Am I crazy to consider paying advisor fees?

[saluki9]

To me the main issue with FAs seems to be the cost. The conventional percentages paid seem way out of proportion to the service rendered. If the conventional % fees (at least for >$1M accounts) were much lower, it wouldn't be such an issue.

Um - that is if the issue of fiduciary responsibility is also addressed. And the tendency to put clients in funds with high ERs due to conflict of interest. And the temptation to "churn" accounts.

Audrey

The problem is that the services rendered can vary so much. It runs the gamut from firms that don't even return phone calls all the way to firms offering family office type services. For the latter I've seen and worked at places where people get every cent and more than they pay for.

Also, I can't see the temptation to churn a fee based account. What would there be to gain?

 

[free4now]

The only reason I could see paying $10-20k/year for a financial advisor would be if they were able to convince the client to do better timing moves than the client would be able to do themselves. That comes down to making sure the client is comfortable and knows the long term reasons for their positions, so they can buy and hold. Novice investors even if they may be able to get the original assett allocation right simply don't have the cojones to buy and hold through a downturn without handholding.

 

[kumquat]

Uh no......I am familiar with how Chase Bank charges clients...........

Apparently not

I believe kumquat is correct. I initially interpreted it as ... if my total invested assets were over $1M then it would only cost .85% for the entire investment ... but the Chase FA corrected me and said that it was cumulative and I would pay 1.6% for the first quarter million, 1.35% next quarter, etc. So, I believe Kumquat is correct in what the fees would be. For whatever that is worth.

No comment on how much the rep makes versus the bank? Interesting..........

Who cares about the division of costs I'm not going to have.

Best advice? Stay far away........

From Chase, or all FA's?

 

[chinaco]

Why use an investment adviser?

One can get a basic investment book and replicate the generic knowledge by themselves... provided they just follow the advice.

Whadaya you thinkin'?? Your gonna to get Warren Buffet? If you want Warren... just invest in Berk Hatty... it's cheaper without a middle man scoupin' out "A Taste" [ in my best impersonation of Tony Soprano's voice]

I believe that the average adviser will not yield better results than the indexes the underlying investments track... If this is true (and I believe it is), then (aside from luck), I would need to land the long-term above average investment adviser to improve my investment performance... not to mention to cover the additional fee.

What do you think the chances are that you (or any other middle class IRA/401k investors) will wind up with the above average adviser in "Podunk Wherever USA"... or even in a large Metro Area?

IMO - An actively managed VG fund is lower cost and likely to be more effective over the long haul. Using financial and estate planning advisers for issues other than handling or managing investments is another matter.

I do not use them, I prefer self education. If I did use one, it would be for a fee for specific advice and it would probably not be a recurring event/fee structure.

I would never give an adviser direct control of my assets.

If for some reason I felt compelled to turn over control of my assets, it would only be with a very large, well known, well regarded and regulated financial institution.

 

[FinanceDude]

If for some reason I felt compelled to turn over control of my assets, it would only be with a very large, well known, well regarded and regulated financial institution.

Well, there you go..........Chase Bank gets another client........

 

[FinanceDude]

I don't know FD your way seems odd. If I have $999,999 I pay $11,000/year if I have $1,000,001 I pay $8500. That isn't how most fee structures work I've seen in the financial world.

Maybe you could pull $2 put of your wallet to save $2500 a year? Most people would........

 

[kumquat]

$4375 if you use the OP's numbers, but who's counting?

 

[easysurfer]

Another thing to consider: the advisor may appear like he is good. But be careful to not fall for the halo effect.

Kiplinger.com

 

[FinanceDude]

Another thing to consider: the advisor may appear like he is good. But be careful to not fall for the halo effect.

Definitely not a problem with the folks on here.............

 

[easysurfer]

If there are folks who use the professional advisors, it would be intereting to read what advice they are giving during the crazy time of the market freefall. Were they running for the hills themselves? Were they screaming, buy buy buy? Would be interesting.

 

[chinaco]

If there are folks who use the professional advisors, it would be intereting to read what advice they are giving during the crazy time of the market freefall. Were they running for the hills themselves? Were they screaming, buy buy buy? Would be interesting.

I talked to a person I know that uses an adviser. The person was in the mid-fifties. The adviser pulled this person out of the equity market during the meltdown and eased them back in... late '09 or early '10.