An August 2011 article in Kiplinger's Magazine (p.44) reported on a study completed by PriceMetrix that "...found that 25% of advisers who manage investment accounts for households that have between $250,000 and $500,000 in assets charge their clients annual fees of 1.75% or more..."
Including transactions costs, turnover ratios, and fund expenses this will exceed 2%. In dollar terms, that is $5,000 per year on a $250,000 investment portfolio every year. If your investments had a 10% positive year and increased to $275,000, that comes to $5,000 (plus the increases) of your $25,000 gain or 20%. And next year the fee goes up higher than that $5,000. If you have losses, then the fee continues though at a slightly lower rate. Not much of a consolation unless you are getting more than investment advice services.
Think about the costs and keep that perspective when you are comparing the value obtained for the services. Investment management is only one aspect, but comprehensive financial planning advice will include so much more (insurance, tax, retirement and estate planning, too). If all you are receiving is investment advice, that 1.75% fee is really much, much more costly to you.
An Introduction
Hi. Welcome to BourGroup and my blog. Phil
Phil Bour is a CERTIFIED FINANCIAL PLANNER(tm) professional since 2004, a Magna Cum Laude college graduate and an accounting professional for over 35+ years. I love numbers, statistics and economic history.
I am also an Enrolled Agent (EA) to represent taxpayers before the Internal Revenue Service and to prepare tax returns.
"Phil"osophy: I believe that you can manage your money on your own (not necessarily through individual stock selection but through mutual funds, ETF's and other solutions) once you receive some one-time, professional guidance. Why pay annual fees when there may be little added value? For additional information, first read the "An Introduction" label at the left. Then move on to others.
Phil Bour is a CERTIFIED FINANCIAL PLANNER(tm) professional since 2004, a Magna Cum Laude college graduate and an accounting professional for over 35+ years. I love numbers, statistics and economic history.
I am also an Enrolled Agent (EA) to represent taxpayers before the Internal Revenue Service and to prepare tax returns.
"Phil"osophy: I believe that you can manage your money on your own (not necessarily through individual stock selection but through mutual funds, ETF's and other solutions) once you receive some one-time, professional guidance. Why pay annual fees when there may be little added value? For additional information, first read the "An Introduction" label at the left. Then move on to others.