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Investing is simple math. So the first question needs to be “Do you need an advisor because you truly can’t do this yourself or are just “refusing” to do this yourself?
Our kids will tell you that I’m always preaching that nobody cares more about your money than you do.
I’m currently trying to “guide” my sister-in-law through the “advisor decision”. She has about $750,000 most of which is managed by a big investment house. The 51 (!!!) mutual and ETF funds they have her in cost almost $600/year. The advisor fee adds another $5500. Yes, that’s $61,000 over the next 10 years and $120,000 plus by the time she is 77 (!!!). And I haven’t even addressed the capital gains taxes as they rebalance monthly.
So if you insist on burying your head in the sand when someone utters the word “investing” then sure pay the 1%. Or suck it up buttercup, learn how to invest in a lazy portfolio, and pay yourself $6 grand a year.
No, if you follow the advice that over the long haul you can’t likely beat the returns from investment in no load Index Funds.
Only if it’s keeping you from making big mistakes. If we assume you were going to put your money in a Target Date Fund appropriate to your age, then under almost any scenario that 1% will cost you over 15% of your final portfolio balance. It’s a pretty steep cost to pay for 30 or 40 years.
If all they are doing is move you’re money around using a robo system, they aren’t adding any value. I would much rather pay a fee for the service provided rather than pay a percentage of assets.
No. There are fee-only financial advisors who can do the job equally well. Mine charged $1200 for three sessions, well under a percentage of my portfolio.
Only if your own investing impulses really need restraint and you have less than $1 million in assets. If you are prone to shooting yourself in the foot, you probably are costing yourself well more than 1% a year. Following the advice of an advisor may help steer you away from the typical costly mistakes many investors make.
This depends on your level of assets. The larger your financial assets, the more likely the answer to this question is no. A good financial advisor can be worth it if she 1) puts your interests ahead of hers; 2) does more than just manage your portfolio; 3) keeps investment expenses very low; and (especially) 4) keeps you from making major behavioral mistakes.