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re: Is 1.5% management fee too high?
Posted on 9/25/23 at 8:39 pm to TDTOM
Posted on 9/25/23 at 8:39 pm to TDTOM
quote:
put a minimum account size that would make it worth your time.
This is a great quote for advisors.
Would never charge that much, but certainly have considered minimums or robo-advisor accounts for smaller accounts. If they are 1.5% better than their benchmark every year (not market, benchmark allocations) why in the world would they take a 20k account or anything near that size?
1
Posted on 9/25/23 at 8:52 pm to UpstairsComputer
quote:
why in the world would they take a 20k account or anything near that size?
Couple of answers I guess. They expect the participant will contribute more or it doesn't cost them that much. 1.5% on 20k is not much money. The expectation is that the account will grow (not from the worldly wisdom of the advisor) and it will add up over time.
This post was edited on 9/25/23 at 8:53 pm
Posted on 9/25/23 at 8:59 pm to NBR_Exile
Or they’re the child or other beneficiary of a larger client.
Posted on 9/25/23 at 9:02 pm to Shepherd88
quote:
Or they’re the child or other beneficiary of a larger client.
This may be the only answer as to why you take it. Then they get charged whatever the main account holder is charged.
Posted on 9/25/23 at 9:14 pm to Shepherd88
True. But then the supposition is the account can grow. I don't despise a salesperson that can grow the account. Unfortunately people are not aware of the risks "advisors" can have on their financial future.
Posted on 9/25/23 at 9:16 pm to NBR_Exile
A $20k account isn't growing enough to make it worth while.
Posted on 9/25/23 at 9:26 pm to TDTOM
I don't disagree. The hope is they will have a client that will grow that account over time.
Posted on 9/25/23 at 9:27 pm to Fat Bastard
quote:
please tell me you are not using edward jones.
Posted on 9/26/23 at 1:09 pm to Man4others
quote:
For example, the investment manager may charge 1.75% on the first $250,000, $1.50% on the next $750,000, 1.25% on the next $5 million and so on.
That’s . . . Outrageous. Our advisor charges 0.9%. Recently we met with two others, one under an investment bank and another fully independent and the fee structure starts at 1% and ends up between 0.8% and 1% blended based on the balance.
And we are on the fence about ending management completely at sun 1% fee levels.
Posted on 9/26/23 at 1:11 pm to Man4others
quote:
.5% is a standard fee for an FA to manage and provide service to a smallish account. FA could charge more like 1.75% to 2% if they wanted to
Not anymore - this has come down to 1%
Posted on 9/26/23 at 2:13 pm to NBR_Exile
quote:If you are planning to just put your money into an ETF or mutual fund, you should not be with a FA at all. That would effectively be "double dipping" on fees.
Move all accounts to Schwab, Fidelity or Vanguard. 1.5% is way too much to pay for their advice. I'm with Schwab and it costs me 0% outside of the normal expense ratios of the ETFs/funds I invest in. There is some value in an advisor that will prevent you from making kneejerk reactions to the market but that can be had for much less than 1.5%. Post your portfolio and we can set you up for the future for free.
ETA: Depending on where you are investing now, transferring in kind may not be possible. Some captured funds by FA's might not transfer. It might be cheaper/only possible to liquidate there before the transfer. If this doesn't apply, you will more that likely be better moving it to the 3 brokerages I mentioned and trade out at no cost.
Posted on 9/26/23 at 2:27 pm to Rollwave034
I wouldnt pay more than 0.75% but that is just me.
I would avoid the 401k, though. Instead of that route, try one of the free roboadvisors like Schwab intelligent portfolios or Sofi.
I would avoid the 401k, though. Instead of that route, try one of the free roboadvisors like Schwab intelligent portfolios or Sofi.
Posted on 9/27/23 at 8:38 pm to Man4others
quote:the frick? That’s just theft. FA is not a hedge fund making you 30% returns. It’s a guy that does a risk tolerance analysis and sends you general market emails once every two months boilerplate from his sponsor while answering your emails and phone calls when you are concerned. I dunno.
FA could charge more like 1.75% to 2% if they wanted to
Posted on 9/28/23 at 2:14 am to Rollwave034
I have some managed accounts with both vanguard and fidelity and the rate is usually about .15 to about .45 or maybe a little higher depending on the amount they are monitoring
Vanguard charges .3 on a annual basis
Vanguard charges .3 on a annual basis
This post was edited on 9/28/23 at 9:34 am
Posted on 9/29/23 at 4:23 pm to Rollwave034
quote:
Is 1.5% management fee too high?
This is the % a lot of people pay now to hedge funds doing extremely active investing.
1.5% for that is theft
Posted on 10/2/23 at 11:26 am to Nephropidae
quote:
the frick? That’s just theft. FA is not a hedge fund making you 30% returns. It’s a guy that does a risk tolerance analysis and sends you general market emails once every two months boilerplate from his sponsor while answering your emails and phone calls when you are concerned. I dunno.
Any percent-based fee on funds managed if its not an active investor is just nonsense. 2% is criminal and borderline immoral as a FA as you will be actively eroding your clients wealth
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