Fees for a managed money account of 2+ million?
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Anonymous
Always love the people that think they are investing gurus for owning the 5 largest stocks! |
Anonymous
This. Financial advisors are like your primary care doctor. They are trained in medicine and can bring in the right specialist (estate lawyer, CPA, etc.) based on your needs. Works well for the layman. If you are a Nurse practitioner yourself, you likely don't need a PC and know which specialist to go to. Most of their thinking is outsourced and they are, for the most part, finance-educated salespeople. |
Anonymous
| Almost no full service advisor is charging 50 bps on 2 million. Fat part of the bell curve is 75 bps to 1. I don’t think you would even get 50 bps from a discount shop like Schwab or Fidelity. |
Anonymous
OP here- What does bps mean? |
Anonymous
basis points = .01% |
Anonymous
| These advisors are in no way worth 50 bps. Vanguard. I feel bad that this industry even exists. |
Anonymous
Same here! |
Anonymous
| Robinhood has zero fees. |
Anonymous
That's reasonable as long as he can beat the market by that margin. Can he do that? |
Anonymous
It's more than overcoming the long-term impact of the AUM fees, but also overcoming the cost of the investments themselves (if they are high expense ratio funds), including the tax burden if investments are actively managed, whether funds or individual stocks (i.e. they will generate unwanted taxable capital gains). Many AUM-type investment managers sometimes place clients into expensive funds affiliated with their employer, funds which may not be in the client's best interests for a host of reasons. Such portfolios are also often complicated, consisted of many individual stocks and mutual funds which do not always make up a coherent asset allocation model. Another vote for Vanguard's PAS. The investment fee is 0.3% for the first $5M under management, less for larger portfolios. Investments will be relatively few in number (typically 2 - 8 ETFs) easy to understand, and usually consist of very low cost widely diversified index funds. Some proprietary actively managed, but still relatively low cost funds are becoming available for clients who want to "tilt" or diversify in a certain direction, and automated tax-loss harvesting is also being implemented for PAS portfolios. You don't get in-person hand-holding, which keeps costs down, but interact whenever desired with an advisor by phone, email, or video conference. Portfolios are reviewed regularly with clients, to allow for adjustments as client circumstances and goals evolve. In contrast to the go-it-alone crowd, PAS relies on Vanguard's proprietary Global Capital Markets Model in attempting to optimize portfolio construction and maintenance for clients. https://static.vgcontent.info/crp/intl/auw/docs/resources/Vanguard_VCMM_brief.pdf?20150814%7C091500 Past performance for PAS, and for other robo and hybrid robo services, is discussed in the Robo Report: https://www.backendbenchmarking.com/the-robo-report/ |
Anonymous
| Managed accounts or mutual in general can see benefits in down markets. A lot of advisors will sell automatically when the market falls quickly, say 7% down. But then they lag the market putting that money back in |
Anonymous
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That's called "market timing", and rarely works out well for the investor.
https://www.forbes.com/sites/jimwang/2020/03/06/6-reasons-why-market-timing-is-for-suckers/?sh=58c5509149d8 https://www.schwab.com/resource-center/insights/content/does-market-timing-work |
Anonymous
Fire any advisor that locks in losses LOL. I can't believe an advisor would actually think this is smart. It is the exact opposite of what you should do. - an advisor |
Anonymous
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All I can say is that 1.25% on $2M is exceptionally high - perhaps you misunderstood and it is tiered starting at 1.25% for the first $500K then 1.00% for $500-$1.5M etc. Different advisors offer different services. My "concierge" financial advisor is 1% up to $1.5M then .80% AUM $1.5-2.5 - they not only do my investments, but also quarterback pulling information from CPA, estate attorney etc -their firm also has CPAs so I don't have to pay to get quick tax advice and questions answered. We have had a financial plan for years, and now that my children are "adulting" they are working with them as well. Agree, you get what you pay for - but the value I get is more from the service, education and attentiveness, rather than insane returns ... Although, we have done well and are invested in different things! Good luck - take a closer look at this 1.25%! |
Anonymous
| I'm a financial advisor and as your accounts grow, you should pay less. I'd charge a client with $2 million .7-.8%. |