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Financial advisor fee? What say ye?
Posted on 1/17/20 at 3:02 pm
Posted on 1/17/20 at 3:02 pm
1,000,000 assets...what is acceptable?
5
Posted on 1/17/20 at 3:26 pm to colgatiger89
I would only talk to a fee only advisor... So the cost would depend on what you needed done.
Posted on 1/17/20 at 3:37 pm to Shepherd88
LINK
Straight from Vanguard, they even claim an advisor is worth 3% annually.
Would love whoever downvoted me earlier to come and change my mind.
Straight from Vanguard, they even claim an advisor is worth 3% annually.
Would love whoever downvoted me earlier to come and change my mind.
Posted on 1/17/20 at 4:08 pm to Shepherd88
This articles are always generic in nature. How much an advisor is worth is dependent on a person’s ability to manage emotions, knowledge and willingness to learn about finance, and services included with the advisor.
Posted on 1/17/20 at 4:17 pm to Shepherd88
Yet vanguard only charges 0.3% for their services....
Vanguard personal Advisor
quote:
Low fees and tax savings
The annual cost is 0.30% of the assets we manage for you. That’s $3 for every $1,000 in your portfolio, with a $50,000 minimum. By combining low-cost funds and tax-smart strategies, our advisors maximize your tax savings so you can keep more of your money.
Annual fee schedule
FEEMANAGED ASSETS
0.30%On assets up to $5 million
0.20%On assets above $5 million and up to $10 million
0.10%On assets above $10 million and up to $25 million
0.05%On assets above $25 million
Vanguard personal Advisor
Posted on 1/17/20 at 5:13 pm to colgatiger89
I pay nothing extra for annual review of my retirement accounts at Fidelity with one of their financial consultants (assigned to one person). We mostly discuss equity/bond positions and re-positioning strategies. And I'm the one asking questions, lol. But it all depends on what questions/issues you have with your assets.
Posted on 1/17/20 at 5:22 pm to UltimaParadox
quote:
Yet vanguard only charges 0.3% for their services....
Which is kinda my point, if you read below Vanguard even admits that a “good” financial advisor is worth 3% and breaks it down to what that incorporates.
Yea there’s some knuckle heads who ain’t worth two pennies for what they charge and then there’s some good ones out who can deliver alpha and after tax returns. An FA is not for everyone, however for $1mm like the OP mentioned I do think some hand holding is worth the price.
Posted on 1/17/20 at 5:42 pm to Shepherd88
What kind of info are you looking for from a FA that is worth $30,000/yr based on $1MM assets? If it’s tax info, then your CPA would be a great resource. If it’s what stocks, funds, bonds to buy then that would be a waste of money.
Posted on 1/17/20 at 5:54 pm to Shepherd88
quote:Maybe you should have actually read the white paper from Vanguard in your link.
Straight from Vanguard, they even claim an advisor is worth 3% annually.
1. aren’t claiming an advisor is with 3%, as if that’s an expected value, they claiming they are with POTENTIALLY 3%.
quote:2. They aren’t claiming the value on ANNUAL basis:
Based on our analysis, advisors can potentially add about 3% in net returns by using the Vanguard Advisor’s Alpha framework.
quote:3. Much of the value comes from things one can learn from this board alone:
We do not believe this potential 3% improvement can be expected annually; rather, it is likely to be very irregular.
A. Investing in low cost funds (0.34%).
B. Rebalancing (0.26%).
C. Behavioral coaching, which teaches people to not invest irrationally. (1.5%).
The remaining 0.9% is largely dealing tax implications, both investing (taxable vs. tax-deferred) and spending/withdrawals (pull from tax-deferred vs.). Much of this is irrelevant to the OP anyways at this point.
This post was edited on 1/17/20 at 6:17 pm
Posted on 1/17/20 at 6:18 pm to buckeye_vol
FWIW my OP said 1-1.25% on $1mm is fair.
Secondly, if someone is coming here to this board with $1mm to ask what they should do then you have lost your damn mind if you think they are gonna be rational enough to listen to this board again when their portfolio has dropped to $600k bc they’re invested in index funds.
Secondly, if someone is coming here to this board with $1mm to ask what they should do then you have lost your damn mind if you think they are gonna be rational enough to listen to this board again when their portfolio has dropped to $600k bc they’re invested in index funds.
Posted on 1/17/20 at 6:50 pm to Shepherd88
Not to insult anyone, but this board is rife with the (repeatedly) most basic questions. Over and over, people who are really smart, great at sales, doctors, lawyers, engineers, and on and on - people with really high paying jobs... can google the crap out of back door Roth IRA or any other strategy, but are too hesitant to pull the trigger because they aren’t comfortable with the lingo or execution.
If you are and can do it yourself, kudos. But to act like there’s no value in an advisor is naive.
The fact is, with $1m, just one good piece of advice is worth several years of 1%. It happens all the time.
If you are and can do it yourself, kudos. But to act like there’s no value in an advisor is naive.
The fact is, with $1m, just one good piece of advice is worth several years of 1%. It happens all the time.
Posted on 1/17/20 at 6:53 pm to Shepherd88
quote:And the site you used to justify those rates, would charge a max of 0.3%.
FWIW my OP said 1-1.25% on $1mm is fair.
And over 10 years the total reduction of a portfolio’s value is 2.56% with a 0.3% fee, 9.56% with a 1% fee, and 11.82% with a 1.25% fee. So a portfolio that would have been worth $2 to $2.5 million would be from $132,000 to $221,500 less using your “fair” rates compared to Vanguard’s.
This post was edited on 1/17/20 at 6:58 pm
Posted on 1/17/20 at 7:45 pm to UpstairsComputer
More info..I'm a high income earner (medical, own rental property, ancillary medical facilities etc). I do not have a lot of free time to do it all on my own, although I do research/read etc.
What I currently find valuable with my current FA: we speak regularly, he answers calls/texts/questions, he informs me of potential upcoming IPO's that I would not otherwise be aware of (and many of the IPO's he makes absolutely nothing off of), keeps me "well balanced" and mainly as a sanity check.
My 401K that he manages was up 24% last yr, the brokerage account he assists with was up 29%. After maxing 401K, backdoor ROTH, HSA, kids ROTH and 529, I do have some expendable income that I like to "play" around with in the market on my own (no assistance)..I tend to be very aggressive, high risk/high reward and last year was up 67%. But I certainly do NOT want my FA to take the risk with my 401K that I did.
So, for me, I have the money but not the time, and I'm smart enough to know that can be a dangerous thing.
I posed the question to see everyone's thoughts and I do find the info helpful. Thanks!
What I currently find valuable with my current FA: we speak regularly, he answers calls/texts/questions, he informs me of potential upcoming IPO's that I would not otherwise be aware of (and many of the IPO's he makes absolutely nothing off of), keeps me "well balanced" and mainly as a sanity check.
My 401K that he manages was up 24% last yr, the brokerage account he assists with was up 29%. After maxing 401K, backdoor ROTH, HSA, kids ROTH and 529, I do have some expendable income that I like to "play" around with in the market on my own (no assistance)..I tend to be very aggressive, high risk/high reward and last year was up 67%. But I certainly do NOT want my FA to take the risk with my 401K that I did.
So, for me, I have the money but not the time, and I'm smart enough to know that can be a dangerous thing.
I posed the question to see everyone's thoughts and I do find the info helpful. Thanks!
Posted on 1/17/20 at 8:19 pm to colgatiger89
Sounds like you aren’t interested in managing the money yourself and seem pretty comfortable with your FA. So I guess you are just trying to make sure he isn’t charging you too much. I think 1-2% for local FA isn’t out of the ordinary.
I’m familiar with schwab and like them but haven’t used their FA services. I looked it up and the fees start at 0.8% for 500k and go down from there. They have local offices in larger cities, one in BR if you are in that area.
That said, just because it’s alot of money to manage doesn’t mean someone can’t manage it themselves with minimum time spent doing it. Particularly if their expectations are the same or somewhat lower than SP500 index returns.
I’m familiar with schwab and like them but haven’t used their FA services. I looked it up and the fees start at 0.8% for 500k and go down from there. They have local offices in larger cities, one in BR if you are in that area.
That said, just because it’s alot of money to manage doesn’t mean someone can’t manage it themselves with minimum time spent doing it. Particularly if their expectations are the same or somewhat lower than SP500 index returns.
Posted on 1/17/20 at 8:37 pm to colgatiger89
.70 - 1.2%
Posted on 1/18/20 at 8:58 am to colgatiger89
I wouldn't go above .85%.
Posted on 1/18/20 at 8:59 am to UltimaParadox
quote:
Yet vanguard only charges 0.3% for their services....
That is a bit misleading as you will also pay fees and expense ratios in their funds.
Some of the fees from using a financial manager are offset by owning stocks directly with no fees or expenses.
Posted on 1/19/20 at 12:57 am to notsince98
quote:
That is a bit misleading as you will also pay fees and expense ratios in their funds.
Some of the fees from using a financial manager are offset by owning stocks directly with no fees or expenses.
Apples to apples comparison really. Really up to the plan you and the financial advisor come up with. Owning individual stocks vs funds is irrelevant to the actual fees you pay the financial advisor.
Try walking into an Edward Jones office and see what type of fund fees you pay on top of their fee for managing your money
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