Many investors don't realize it but your advisor/broker/bank has been overcharging you for years! In the past 7 years, fees have dramatically declined and most advisors have not reduced the fees for their clients. They know there is a risk that you may fire them and leave, but they are willing to take that risk because most investors don't ask the tough questions or do the math.
I encourage everyone who uses an advisor to request a total fee summary from your advisor for the last 2 years (longer if possible). You will be shocked.
What is the total cost of your portfolio?
Mutual fund and ETF expense ratios range from .05% to 1.5% per year.
Advisor fees range from .5% to 1.5% per year.
On a $1M portfolio, some investors pay total fees of $15k to $25k per year! Your advisor may have many social outings in TV (golf, wine, dinner, polo) but guess who is paying for these outings! YOU are!
So, if the "going rate" for investment management is .25% to .5%, what else are you paying for? Are you a high maintenance client? What can you do to get lower fees? Can you find a "fee only" advisor who is low cost?
Net of all fees, most investors would be better off just indexing (as long as you have discipline and a solid approach). In fact, have your advisor compare your performance (net of all fees) to the appropriate Vanguard LifeStrategy Fund.
*** If your advisor does not report your performance net of all fees, you should fire your advisor! They should also compare your performance to some sort of index fund strategy.
The Vanguard LifeStrategy funds offer global diversification for .14% per year. You can also build something similar with Schwab, TD or Fidelity.
Vanguard LifeStrategy Funds | Vanguard
Why do you think that so many people in TV overpay for financial services? Any thoughts?
Good luck to all. Also, FYI on the below.
The Investment Education Club will meet Thursday July 13th at 3 pm in the Daytona Beach Room, Sea Breeze Recreation Center. All residents and their guests are welcome.
Does your mutual fund manager provide returns above the fund's benchmark? If so, is that due to the manager's skill? We will explore that subject with the presentation "Seeking Alpha - Evaluating Mutual Fund Manager Performance." This presentation should be of interest to anyone currently owning or considering owning a fund.