Reasonable Fee Rate for Assets Under Management

[Anonymous]

We've been working with an advisor for about 5 years. During that time, our portfolio has grown from $2M to $5.2M due to performance and some additional investments made from our money market account.

At what point should we expect a rate adjustment based on investments? We are currently paying .5%. Please, I am not looking for advice on whether or not to use an advisor...just whether a rate adjustment is warranted, or if we are already paying a reasonable rate for that level of assets under management.

Thank you in advance.

[Anonymous]

Anonymous wrote:We've been working with an advisor for about 5 years. During that time, our portfolio has grown from $2M to $5.2M due to performance and some additional investments made from our money market account.

At what point should we expect a rate adjustment based on investments? We are currently paying .5%. Please, I am not looking for advice on whether or not to use an advisor...just whether a rate adjustment is warranted, or if we are already paying a reasonable rate for that level of assets under management.

Thank you in advance.

OP here. I probably should have added that the advisor provides the following services:

Retirement planning
Tax planning
Holistic management of portfolio considering other assets not under his management (401K, deferred comp, money market)
Assistance with estate planning
Miscellaneous

[Anonymous]

You are paying a good rate for the amount under management and that is good performance also. I am anti financial advisor but yours is doing pretty well.

Just make sure he doesn't try to sell you insurance products and also check the expense ratios on funds he sells you and how much you have to pay in capital gains annually from rebalancing.

[Anonymous]

Anonymous wrote:You are paying a good rate for the amount under management and that is good performance also. I am anti financial advisor but yours is doing pretty well.

Just make sure he doesn't try to sell you insurance products and also check the expense ratios on funds he sells you and how much you have to pay in capital gains annually from rebalancing.

Thanks, but not sure you can really judge the performance considering part of the increase was deposits into the portfolio from our money market.

That said, what do you think would be the next tier of AUM where we could expect a rate reduction? We are considering moving the 401K over, but wouldn't even do so unless there was a rate reduction. The 401K is worth about $3.5M. We would either bring the entire amount over, or do it gradually with Roth conversions.

[Anonymous]

with your net worth OP, you should be on bogleheads where people are serious about finance, not DCUM, where discussion primarily focuses on topics like "is $600K HHI mean I'm rich?"

[Anonymous]

.5% is very very competitive for an AUM under 10 Million; to the point where I would be looking at the fees for the products they have you in with a fine tooth comb.

I wouldn't expect any fee decreases without bringing 2-3x more to the table. Even then I'm going to be looking at how long we have been working together and how easy/hard you are to work with. Keep in mind I'm getting ~.3% for $50+ Million from institutional investor that I have to do zero for outside of send statements and tax documents yearly.

[Anonymous]

Why would you give this advisor your 401k to manage? That doesn't make sense to me. Isn't it managed by whoever manages the 401k?

[Anonymous]

Anonymous wrote:.5% is very very competitive for an AUM under 10 Million; to the point where I would be looking at the fees for the products they have you in with a fine tooth comb.

I wouldn't expect any fee decreases without bringing 2-3x more to the table. Even then I'm going to be looking at how long we have been working together and how easy/hard you are to work with. Keep in mind I'm getting ~.3% for $50+ Million from institutional investor that I have to do zero for outside of send statements and tax documents yearly.

This.

[Anonymous]

Anonymous wrote:

Anonymous wrote:You are paying a good rate for the amount under management and that is good performance also. I am anti financial advisor but yours is doing pretty well.

Just make sure he doesn't try to sell you insurance products and also check the expense ratios on funds he sells you and how much you have to pay in capital gains annually from rebalancing.

Thanks, but not sure you can really judge the performance considering part of the increase was deposits into the portfolio from our money market.

That said, what do you think would be the next tier of AUM where we could expect a rate reduction? We are considering moving the 401K over, but wouldn't even do so unless there was a rate reduction. The 401K is worth about $3.5M. We would either bring the entire amount over, or do it gradually with Roth conversions.

Isn't this a question you can directly ask your planner? "We're thinking about moving this $3.5m 401k to you, but we'd like to see a fee reduction at that level; what can you do for us?"

[Anonymous]

Anonymous wrote:

Anonymous wrote:.5% is very very competitive for an AUM under 10 Million; to the point where I would be looking at the fees for the products they have you in with a fine tooth comb.

I wouldn't expect any fee decreases without bringing 2-3x more to the table. Even then I'm going to be looking at how long we have been working together and how easy/hard you are to work with. Keep in mind I'm getting ~.3% for $50+ Million from institutional investor that I have to do zero for outside of send statements and tax documents yearly.

This.

+2

[Anonymous]

OP who are you using? This is the most competitive rate I’ve seen (if you aren’t getting taken advantage via “kick backs”). Everyone we’ve spoken with is 1% and won’t touch the tax stuff or estate planning as part of that fee either.

[Anonymous]

Our fee went to 0.5% (from 1%) after we hit something like 10-15 million, so it sounds like you're doing well with it.

[Anonymous]

That's really good. we are at .75 with about 7m for similar services. We are with a small firm and they are down the street, we pop in when we need, and they've been very helpful. I'd do it myself but my fear is that if I die my spouse (disorganized and no interest/clue in personal finance) will not handle thigns well plus most of the money is in separate trusts for my kids so....I dont think you will find a full service firm that offers less than .5---you could pay less for like a fidelity manager (my mom had one and they just put her in a million overlapping funds, but didn't do much else beside some automated tax loss harvesting).

[Anonymous]

Vanguard offers .3. Very respectable.

[Anonymous]

I’m at .80% for about $3 million under management so I’d say your place is very competitive.