Their costs seem to range from ,4 to .9 % of assets managed. That can add up to big yearly amounts. Do you think the cost is worth it?
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On average it is well documented that active management costs more than it gains the client, so it’s a s—ers game. The smart money keeps costs low, broadly diversified, and low turnover. For me getting a few different very low cost all in one funds (retirement age or risk level based, your choice) and set it and forget it has worked very well over the years.
i don't understand why anyone would pay a FA. Take your millions and put some in high yield stocks and the rest in a vanguard account. Sleep easy and collect the dividend checks.
No. As a previous poster stated that fee cuts into your returns to a frightening degree over the long term and those folks often work for a specific fund family and will only place you in their managed funds which have additional fees. If you have an unusual situation or don’t feel confident setting up a portfolio and won’t take the time to learn, go to a fee only financial advisor who will set up a recommended portfolio which you can implement yourself. Better yet, chose a single target date fund which contains a blend of stocks and bonds based on your timeline.
try UnconventionalInvestor.com. Low fee, indexed, and sufficiently cynical to protect one's assets.
My friend, its like you want to get married, but don't want to pay for the wedding.
The fee to manage an investment account is called the load, or the load fee. Anything over 0.5% is starting to get into the experience range. It should never be 1% or higher. Check your 401k investment funds for the load fee of that fund. Financial advisers very seldom perform better than the annual market average. Just invest yourself into various funds that have load fees and have decent 1, 3, 5 ,10 years and lifetime returns relative to the market that those funds are in. They all use a benchmark for performance comparison.
We have been using a firm that meets with us twice a year and advises on our company investments for free. They’ve been doing it for four years now. Of course they do it for free in hopes to get your money when you retire. But it’s proven to work well for us so of course we plan to go with them. I’m taking EOI and my hubby will work a 2-4 more years.
Like any service procured, you need to "get your money's worth" from your financial advisor.
Ask yourself whether you have (the time, the expertise, et. al.) the daily interest to monitor your portfolio? Most advisors allow you to leverage their learning from early clients. Yes, there is likely model portfolios for folks of our age and financial wealth. You then tweak the model portfolio to meet your risk tolerance.
My outlook is that my financial advisor should make me multiples of what I pay him for advice (better stock picks, asset allocation, etc.)
Though I check my portfolio regularly, I leave the day-to-day "worrying" to the financial advisor so that I can do other things :)
You do have choices, although limited. You can pay a fee, manage it yourself or cash it all out and hide it in your basement. Ultimately, if you don't have confidence in your knowledge of the market, pay a fee of your choice and move on.
For about 6 months I used an advisor from the Company that CVX uses for the 401k. I had multiple accounts and the fees ranged from .4% to .9% depending on the size of the account. My advisor was ok. I was provided a limited number of investment options from a menu provided. You can't customize. One morning I called them to make changes at 9 am and asked to change my investments. This is something I can do on there website very easily and the changes happen that day. Mutual Funds trade after the close of business each day. I was assured by the experienced advisor that my changes would be made that day. The changes were not made as promised. The next day the changes were made and I lost a good bit of money because the market went down. I was then told by my advisor that it takes several days for mutual fund changes to be made in my managed account.
I fired the advisor and switched to a advisor group call Betterment. I got free advisory fees for a year. They allow you to use an advisor or will recommend a fund mix which depends on your age. If you make a change at 9 am it goes in immediately. This can be huge. You can also customize your mix (domestic, foreign and bond) of funds. Very happy with them so far. I don't trust the company that starts with the letter F after they lied to me on a recorded call
I would highly advise against anyone that charges per year %. In 30 years, you are talking about hundreds of thousands of dollars off of your 401k as well as unfortunately common “kickbacks” some of the advisors get by proposing certain mutual funds that will not benefit you. Not all are bad, but even the “good ones” are tough to justify when there’s so much available information out there on proper investing techniques.
Is it worth $200k+ to spend some time on learning from a lot of great resources out there (rich dad poor dad, Dave Ramsey, index investing for dummies)? There are also a lot of weeklong trainings that will teach you what you need to know. The dirty secret is that significant majority (90%) of all financial advisors and mutual funds never beat the market.
For us, yes, absolutely worth it. Both of us retired 5 years ago. We selected a large firm, built a personal relationship with our financial advisor and meet face to face a few times per year. Total cost is 1%. The firm we use has many analysts that support our financial advisors. Our investment plan was tailored to fit our needs and has stop gaps for huge market swings such as the '08 - '09 crisis.
Although we were good at our jobs "making" oil and gas as well as creating value, we felt that that relying on ourselves to manage our hard earned dollars wasn't the wisest thing to do since we didn't have the backing of a large institution that has the educational and historical backing.