Reply to Fees for a managed money account of 2+ million?

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[quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous]No more than 0.5%[/quote]

Really? The person who was recommended to us has a fee of 1.25%. We thought that seemed high.[/quote]

That's reasonable as long as he can beat the market by that margin. Can he do that? [/quote]

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/

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