Quote:
Originally Posted by Plinker
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.
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I appreciate your explanation. But your original post says that with zero fees, the account balance after 25 years would be $466,000 as compared with $266,000 with a 2 percent advisor fee. So, in this calculatipn, you have not applied any value whatsoever to the advisor's efforts or investment decisions and the 2 percent fee for 25 years was money down the drain. It seems as though you should at least apply some estimated value to the advisor's investment decisions or state that financial advisors are totally worthless.