IRA, not my employer-sponsored 401K.
Posted on 1/28/15 at 3:31 pm to TXTigerDad
My advisor never charges me for 401k help ...
Posted on 1/28/15 at 3:33 pm to TXTigerDad
tell him to frick off and get a new advisor
Posted on 1/28/15 at 3:35 pm to TXTigerDad
So he manages the IRA but wants to charge you $500 on investment advise in your 401K. I do think it is shitty because part of his thinking on your IRA should be where your 401k is invested.
I don't see him making a sound IRA decision without knowledge of your 401k.
So from that angle, yes, it's pretty shitty. Just tell him you've had a couple of other well known managers trying to get your business for years and they want to look at your 401k for free.
I don't see him making a sound IRA decision without knowledge of your 401k.
So from that angle, yes, it's pretty shitty. Just tell him you've had a couple of other well known managers trying to get your business for years and they want to look at your 401k for free.
Posted on 1/28/15 at 3:39 pm to LSUFanHouston
quote:
Now, if this is something he can do in 30 seconds, yeah, charging is obnoxious. But my guess is your advisor will take the time to study the funds, look at your 401K as part of your entire picture, and then issue a written recommendation. All that takes time.
If a client calls me in November with a tax question and it takes 10 minutes to answer, I don't charge any time for that. If it takes 2 hours of analysis and research, yes, I'm sending a bill and I'll tell them ahead of time how much it will cost.
I understand your point, and can't say that I disagree with you. However, here are a few more facts that I didn't mention in my OP:
I just paid him $750, at his suggestion, for him to do a retirement forecast and analysis, for which I'm meeting him this Friday. I was thinking he might be willing to do this in connection with that.
He looked at my 401K one other time for me, at no charge, probably about 5 years ago, and hasn't done anything like that since.
I don't think it would take him more than 30 minutes to do the analysis, as we have a limited number of choices and he could use a similar allocation to the one he employs for me in my IRA.
But I appreciate you taking the time to give me your point of view. I am not necessarily offended yet, just wondering if I should be or not.
Posted on 1/28/15 at 3:41 pm to TXTigerDad
I seems to me that your advisor should be taking your 401K into account as part of the big picture of your retirement goals. His fee and analysis should include all of your retirement holdings.
Posted on 1/28/15 at 3:42 pm to Maderan
quote:
If you are just asking him to take a look and give you a shoot from the hip opinion then I would say that he should be able to do that for free.
That's what I had in mind, but maybe he had something else in mind.
He is an independent RIA.
Posted on 1/28/15 at 3:47 pm to GeeOH
quote:
So from that angle, yes, it's pretty shitty. Just tell him you've had a couple of other well known managers trying to get your business for years and they want to look at your 401k for free.
My co-worker was just telling me about his fee-based advisory arrangement with a Merrill Lynch firm. They charge the same rate as my guy but they advise him on his 401K for free.
Posted on 1/28/15 at 3:47 pm to TXTigerDad
Yes, if you are paying $750 for a retirement analysis already + $4,000 on an IRA he manages, plus he wants another $500 to provide advice on a 401k that he likely stands to have roll over when you retire... come on???
Like you said, he's already done the work once, you have limited choices, and frankly, most 401k's use extremely similar funds so he should have a working knowledge of them before you even show him... that's a greedy business model imo.
Like you said, he's already done the work once, you have limited choices, and frankly, most 401k's use extremely similar funds so he should have a working knowledge of them before you even show him... that's a greedy business model imo.
Posted on 1/28/15 at 3:48 pm to TXTigerDad
Yea, I don't know how good that retirement forecast is if he is not including your 401k. Just seems petty at this point to charge you to look at it, for 2/3's the same price as your entire retirement forecast, which I still think that price is high 
This post was edited on 1/28/15 at 3:51 pm
Posted on 1/28/15 at 3:51 pm to TXTigerDad
quote:
My advisor, who manages my retirement savings account (IRA), makes about $4K/yr from me for his fixed fee-based service. When I asked him if he would take a look at my holdings and investment choices in my 401K and advise me on how to invest/reallocate, he offered to do it for an additional $500.
Yes it is shitty however it MAY be a legal/liability/fiduciary thing that he HAS to charge you since the assets are custodied elsewhere if he gives you advice he is taking on fiduciary responsibility. I've heard of some B/Ds having this rule most advisors look the other way maybe this guy is a stickler.
Posted on 1/28/15 at 3:56 pm to TXTigerDad
I don't know. Mine does this same thing for free. I have to take notes since he's not supposed to do that but he gives me the advice for free.
Posted on 1/28/15 at 4:01 pm to TXTigerDad
As an independent RIA he has the flexibility to do this for free but since you say he is not an asset based fee advisor that may be why he wants to charge you.
Fixed fee advisors can sometimes be a bit salespersonish for me. As you are paying him for a financial plan I will throw in a word of caution. Besides questioning their value overall, most of those I have seen always come out saying you need more life insurance. Usually not needed and an excellent source of fee revenue for some advisors.
Carry enough insurance to replace your income in order to protect your family and carry it the cheapest way you can, usually term. If you have saved well by the time you retire the need for insurance pretty much goes to zero as your family will be provided for.
Fixed fee advisors can sometimes be a bit salespersonish for me. As you are paying him for a financial plan I will throw in a word of caution. Besides questioning their value overall, most of those I have seen always come out saying you need more life insurance. Usually not needed and an excellent source of fee revenue for some advisors.
Carry enough insurance to replace your income in order to protect your family and carry it the cheapest way you can, usually term. If you have saved well by the time you retire the need for insurance pretty much goes to zero as your family will be provided for.
This post was edited on 1/28/15 at 4:03 pm
Page 1 of 2
Popular
Back to top
Follow TigerDroppings for LSU Football News