How much are you really paying?

[paperclip202]

With so many "free lunches" in TV, how much are you really paying in Investment Management fees (just Advisor fees- you may need to check your Advisors ADV brochure to find out what you are paying)? How mauch are you paying in fees from either from your Advisor in TV or your Advisor from home. I imagine that a lot of us "do it ourselves" along with all of our other hobbies in TV.

Please take the poll for Advisor fees only. In addition to the Advisor fees, "active mutual funds" typically have fees of .6% to 1.2%+ and "index type funds" charge .1% to .4% of assets.

In the "new normal" of investing and 0% interest rates for savings, all the fees you pay for investing really add up.

[2BNTV]

I don't pay anything for an advisor fee. I do have a managed fund account that takes .5% of the total managed funds for a fee. It has performed exceedingly well and think the fee they charge is very reasonable compared to it's growth over the last three years. My advisor makes a small amount on other funds that was transferred to bond type accounts. I have been with Schwab for a number of years and some fees are waived as a courtesy.

All in all, I get great advice for the nominal fees that are levied.

[paperclip202]

Don't be shy! Please vote in the poll if you can. If nothing else, it forces you to really check your fees. Many people I have met think their fees are pretty low but when they actually look into it, they are above 1.5% (and another .5% to 1% in Mutual Fund expenses). Keep in mind that 12b-1 fees are an extra fee paid to your Advisor. :shocked:

Here is a site to look up and download your Advisor's firm ADV (brochure). They should send this to you annually but many don't.

IAPD - Investment Adviser Search (http://www.adviserinfo.sec.gov/(S(mdauqufu5myqqeutqgadszfc))/IAPD/Content/Search/iapd_Search.aspx)

Here is a chart for typical Advisor fees from broker dealer accounts from 2011. If you Advisor has a new fancy office and is a BIG spender, check your fees to find out if YOU are paying for that fancy office!!!! :rant-rave:

Good luck.

9096

[Bill-n-Brillo]

Sounds like the poll is focused on those who buy into mutual funds, correct?

Bill :)

[paperclip202]

The poll is focused on Advisor fees in general. If you do it yourself and buy stocks, ETF's, individual bonds and such, Answer 1 would be the best fit. If you use a broker in the comission model, Answer 2 would be the best fit.

If someone uses an Advisor, most of them today focus on an AUM (assets under management) fee structure. They can use stocks, ETF's, Mutual funds, bonds and such but they typically charge some sort of "wrap fee" as a % of assets. The Advisor answers for fees would be 3 to 7 in the poll.

Hope that helps clarify. Thx.

[l2ridehd]

With some very basic research you will quickly find that in every three year period only 15% of active managed funds beat the index benchmark they measure against. That means that 85% of active managed funds fail to exceed the return of a very low cost index fund. Take the window from 3 years to 10 years and the number drops to 5%. So by selecting a fee based advisor to manage your money, you are betting that you are smart enough to find the 1 in 20 (5%) that can beat the return of a low cost index strategy.

Going the next step and determining what your risk factor really is so you can set your asset allocation correctly, spend one hour a month to review your results and re-balance as necessary, and your returns will always beat the returns of the paid advisor. The only folks who should use a financial manager and be willing to pay those onerous fees are those that do not have the discipline to determine a strategy and follow it.

If you feel you have to constantly tinker with your investments, or buy the latest hot stock your ex brother-in-law believes in, and can't stick with a "stay the course" strategy then hire an advisor.

Even the very best advisor out there will fail to deliver at some point.

[rjm1cc]

I think the value of an advisor is more the hand holding than the results of the investments. If advisors could pick the best funds etc they would also be retired. Their value is to get you to invest, hold your hand in a down market and help you plan your future cash flows.

[paperclip202]

:agree: For many people, there is a significant benefit to working with a Fee-Only Advisor (your Advisor should be a "fiduciary" for you - many can't offer this level of service because they sell you product). :$::$::$:

1) Some people need coaching (what did you do in 2008/ 2009? the market is up 130% to 180%+ from the bottom). The worst portfolio is one that doesn't let you sleep at night.
2) Some people need help to build a proper portfolio.
3) Some people don't have the time or desire to manage their money.
4) Some people need help avoiding BIG mistakes (like someone selling something "too good to be true" at a free lunch seminar).
5) Even in retirement, we need to build a portfolio for several decades.
6) Some of us need to work more on our golf game instead of watching financial news and messing with our portfolio. Active management doesn't work.

I am a huge fan of using index type funds (low cost). Your investment returns mainly depend on asset allocation (Lg. cap, small cap, growth or value, international, bond asset class and more). Many investors are missing asset classes that are very important to long term returns and diversification.

If you use an Advisor, it is a good thing to know your total fees (many are just too high for the services they provide). :cus: Total fees are sometimes hard to find and people are surprised when they tally them up (it may be one of your largest expenses in TV. Does your Advisor have a new fancy office and is a BIG spender?). This is why I started the poll. Take a look at my post above with "additional information regarding fees". There is a good graph with different fees based on size of portfolio.

Good luck. If you have an Advisor, do some research and take the poll. Thanks!

[l2ridehd]

There is only one person who will always have your best interest when managing your money. Only one who will not try to sell you something. That person is you.

Managing your money is pretty easy, takes very little time and will be rewarding. If you don't do it today then take the time to read some books, understand the markets and move to self management. Here are some books I would recommend.

- The Investor's Manifesto
- Common Sense on Mutual Funds (updated edition)
- Wise Investing Made Simple
- All About Asset Allocation
- Why Smart People Make Big Money Mistakes
- The Bogleheads' Guide to Retirement Planning

Any book by William Bernstein, Rick Ferri, Larry Swedroe would also be good.

I follow a Lazy Traders 6 fund slice and dice model. It uses very low cost index mutual funds that cover the total US and global markets with a small cap value tilt. Some people add REIT's and commodities to create a total portfolio. I dont use REIT's as I have other RE investments. I do add a small amount of commodities.

The only challenge I see for doing it yourself is determining your risk tolerance, what you should hold for an asset allocation and following your investment plan. I would be happy to help anyone who needs some guidance for free. It really is not hard to do and the savings really add up fast.

[Bavarian]

I buy individual stocks and tax free and taxable bonds from many countries. Some brokerage accounts I have are managed and I pay a fee based on value of portfolio, but no commissions. Other accounts are traditional. I also have an online trading account for cheap trades I pick myself. Have been using a stock picking service for awhile WSS, but I think my one ideas pay off at least as well with no cost. You don't need an investment advisor to find high dividend payers. Food is always good. and utilities. Just set a stop loss so you don't lose all your money. The days of the 5.5% passbook are over.

Pardon the typing, my right arm in sling after rotator cuff surgery last week.

[graciegirl]

...

[batman911]

If you invest in mutual funds, you will not find better than Vanguard for fees.

[Cedwards38]

I'm also a do it yourselfer, who uses only index funds, and loves Vanguard funds, along with some online stock trading at low cost. Fees can be outrageous, so I avoid them as much as possible. We all know the key to successful investing is not stock picking, but rather is asset allocation. If it sounds too good to be true, run like hell.

[lappy50]

I am hooked up with a group out of Texas called Money Matters. I have been very pleased since they do NOT buy and hold. They were OUT of the market in 2008 during the meltdown and were out for six months prior to this last rally.

They're motto is " We are not here to make you rich, but to keep you from getting poor!"