Financial advisor fee

I think that there is an appeal to paying a certain amount for something - sort of an implied value.

I was always amazed at the people that "just felt better" in a higher priced Mercury even though it was a Ford with a different grill. :LOL:
 
travelover said:
I think that there is an appeal to paying a certain amount for something - sort of an implied value.

I was always amazed at the people that "just felt better" in a higher priced Mercury even though it was a Ford with a different grill. :LOL:
Click to expand...
LOL....I'm a car guy so I really get that.

Did you know the Pontiac Fiero rear suspension was the exact same as the FRONT suspension of a Chevy Chevette? It's true...I used to be an auto mechanic. Try ordering a rear ball joint for a Fiero, write down the part number, then call back and order a FRONT ball joint for a Citation. :LOL:
 
travelover said:
I think that there is an appeal to paying a certain amount for something - sort of an implied value.

I was always amazed at the people that "just felt better" in a higher priced Mercury even though it was a Ford with a different grill. :LOL:
Click to expand...


Not quite the same.... sure, the mechanical parts are the same, but the Mecury does have more 'stuff' inside... now, you can argue that the cost is not worth it, but it is not only the grill that is different...
 
I was recently in the same position as you are. About the same size of managed investment and the same annual fees. I got into semi-retirement and then retirement I wanted more control over things. Several years ago I took a portion of the funds (400k) and invested it myself. I found that my own investment picks were doing as well as those of the advisor.

The advisor raised their fees by about 4k per year and I decided to do it myself to avoid this increase.

I have learned much on this board and also by joining the American Association of Individual Investors along with some other publications and seminars.

I am now at Schwab which offers many educational seminars both on line and in their offices.
 
Speaking of Schwab and fees

I am confused about the fees at Schwab-
IF I buy a fund thru Fidelity they charge me $17 per purchase of mutual fund whether I buy $2000 or $20000 worth of the fund-
at Schwab they want $75-per fund transaction...
I get that the difference is not huge in the scheme of my portfolio size "percentage wise"---I just dont get why there is such a difference which "percentage wise" is actually 441% higher for Schwab.
 
urn2bfree said:
Speaking of Schwab and fees

I am confused about the fees at Schwab-
IF I buy a fund thru Fidelity they charge me $17 per purchase of mutual fund whether I buy $2000 or $20000 worth of the fund-
at Schwab they want $75-per fund transaction...
I get that the difference is not huge in the scheme of my portfolio size "percentage wise"---I just dont get why there is such a difference which "percentage wise" is actually 441% higher for Schwab.
Click to expand...

What in Gawd's name are you buying at Schwab? They offer no transaction fees on hundreds of funds in every conceivable asset class, an ever growing suite of their own ETFs that you can trade commission free, and access to who knows how many 3rd party ETFs that you can trade for $8 a trade or whatever it is.
 
urn2bfree said:
Speaking of Schwab and fees

I am confused about the fees at Schwab-
IF I buy a fund thru Fidelity they charge me $17 per purchase of mutual fund whether I buy $2000 or $20000 worth of the fund-
at Schwab they want $75-per fund transaction...
I get that the difference is not huge in the scheme of my portfolio size "percentage wise"---I just dont get why there is such a difference which "percentage wise" is actually 441% higher for Schwab.
Click to expand...


Sounds like a reason not to be at Schwab.... or Fidelity for that matter..
 
Texas Proud said:
Not quite the same.... sure, the mechanical parts are the same, but the Mercury does have more 'stuff' inside... now, you can argue that the cost is not worth it, but it is not only the grill that is different...
Click to expand...

I worked long enough designing that "stuff" that I know what was really different and what was glitter. ;)
 
Finance Dave said:
LOL....I'm a car guy so I really get that.

Did you know the Pontiac Fiero rear suspension was the exact same as the FRONT suspension of a Chevy Chevette? It's true...I used to be an auto mechanic. Try ordering a rear ball joint for a Fiero, write down the part number, then call back and order a FRONT ball joint for a Citation. :LOL:
Click to expand...

How about ordering GMC Sierra trucks, and then getting GMC Sierra trucks with Chevy steering wheels in them? True story.........:ROFLMAO::ROFLMAO:
 
Texas Proud said:
Sounds like a reason not to be at Schwab.... or Fidelity for that matter..
Click to expand...

That is the charge for DFA funds as they are not on the no charge lists....it adds little but the difference between them is notable.
 
urn2bfree said:
Speaking of Schwab and fees

I am confused about the fees at Schwab-
IF I buy a fund thru Fidelity they charge me $17 per purchase of mutual fund whether I buy $2000 or $20000 worth of the fund-
at Schwab they want $75-per fund transaction...
I get that the difference is not huge in the scheme of my portfolio size "percentage wise"---I just dont get why there is such a difference which "percentage wise" is actually 441% higher for Schwab.
Click to expand...

There is an easy explanation. Your DFA advisors belong to a broker/dealer who uses Schwab as a custodian. Schwab's DIRECT accounts have much lower fees. But, the broker/dealer wants to make a PROFIT, so they mark up the fees above what Schwab charges them to conduct business and it becomes a profit center for the broker/dealer. Schwab will charge $8 for a direct customer to execute a trade, but charge $15 to a broker/dealer using them as a custodian. Then the broker/dealer marks up the stock trade commission some and the advisor some more. $75 is high, our ticket charges are $15 on most of the ones we have to pay a charge on. We mark up from there but not that much......;)
 
No I dont think the $75 fee or the $17 are in any way tied to the broker or my advisor- that goes to SCHWAB or FIDELITY (We use Fidelity, but I shopped around to see where to have our account custodially held and asked those places the charges- without any mention of advisors or anything.)
 
urn2bfree said:
Speaking of Schwab and fees

I am confused about the fees at Schwab-
IF I buy a fund thru Fidelity they charge me $17 per purchase of mutual fund whether I buy $2000 or $20000 worth of the fund-
at Schwab they want $75-per fund transaction...
I get that the difference is not huge in the scheme of my portfolio size "percentage wise"---I just dont get why there is such a difference which "percentage wise" is actually 441% higher for Schwab.
Click to expand...
Fidelity's fees for MF purchases vary based on account balances, and which fund is being purchased. Merrill Lynch Edge account customers cannot even buy many mutual funds (EG ACITX) that are not on they're availability list.
 
urn2bfree said:
These forums have been wonderful for educating me. We have a fee only financial advisor and have about $2.5M under management... All in passive investments -DFA stock funds and Vanguard bond funds.
Reading the various posts and links found here I am concerned that our advisor may be overpaid. The fee structure is 0.5% of assets plus $2000 "planning fee" every year.
This seems excessive to me as I have learned of other alternatives, alas all out of my state but available nonetheless.
With passive investing the whole notion of charging more just for a bigger portfolio seems dubious to me. How much more work is needed to manage $2 million vs $1 million? $5000 more work? HOW?
Today -in anticipation of our portfolio review next month my advisor called to let me know they are looking to RAISE my planning fee! "Funny," I said, "because I intended to ask why it should not be lower." They hemmed and hawed claimed more money creates more liability. but come on, that still cannot justify these levels of fees. How much could liability cost for them? They are by statute protected by arbitration requirements and Fidelity is my custodian carrying liability as well.
Is it worth thousands of dollars to have an in town, face to face advisor rather than a similarly passive. FAM FRENCHmodel/philosophy advisor with low fees but out of state like Portfolio Solutions,or Evanson or Cardiff? Seems for a fraction of those thousands I could fly to those advisors if I really wanted to. they all seemed to do DFA fund mixes, tax leveraged and rebalanced regularly to maintain AA.
Any thoughts or experience working with out of state passive advisors?
Click to expand...
I have no problem using a fixed quarterly fee advisor who does passive investing using mainly DFA Funds. He's out of state, way out of state. I've met him once in seven years - three years after we put our assets with him. We had 2-3 1/2-1 hr phone conversations with him before investing thru him. His fees would amount to about 0.05-0.10% in your case I would guessimate. I find that amount worth it from the two minds are better than one view, due my respect for his knowledge, and because he's there for my spouse if I'm not. For 0.5%, I'd probably try to do it myself, but I find the 0.1% rounding error vs. above the benefits.
 
Not sure even where to start. FA's get a lot of disdain; may I even say hate?

My question for you: is your advisor providing you value-added performance AND SERVICE? Just like any advisor, whether medical, legal, or whatever, some charge more for more intense service. That should go without saying. Some use mass market technology with no client face time (Vanguard) and their service is not great (the advisor side, not the funds themselves). Some hands-on, high touch advisors are worth it to some folks who want that type of service model.

Not all advisors are crooks. Not all advisors sell things. Some advisors have a very long term record of outperforming at less risk than the market. Not that that will convince the angry ones on this board, but it's true.

Is it worth hiring one? That's an individual decision. If you want passive, it would seem to be a no-brainer to do it yourself.

Some outperform their benchmark. How? By superior asset allocation. By staying a step ahead of the market. It is possible, even with a passive model, to outperform a benchmark that they have given you (if any). Examine their performance over the last 4 years; it has been a roller coaster market and should give you an idea about their allocation skills.

So before you jump, give it some thought and examine: 1. their service provided; and 2. their performance.

And skip the hate you read from a few on this board.

Gray Fox
 
frequenttraveler said:
My question for you: is your advisor providing you value-added performance AND SERVICE? Just like any advisor, whether medical, legal, or whatever, some charge more for more intense service. That should go without saying. Some use mass market technology with no client face time (Vanguard) and their service is not great (the advisor side, not the funds themselves). Some hands-on, high touch advisors are worth it to some folks who want that type of service model.

Not all advisors are crooks. Not all advisors sell things. Some advisors have a very long term record of outperforming at less risk than the market. Not that that will convince the angry ones on this board, but it's true.

Some outperform their benchmark. How? By superior asset allocation. By staying a step ahead of the market. It is possible, even with a passive model, to outperform a benchmark that they have given you (if any). Examine their performance over the last 4 years; it has been a roller coaster market and should give you an idea about their allocation skills.


Gray Fox
Click to expand...


With all due respect, "superior asset allocation" are you kidding me.

If you are paying your so called advisor 2% total of your portfolio and your SWR is 4%. Fees are after everything like the ER's on mutual funds and 12b 1 fees and such. Do you think it's worth it to you to pay someone 50% of your income for advice. I'd love to know about the advisor that can make me 50%+ more on my money with the superior asset allocation, stop it your killing me.
 
frequenttraveler said:
Not sure even where to start. FA's get a lot of disdain; may I even say hate?
Click to expand...
Many get the same respect as used car, annuity and time share salesmen. And there are as many good, well-intentioned used car, annuity and time share salesmen as there are good and well-intentioned FA's. But who wants to kiss all those frogs to search for a prince when you can easily DIY?

By the way, what do you do for a living? :cool:
 
Last edited:
We can say that financial advisors have an image problem. If they could somehow fix their Guild and toss out all the Bad Apples, then maybe they would get more respect.
 
frequenttraveler said:
...FA's get a lot of disdain; may I even say hate?

...Not that that will convince the angry ones on this board, but it's true.

...And skip the hate you read from a few on this board.

Gray Fox
Click to expand...

Really? You're seeing hate and anger here? Sad.
 
Since the OP is already using Fidelity as a brokerage firm (if I understood correctly), why not use them as a passive advisor as well? They provide that service, and with a 2.5M portfolio, I think the fee will be less than .58%. And I beleive FIDO also absorbs all trading expenses in their fee structure. FIDO has brick and mortar in most larger cities. You get full access to several advisors for questions, and quarterly reviews (some by phone).

I'm a DIY'er using FIDO as a brokerage. I decided to look into this option just a few weeks ago, so I could give my DW some options, should anything happen to me.
 
Packman said:
Since the OP is already using Fidelity as a brokerage firm (if I understood correctly), why not use them as a passive advisor as well? They provide that service, and with a 2.5M portfolio, I think the fee will be less than .58%. And I beleive FIDO also absorbs all trading expenses in their fee structure. FIDO has brick and mortar in most larger cities. You get full access to several advisors for questions, and quarterly reviews (some by phone).

I'm a DIY'er using FIDO as a brokerage. I decided to look into this option just a few weeks ago, so I could give my DW some options, should anything happen to me.
Click to expand...
Would they give me access to DFA? And would they allocate me in the most tax advantaged way?
 
You must log in or register to reply here.

Similar threads

Midpack
Vanguard PAS $
Replies
8
Views
618
Koolau
Koolau
L
61 y/o in Atlanta, mostly retired
2
Replies
43
Views
2K
pacergal
P
donheff
Help finding a Financial Advisor
Replies
10
Views
1K
Markola
Markola
K
asset location and allocation
Replies
13
Views
897
Montecfo
M
T
Another Vanguard problem
11 12 13
Replies
305
Views
25K
MarieIG
M

Latest posts

Back
Top Bottom