That’s great that you found the information interesting, and of value I hope.

The fee of 1.25% needs to be assessed against what services you need and what is being provided. The first question to ask yourself is, what services do I need? If it’s management of your investments only, then talk to two or three investment managers and compare their services with their fee. For instance, do they provide quarterly performance reports? Who custodies (holds) your money? In my opinion, it’s better to have another firm custody your assets. Then you receive a report from that firm which you can compare to the advisors reports. A nice cross check. 1% to 1.25% is a typical range for firms that use actively managed mutual funds or individual stocks and bonds. In addition to the management fee you are paying the expenses inside the mutual funds and transaction costs. Total feels ratchet up fast and make it more difficult to grow your portfolio. Ask about those other fees, as well. It’s your money so never hesitate to have a firm show you total expenses, e.g. management fees plus mutual fund internal expenses, and what you will be paying for transactions, either for mutual funds or for individual securities.

If the firm is both managing your money and other aspects of your financial life, they may charge an ongoing 1.25% for intermittent financial advice. You may be better off with a lower management fee from a firm that specializes in investments, and paying separate for specific financial advice from a firm that specializes in financial planning. Financial planners aren’t necessarily highly knowledgeable in investments, and visa versa. Check experience and credentials.

For comparison, and a plug for my firm, we charge .5% (1/2 of 1%) annually for a $1 million portfolio. Low cost, tax efficient funds are used to build the investment portfolios. The entire portfolio management fee for a $1million portfolio plus fund expenses may be 1% or less. We custoday our assts with a firm that has low transaction fees.

We charge a minimum fee of $500/qtr. To keep the annual fee less than .7%, we suggest households with less than $285,000 use our hourly services.

Quality of management, which includes portfolio management knowledge and experience, coupled with lower costs are both very important for growing your assets. Too often people are nervous about asking questions, likely concerned they will insult an advisor. If an advisor gets upset, move on. Good communication and forthright information are signs of an advisor who respects the advisor/client relationship.

Thanks for reading the blog.

Best of luck.
Rita Janaky

I’m pleased you found the information helpful.

May we soon enjoy a market turnaround.

Rita

Stocks have a long-term annual return of about 12%. Some of those years had returns over 30%, while other years the market is down 20% or more. No one can predict how the markets will perform over the short-term. Investors wanting a bigger retirement nest egg need to balance the potential for growth with the potential for loss with not enough working years to recover.

Unfortunately, these markets are going to push some people’s retirement dates out further into the future. More attention will be placed on reducing expenses in retirement, like paying off mortgages and credit card debt, to reduce the level of withdrawals needed.

Investors with significant allocation to stocks and who are closing in on retirement are suffering a lot right now as their portfolio values fall. Each will have to assess his or her particular situation to decide the best action plan. In the past markets have typically recovered in less than 3 years. If investors sell now, they are not in the market to enjoy the rebound. An investment advisor can guide individuals through the process to set an appropriate asset allocation strategy.

How would you quell concerns from investors who have a significant allocation in stocks for the growth component because they don’t have too many years before retirement?

Thank you,

Brent

I also highly recommend BizTrader.com, which is this online global marketplace where you can invest in, buy, and sell a business. It’s inexpensive to post your business (often free), and I know brokers use it as well. You can even use it to find a broker. Check it out and good luck!