“My financial advisor made me money so I don’t mind the fees I
paid.” But did she make you as much as she
should have? If not, that $5,000 fee you
paid on a $500k retirement account doesn’t seem like a good investment. A simple balanced portfolio of low-cost
Vanguard funds returned over 17% in 2017.
So if you made 15% for example last year then you paid a $5,000 fee to lose
$10,000 relative to what you should have made.
Don’t be fooled by advisors who tell you that you had a great year and
made 10%. Of course the right portfolio is different for each person and
someone requiring a lower-risk portfolio would have earned less but the return
above is what many 50-something couples should have earned in 2017. (This hypothetical starting portfolio is 50%
US stocks/20% international stocks/25% bonds/5% REITs.) The Vanguard Target Retirement 2035 Fund did
even better with a 19% return. The
bottom line: If you’re paying high fees, make sure you are getting your money’s
worth. And ask me how sensible advice from
an hourly, fee-based advisor may provide you with a different option.
- Larry Pike, CFA, Client Priority Financial Advisors LLC
- www.clientpriority.com
