Just wondering what other people pay. Schwab used to charge 1% up to the first 5 million AUM, 0.5% for the second 5 million, etc. Wells Fargo double that.
I think 1% is standard for managed. Itās a lot less for robo or āadvisedā or age based fund.
I donāt use one. Fees just too much (for me). If I were Iād go robo.
Some obviously want that 1:1 and that has fees.
I am trustee on my friends daughter account (he passed) and sheās with an advisor at .8% flat plus all the commissions. They fiduciary at Schwab. Personally Iām not a fan.
Year after year itās a lot.
But thatās just my personality.
They are in a ton of asset classes Iād never dream of so in that sense theyāre earning the $.
But returns have been small. And thatās been the target. Less risk.
Iād have just bought muni bonds.
Everyone is different or has different comfort levels but I think 1% is standard.
But Schwab will have other offerings, as good and cheaper as will others.
Good luck.
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We pay 1% at Wells Fargo. That gets us individualized portfolio management from a VP who meets us in our home annually. We also get preferred VIP rates on mortgage loans and other products. Itās expensive but we tried DIY early on and failed miserably.
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Weāve paid 1%, and .8%. We were ok with that when younger, primarily for the planning and advice that came with the portfolio management. We were more inexperienced, and our lives were more complex. We also never had all the savings under one advisor. About 1/2 was separate with employer 401kās.
But now, nearing retirement, our savings has grown, so the cost is much higher for little difference (if not less) advice. Weāre about to simplify to index funds and an hourly advisor to help with occasional questions.
I see no reason to keep paying AUM with index funds.
If the hourly model (or the advisor) doesnāt work, we might consider moving to Vanguard Personal Advisor (.3%). I prefer an hourly advisor, but theyāre hard to find.
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My struggle on the account that I"m a trustee - so I donāt meddle other than an occasional comment to the owner is - you donāt just pay the .8% or 1%.
Each fund has an expense ration - and while they use cheap ones, they still have expense.
And each trade they make - they use Schwab as a fiduciary and I think a lot of independents do - for certain fund families there is a $12 trade fee.
When you have a lot of $$, itās not much - but it does add up and if youāre at 1%, youāre really higher.
There are cheaper options of course. But like anything, is it worth it to you?
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Are they working with an independent advisor who has a business outside of Schwab, a fiduciary, who manages their accounts thru Schwab? Or are they using an advisor (eg. broker) at Schwab? The difference isnāt just semantics. Independent fiduciary advisers may find a home at Schwab, but someone dealing directly with a Schwab employee (broker or advisor or whatever they like to label themselves) does not have a fiduciary relationship with their broker. Nor does anyone working with a broker (better understood as a salesperson).
Also the plethora of asset classes is part of what advisors, even true fiduciaries, like to do. They want to make investing seem so complicated that it isnāt something you could do on your own so you stay with them and keep paying that 1% or so fee. It doesnāt need to be that complicated. Someone saving for a distant retirement is likely fine with a 3-fund portfolio as discussed on Bogleheads. Someone with more near-term needs such as a child probably shouldnāt be heavily in the market, instead in short-term bonds including inflation-protected TIPS bonds.
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Sorry - they are a major NJ firm (that has expanded). They are independent - but run their brokerage services through Schwab (so your first example) - and use a lot of funds - DFA is one. And mutual funds - where Schwab charges a small fee (usually $12). Itās not Schwab - but her account is Schwab. In fact, their brand name is on the bottom right of the statement. She pays .8%. quarterly.
It was a child whose dad passed who was my best friend in college.
They do a lot of trading - looking - she has, for example, a bunch of DFA - Emerging Markets, Emerging Markets Value, Global Real Estate.
Bond funds of different duration.
They send out all the quarterly newsletters. They have seminars.
They are very approachable so I can see someone liking a firm like this.
I just think - you find indexes in four or 5 classes and save the fees which bite into the return (and are more than the management fee).
Or in what sheās seeking - buying muni bonds.
I feel like the account should be double or near what itās become. In my mind, it could have been invested in income producing assets and sheād have had enough to live her entire life if she wanted - but no longer unfortunately. And they pull from it to pay tuition at a very expensive school.
But I will ask occasional questions but mainly stay out of it as the mom wants this. Itās an uncomfortable place to be - I have concerns and have expressed them but in the end, I want to stay distanced because the mom is of sound mind, etc.
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TSBNA-- make sure you keep a paper trail of the questions youāve asked (just archiving your emails in a folder will work). You donāt want the daughter waking up at age 30 and realizing that her nest egg has turned into a āplay moneyā account of 10K. She wonāt be coming after her mom- sheād be coming after you.
Paying tuition out of it is likely inline with your friendās intentions so youāre fine there. But watching it dwindle due to overactive trading, fees, and an overly complex diversification strategy is aggravating- just keep a record of your suggestions and the momās āthanks but no thanksā.
I have a cousin who had a similar situation-- and the āyouāll never work againā turned into an āemergency when neededā fund. Fortunately, the uncle in charge was a meticulous record keeper, including meetings with the bank trustee where he suggested consolidating into no-load funds, avoiding anything which required frequent trading (and fees) etc.
Youāre a good friend to do this.
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In our wealth-growing years, we mostly invested via 401K accounts and self advised (except a few consultations with a freebie work benefit Merrill Lynch rep). As retirement got closer we went to a few inexpensive 2-night retirement planning workshops, including consultations. That was great for forcing us to organize our accounts, but we didnāt love any of the instructors/planners. And conceptually we did not want somebody who would be making money only through trading.
By the time we retired, we had signed up with a fee-only planner.
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1% is the general rule of thumb.
Pretty much the entire financial services industry has gone in that direction once commission trades went to little and now zero.
To me, the real question is what do you get for that 1%? Everyone charges pretty much the same so go with someone that gives you real advice.
Do they help you with tax strategies, estate planning, social security and medicare planning?
Good advisors can deliver value - itās up to the client to demand better advice for what they pay in addition to asset management (which most advisors farm out to money managers).
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0.8% every quarter is 3.2% every year, which is significantly higher than most fees iāve been seeing or hearing about. That plus the frequent trading sets off warning bells for me. Iād be very uncomfortable.
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.8% annually. So on a $1 million dollar Balance, $2k Per quarter.
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Iād still be concerned about frequent trading. This young beneficiary can withstand a reasonable amount of risk as nd thereās no apparent reason for frequent trades other than churning commissions and creating taxable gains and losses.
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I donāt love it. In the grand scheme of assets itās not huge.
Iād have doubled the account - because Iād have had it in muni bonds - but thatās me. Even for a youngster, make $40K one year, invest that $40K and at 4% now itās 41.6K. Of course munis were horrible the last 5 or 6 years.
Itās in mainly conservative stuff - but yeah - not a fan. But not my money. Iām simply a trustee.
Iāve raised concerns but in the end, mom owns the account in trust for her daughter - and I try to offer advice but not steamroll.
Iām not a fan of money managersā¦in general.
They are nice people - doing what theyāre supposed to.
But in general, I think people should learn about the difference between a stock and bond. Yes, there are more products - but if someone is buying a TV - they learn all about the difference of 8K or 4K - or go back 15 years, plasma to LCD. They have half a million or million dollars but play dumb?
btw - all of us in tech stocks (me included) - while they outperformed for years, donāt we wish we were in the S&P 500 now where our losses would be less.
Buy a few indexes (mainly large, some medium, small, intl) - add some quality muni bonds at whatever % (not a fund), and call it a day - thatās my thought anyway.
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