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There is nothing wrong with paying a fee as a % of assets. The good old guys at vanguard have concluded that advisors can be worth 1.5-3% in relation to what an investor would do on their own
Heck if you are dumb enough to pay a % of assets vs an hourly rate I guess there "is nothing wrong" with being shafted. Does 'nothing wrong' = legal? Yes it is legal but it is not smart.
Oh, Great. Thank you. In our discussion on the phone, I mentioned that I don't try to impress and he said that he had that impression of me by what I was saying.
I am actually seeing 3 different Retirement Planners to interview them, but so far I am most impressed by this one as he got straight to the point and we had a really good conversation discussing different options and he kept away from ideas that I had told him I would be uncomfortable with. I think the one I am meeting Monday will be a short meeting as he impresses me the least.
I promise not to do anything without due consideration and probably a few questions posted on the board.
Heck if you are dumb enough to pay a % of assets vs an hourly rate I guess there "is nothing wrong" with being shafted. Does 'nothing wrong' = legal? Yes it is legal but it is not smart.
It depends on what you are looking for. Active planning, assets allocation, reallocating and preventing you from chasing performance or panicking. It sounds like you may be hung up on paying someone who might be of benefit to you.
Do you think the low cost smart guys at vanguard are "dumb"?
Long way away from 'what to wear' but do keep in mind, the flat fee guy gets what he gets regardless of how well you do. The percentage guy makes more if you make more.(assuming an ongoing relationship)
Tis is not to be taken as coming down on one side or the other because this alone doesn't make one better than the other.
There is nothing wrong with paying a fee as a % of assets. The good old guys at vanguard have concluded that advisors can be worth 1.5-3% in relation to what an investor would do on their own
paying a 1% based on assets and not performance ,better have some great performance and value to go along with it.
i never understood the logic behind someone paying a fee for mgmt of their assets . i can see paying based on gains but getting paid for giving you a loss or no gains is quite silly to most of our thinking..
but having said that think about the following:
we can all cut the grass ourselves but many ,self included when i had the house had a gardner. the gardner does not charge you to mow only based on the difference in height of the grass to what it will be after it is cut.
we don't pay a cable bill based on how much we use it,.
for many it is the service of baby sitting their money they are paying for because they do not have the skill or want to do it themselves.
we can all watch our kids for free but yet many have nanny's right?
i guess it isn't the performance you pay for it is a baby sitter.
Last edited by mathjak107; 07-27-2014 at 04:47 AM..
paying a 1% based on assets and not performance ,better have some great performance and value to go along with it.
i never understood the logic behind someone paying a fee for mgmt of their assets . i can see paying based on gains but getting paid for giving you a loss or no gains is quite silly to most of our thinking..
but having said that think about the following:
we can all cut the grass ourselves but many ,self included when i had the house had a gardner. the gardner does not charge you to mow only based on the difference in height of the grass to what it will be after it is cut.
we don't pay a cable bill based on how much we use it,.
for many it is the service of baby sitting their money they are paying for because they do not have the skill or want to do it themselves.
we can all watch our kids for free but yet many have nanny's right?
i guess it isn't the performance you pay for it is a baby sitter.
Strange you don't see the value but it's all in the study you've posted many times. And pay only on gains? So in a really good year would you be okay paying 5%? I mean last year net of fees you could have still been in the 20-30% annual return range. Down markets really are where advisors are worth it and charging a fee based on assets still makes sense in losing years as you are paying less than prior years and I'd argue getting more value. The vanguard study talks about this specifically because of the avg investors tendency to bail at the wrong time. Also between management styles or active asset allocation canproduce smaller losses in down markets. Ie a covered call strat that was down mid 20%-30% did provide value or if I stopped you from selling out month after month when you called in, in a panic and reminded you we were on a 10, 20 or 30 year plan. You can call it a babysitter but there is a lot more counseling that goes on between the avg fa and client than youd think.
In point of fact, I've never met anyone anywhere ever who didn't think they were paying someone else waaayyy too much money to do their job. And these same people who think they are paying too much, also think that they themselves are very underpaid for the work that they do.
Such is life. I am happy to pay my retirement planner in any form as long as I get what I am after. I believe he will be able to help me accomplish my goal.
Jeans and boots all the way, look at Warren Buffet's brother. A farmer. A rich one, yeah, but a farmer.
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