Am I overpaying my financial advisor?

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:OP, a better option would be to meet with a financial planner, that will go over your estate plan, all of your insurances, tax planning , retirement planning and investment management for a year. After the year, you can decide if you need them further. If your life is not complicated, you might not need to see a financial planner till you are a few years from retirement. This approach will save you money in the long run.

OP here. This is what our FA did the first time we met with him. Isn’t it the same thing or very similar?

It depends on the level of diligence that was provided. How long have you been with them? Can you tell us investments the advisor put you in and how much money roughly is in them?

We’ve been with him since 2018 and this was all new to us at the time. We’re currently in our early 40s with two young kids and I just feel like everything is so conservative with him and we’re not making enough to justify his fees. To be fair, I have a higher risk tolerance than my husband but my husband has gotten on board with my more aggressive suggestions of investing. The main reason we signed up with him was because of the all of the pre-clearance requirements and we were just a bit overwhelmed with where to start. When the kids are done with daycare, we’ll be able to add even more cash in addition to what we contribute on a monthly basis.

[Anonymous]

We pay 1%. They also have access to funds that are not readily available to the public.

We don't want to spend time on managing our funds. My spouse had hired a FA to manage their portfolio. I resisted. Years later, theirs was doing better than mine, and I could not buy the same funds that they had. So, I switched.

We have about $3mil.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:OP, a better option would be to meet with a financial planner, that will go over your estate plan, all of your insurances, tax planning , retirement planning and investment management for a year. After the year, you can decide if you need them further. If your life is not complicated, you might not need to see a financial planner till you are a few years from retirement. This approach will save you money in the long run.

OP here. This is what our FA did the first time we met with him. Isn’t it the same thing or very similar?

It depends on the level of diligence that was provided. How long have you been with them? Can you tell us investments the advisor put you in and how much money roughly is in them?

We’ve been with him since 2018 and this was all new to us at the time. We’re currently in our early 40s with two young kids and I just feel like everything is so conservative with him and we’re not making enough to justify his fees. To be fair, I have a higher risk tolerance than my husband but my husband has gotten on board with my more aggressive suggestions of investing. The main reason we signed up with him was because of the all of the pre-clearance requirements and we were just a bit overwhelmed with where to start. When the kids are done with daycare, we’ll be able to add even more cash in addition to what we contribute on a monthly basis.

As was stated earlier, the pre-clearance should be a nonissue if you are investing in broad market index funds or ETFs. So, I wouldn't consider that a reason to stay with the advisor.

In terms of risk tolerance, you are still young and have at least twenty years before retirement. You could invest everything in stock indexes so long as you know you will not panic and sell it all off if the market suddenly declines by 20%. As you approach retirement, you could shift over to a more cautious 80% stock, 20% bonds or the more traditional 60/40 split.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:OP, a better option would be to meet with a financial planner, that will go over your estate plan, all of your insurances, tax planning , retirement planning and investment management for a year. After the year, you can decide if you need them further. If your life is not complicated, you might not need to see a financial planner till you are a few years from retirement. This approach will save you money in the long run.

OP here. This is what our FA did the first time we met with him. Isn’t it the same thing or very similar?

It depends on the level of diligence that was provided. How long have you been with them? Can you tell us investments the advisor put you in and how much money roughly is in them?

We’ve been with him since 2018 and this was all new to us at the time. We’re currently in our early 40s with two young kids and I just feel like everything is so conservative with him and we’re not making enough to justify his fees. To be fair, I have a higher risk tolerance than my husband but my husband has gotten on board with my more aggressive suggestions of investing. The main reason we signed up with him was because of the all of the pre-clearance requirements and we were just a bit overwhelmed with where to start. When the kids are done with daycare, we’ll be able to add even more cash in addition to what we contribute on a monthly basis.

OP, pull out your latest statement and provide the fund and dollar amount. That info is key to helping you figure this out.

[Anonymous]

Anonymous wrote:We pay 1%. They also have access to funds that are not readily available to the public.

We don't want to spend time on managing our funds. My spouse had hired a FA to manage their portfolio. I resisted. Years later, theirs was doing better than mine, and I could not buy the same funds that they had. So, I switched.

We have about $3mil.

So long as you are okay paying $30,000 a year plus fund expenses plus load fees for those special funds, okay I guess.

But wouldn't be worth it to me, particularly at just $3 million.

[Anonymous]

Anonymous wrote:We pay 1%. They also have access to funds that are not readily available to the public.

We don't want to spend time on managing our funds. My spouse had hired a FA to manage their portfolio. I resisted. Years later, theirs was doing better than mine, and I could not buy the same funds that they had. So, I switched.

We have about $3mil.

Op here. It’s good to hear another perspective in favor of a FA. However, to my knowledge, we don’t have access to funds that aren’t available to the general public. And our balance is much smaller.

[Anonymous]

Anonymous wrote:We pay 1%. They also have access to funds that are not readily available to the public.

We don't want to spend time on managing our funds. My spouse had hired a FA to manage their portfolio. I resisted. Years later, theirs was doing better than mine, and I could not buy the same funds that they had. So, I switched.

We have about $3mil.

You don't want or need funds not available to the public. These funds are high fees and lower returns in the long run. You are getting bamboozled. The big banks and brokerage firms are for people that do not know any better.

Did you read Jazon Zweig's article this weekend in the WSJ?

You are dealing with a salesperson that is putting you into cookie cutter portfolios.

Rule #1 - do not hire a FA to manage your portfolio. They are spending a few hours a year looking at your account and getting paid $15,000 per hour. For

Hire a financial planner that will help you with your entire financial life.

[Anonymous]

Anonymous wrote:

Anonymous wrote:Its fine, OP, everyone I know that works for a big 5 pays a financial advisor to handle their money, it's so much easier.

Op here. That’s exactly it. However, I’m wondering if we can just negotiate a lower fee, like someone else suggested at .85%.

The fees typically decrease as your assets increase. I imagine that once you hit a million, your fees will go down. This is very normal and I'm not sure why the people on here are freaking out. Totally, totally normal for someone in your situation.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:OP, a better option would be to meet with a financial planner, that will go over your estate plan, all of your insurances, tax planning , retirement planning and investment management for a year. After the year, you can decide if you need them further. If your life is not complicated, you might not need to see a financial planner till you are a few years from retirement. This approach will save you money in the long run.

OP here. This is what our FA did the first time we met with him. Isn’t it the same thing or very similar?

It depends on the level of diligence that was provided. How long have you been with them? Can you tell us investments the advisor put you in and how much money roughly is in them?

We’ve been with him since 2018 and this was all new to us at the time. We’re currently in our early 40s with two young kids and I just feel like everything is so conservative with him and we’re not making enough to justify his fees. To be fair, I have a higher risk tolerance than my husband but my husband has gotten on board with my more aggressive suggestions of investing. The main reason we signed up with him was because of the all of the pre-clearance requirements and we were just a bit overwhelmed with where to start. When the kids are done with daycare, we’ll be able to add even more cash in addition to what we contribute on a monthly basis.

OP, pull out your latest statement and provide the fund and dollar amount. That info is key to helping you figure this out.

OP here: here’s for our main account.
$186k in mutual funds: CMINX, EGRIX, PGINX
$265k in individual stocks. Lots of FAANG (to be fair, we asked for these a few years ago).
$248k in ETFs (lots of wisdom tree ones): XLK, EPS, DLN, DON, KOMP, EZM, JEPI, DWM, DES, FES, DEM, AOR.
$21k in cash.

Does this help?

[Anonymous]

OP, we went with a FA naively thinking they would beat "trading" to beat the market. All they did was put us in funds based on our risk level that they put all who have the same risk level, and that was it. I watched our money go up and down just like the rest of the market, and paid to do it! Plus, the fund fees on top of the FA fee.

So we moved out to manage our own and go up and down just like they did. The difference is as I have gotten better at it, I can buy and sell on top of the main portfolio. It has been in the individual stocks that we've made the significant gains. But I am actively monitoring.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:OP, a better option would be to meet with a financial planner, that will go over your estate plan, all of your insurances, tax planning , retirement planning and investment management for a year. After the year, you can decide if you need them further. If your life is not complicated, you might not need to see a financial planner till you are a few years from retirement. This approach will save you money in the long run.

OP here. This is what our FA did the first time we met with him. Isn’t it the same thing or very similar?

It depends on the level of diligence that was provided. How long have you been with them? Can you tell us investments the advisor put you in and how much money roughly is in them?

We’ve been with him since 2018 and this was all new to us at the time. We’re currently in our early 40s with two young kids and I just feel like everything is so conservative with him and we’re not making enough to justify his fees. To be fair, I have a higher risk tolerance than my husband but my husband has gotten on board with my more aggressive suggestions of investing. The main reason we signed up with him was because of the all of the pre-clearance requirements and we were just a bit overwhelmed with where to start. When the kids are done with daycare, we’ll be able to add even more cash in addition to what we contribute on a monthly basis.

OP, pull out your latest statement and provide the fund and dollar amount. That info is key to helping you figure this out.

OP here: here’s for our main account.
$186k in mutual funds: CMINX, EGRIX, PGINX
$265k in individual stocks. Lots of FAANG (to be fair, we asked for these a few years ago).
$248k in ETFs (lots of wisdom tree ones): XLK, EPS, DLN, DON, KOMP, EZM, JEPI, DWM, DES, FES, DEM, AOR.
$21k in cash.

Does this help?

Oh dear Lord. I just looked at the first one, CMINX. The A shares carry a front end load of 2.75% and the expense ratio is 1.22%. The C shares carry a level load of 1% (level load means you are paying 1% a year) and expense ration of 1.97%. I am pretty certain these fees are in addition to the 1% AUM fee you are paying.

Compare this to VOO (Vanguard S and P 500 ETF). No load and 0.03% expense ratio. In fairness, CMINX is a mixed equity bond fund, but, wow, those fees!

[Anonymous]

^^Meant to say your 1.25% AUM, not 1%.

Am guessing that going through all the other funds would show that they are all high load and high expense ratio. Not only that, you have far too many different funds.

Your financial advisor seems to be selling all of these to you to benefit his firm and him from all those fees. Plus the AUM. Borders on criminal for a $700,000 portfolio in my view.

[Anonymous]

Anonymous wrote:^^Meant to say your 1.25% AUM, not 1%.

Am guessing that going through all the other funds would show that they are all high load and high expense ratio. Not only that, you have far too many different funds.

Your financial advisor seems to be selling all of these to you to benefit his firm and him from all those fees. Plus the AUM. Borders on criminal for a $700,000 portfolio in my view.

Yup I looked at the second one and it's similar - expense ratio of 1.32%.

OP, run as fast as you can from this FA. Ironically an earlier poster was right about tax advice being something worth paying for, unlike someone to move.money around for you. As you sell these awful funds you will have some tax hits, might be worth sitting down with a good tax advisor for an hour to map out the best way to do that.

[Anonymous]

OP here. Ugh I feel sick hearing this. Just spoke with DH and advisor had recommended deploying the mutual funds slow and steady in case the market crashed. The mutual funds were supposed to just beat inflation and do better than a savings account while we slowly deploy. I guess it’s all relative to risk tolerance, and we’re not being aggressive enough. What if I just tell him to move it all to a cleared S&P 500 index fund? We have time to ride the waves and understand there’s no guarantee.

[Anonymous]

It is nothing to do with risk tolerance. It’s about being taken for a ride by your advisor.

His fees alone are $10k a year. On top of that he is making a fortune from load fees.

If you manage your money yourself you can choose whatever risk profile you want. Everything you described him doing would take a couple of hours at most a year to manage yourself. I know that because I do it for my wife and myself. We have about $1.5 million invested.

But I give you no advice. Recycling money from naive people to greedy people is one of the fundamental attributes of US capitalism, so I respect you for doing your part so well.