Quote:
Originally Posted by retiredguy123
Duh. Obviously, if you pay AUM fees, you will have less money unless the advisor can make up the difference with more successful investments than you could make on your own. I have never paid any AUM fees, but every investor needs to assess the value of paying an advisor. Apparently, the OP's calculations assume that the advisor has zero value.
|
The point of my post was not to show you will have less money when paying AUM fees. That is obvious, unless your advisor is consistently beating their benchmark by more than 2%, in my example. Numerous studies have shown that very few advisors can, after fees, consistently beat their benchmark. Rather, I was showing just how large the amount paid, over time, can end up being. It is a significant percentage of what you may have achieved by choosing index funds with a low cost provider. I also stated that there are individuals who would benefit from an advisor. Preferably, a fee-only, non-AUM advisor that charges by the hour. The right advisor can add value and should be compensated. However, it appears that in TV many advisors are nothing more than insurance salesman and are actually providing negative (less than zero) value.