Depends on the level of service. At that price point he should be washing your car and picking up the dog poo in the backyard.
intercst
6 Likes
To me if your advisor spends two hours per month with you, that is worth $500/hr or $12K per year. (I’d be surprised if you get that much of his time.) Mostly you get put into a group of investments managed by others that match your goals.
Depends on how large your account is but most over pay.
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Some folks do need a financial advisor, and if so they should employ one who charges by the hour (though $500 per seems a bit much).
$12k on a $12m portfolio, that’s reasonable.
$12k on a $400k portfolio is an absolute rip off.
We’re at that time of life when many of our peers are retiring, or thinking about it. So many are talking about meeting with their FA, and worrying about if they have enough. I tell them of the 4% rule (of thumb) and how fees to the FA deduct from their income.
Gross Income 4%, FA fee 2%, net income 2%.
Your FA is taking half your income.
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Hopefully 4% is your withdrawal rate, not your gross income.
DB2
1 Like
3% of the portfolio value? If the average market return is 12% you are giving away one quarter of your profits. Sounds steep to me. The money might be better spent on learning to invest. Buy/read books by and about the best investors past and present. How do they do it? Then develop a strategy that fits your needs, likes, and abilities.
The Captain
2 Likes
I would just say “yes’”, but the Motley Fool software insists that I use at least 15 characters, so YES YES YES YES YES YES YES.
PS: If he has put you in proprietary mutual funds with a 2% fee, then you are going negative in an even market, super-negative in a down market, and only slightly positive in an up market.
Did I mention “YES”?
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My informal godfather was a brilliant physicist who had a hand in the invention of the “rotating drum memory”, the first relatively fast with decent storage memory for digital computers. He sold his rights, started investing, and his “advisors” did him wrong. He put his three kids, aged 5, 8, and 10, into a competition. They outdid his advisors. His second kid fell in love with the game and outdid the market for years. “It ain’t rocket science”, the kid said (my dad was the rocket scientist and a horrible investor), but more like “raising hogs, chickens, or sheep”.
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Note that fees are often scaled down w account size. Larger accounts may pay 0.75% or less. But that can mean annual fees over $100k. Then $12k starts looking attractive. Maybe even reasonable.
By comparison rocket science is easy, no humans to muddle up things! I wish i had discovered covered calls much earlier. It’s not investing, it’s a casino where the seller plays the house and the buyers place bets. The rules are clear and don’t depend on the whims of emotional humans. I’ve done many things but nothing as complicated as the stock market. I say that after spending more time learning about the market than on any other activity. IBM taught sales in three weeks - In Cuernavaca, Mexico!
The Captain
1 Like
David,
Ed Hall age 65 in the late 1970s invested all in Texas wild catters. He lost all. But he was so valuable he moved into bigger digs in California to study making electricity out of seaweed. He probably succeeded but that does not mean it was economical at that time.