What Is The True Cost of a 1% AUM Investment Fee?

[@rob_berger]

Here's the article I wrote on this topic: robberger.com/how-should-we-evaluate-financial-planning-fees/

[@troutdude891]

Rob, as always good advice. I had a friend once put the AUM fee in perspective which really resonated with me. He said you are supposed to spend 4% of your portfolio in retirement and if you pay 1% to an advisor, that's 25% of your allowable spend going to the advisor.

[@JohnWisconsin]

I've been telling people that for years and they just don't believe that their "really nice advisor" is doing that. "But it's only 1%." At a minimum it's about 12.5% (1% of 8% annual returns).

[@alk672]

Yes, exactly. Also, if you calculate advisor’s compensation per hour they spend on your account - it will add up to multiple thousands per hour, especially for larger accounts. It’s a scam.

[@debratateisu92]

Completely agree!

[@johnbrown1851]

1%=25% ......if you are withdrawing 4%of your portfolio annually.

[@johnbrown1851]

You might be paying your advisor more than you are paying in taxes if you are paying 1% AUM

[@littlered4122]

Thank You Rob, people like you help my Wife and I manage our own 7 Figure Portfolio. We give no fees no anyone, well besides a few .04 ETF Expense Rations.

[@you78750]

1% of one million is $10,000 and 1% of 2 millions is $20,000. Extra $10,000 for the same amount of work for the first million.

[@ralphparker]

At some point it is the same amount of work no matter how much more you have.

[@robsimon6514]

Timing is everything. Thanks for your commentary. I have spent my career in corporate accounting for a small company for the past several years, but did not want to assume I had sufficient knowledge in the personal investing side of things and wanted an independent review. My wife and I recently met with an advisor. Although we appreciated some of his observations, we did not find that his plan was all that different than our own and the historical returns in his plan were very comparable to those we had achieved without paying a 1% fee. To his credit, he was very upfront and clear about the fee structure and asked many good questions before producing a proposal. Ultimately, we decided to continue to manage our portfolio on our own. In fact, I will have more time in retirement to monitor things and will enjoy doing so. Thanks again.

[@rickdunn3883]

@Rob Berger. Spot on. Folks remember: "Money Doesn't Grow on Fees."

[@justamanwithbeliefs]

I'm 53. Been saving in my 403 B Fidelity for 7 years now as a doctor, my goal is to retire in 5 years with a 7 figure net worth. I already own a house, but keen on buying a second one. I know it's a lofty goal, but I'm now looking towards the stock market to fuel it up.

[@everceen]

not an advisor too and not against the use of one but personally, with more investing tools than ever before, financial advisors should get back to cold calling and free market opportunities to remain relevant, I dont see anyone paying to seek their services anymore

[@raymiller764]

@evelynlukmon where is the laugh emoji

[@robsteal3887]

They argue against the fees because that's their bread n butter. So of course they defend it. And at some point you stop buying diapers, but AUM lasts forever if you keep using a advisor. Apples and oranges, but bottom line, if you have index funds you don't need to pay someone to sit there and watch them for you.

[@LJ-jq8og]

💯

[@cruz3076]

I bought me some TSLA, PYPL and SOFI last month. Investors are preaching buy the dip, some are selling without a concern should I too? I am asking because after a pretty good run Q1. I am up to 251k from 180k at the beginning of Q1 thanks to the likes of AMD and TSMC.

[@vincentchan5773]

the mirage caused by inflation is beginning to affect the mind of investors, studies found that investors undervalue stocks in the presence of high inflation just buy the dip, DCA with caution, maybe see an advisor

[@Jones21554]

Yes, it can also be brought down to the fact that Investors will make the same error, in reverse, when inflation and interest rates start to come down. That’s why a foundation of a major buy signal should currently being built.

[@cruz3076]

​ @KevinCollins Did some research on Glen, looks really sound. Thanks for sharing this. I just scheduled a call, I hope for feedback.

[@JoshawnWilliams-s7b]

Hi what is the fee you are charged for the services offered, did you pay any upfront fees for consulting? Because I just set up a consult and I am not sure what to expect back, thanks for ur prompt response.

[@matthewbrice737]

Plus when your portfolio goes down in a year, your advisor would still collect his 1%. So now you are faced with having to return higher than overall market to get back to where you were before. Personally, I don’t see why people pay AUM. Having been around “advisors”, most do not know any more than regular folks. They just have a veneer of expertise because of a small amount of training, a certificate and flashy business cards. Most understand precious little about capital gains, taxes, etc. People can (and should) learn the basics to look out for themselves. Hire an accountant or maybe fee based CFP if necessary. Just my $.02.

[@e-care-books9867]

Rob, you are the Yoda of retirement strategies. :)

[@blah2blah65]

Help you he can, ummm, yes. Reduce fees you must. Save or throw away... there is no 'just pay 1%'.

[@jaysoncordrey4272]

I've noticed there have no video on investor behavior and how it can seriously impacted one's retirement. I think that would make a good video. There is a lot of good articles and knowledge to dive into.

[@davidfolts5893]

Thanks, Rob Berger. Reverse compounding is never in our best interest.

[@BiggMo]

Rob, i’m grateful for your perspective on these matters.

[@stevegorkowski3246]

Most people if they find a good advisor they will make more money VS you doing the investments. Example : over the years I invested my money and had gains of 6% on average a year. Maybe less because my time is worth money. After all fees I am at over 10% in returns a year. When you have an advisor he brings into focus how to invest. I was investing too conservative because that money became something I was personally attached to. This gives another view point because he didn't earn the money. He can give a more objective view of investing it. I just don't be penny wise and dollar foolish!

[@Beach-t6b]

I was with vanguard personal advisors and paid .3% aum fee for a few years but recently discontinued the service because I can handle it on my own now. In retrospect, I would recommend paying a flat fee and educate yourself, if you are so inclined.

[@gotamd]

It's perfectly fair to compound advisor fees. It doesn't matter if most people don't think about it that way, but it is the correct way to think about it. That said, I agree with him that in many cases you can't just assume "all else is equal" from an investment and portfolio perspective with or without an advisor. Many people will not invest wisely on their own and some advisors are also not investing wisely. I'd say there are some people who don't need an advisor and some people who could definitely benefit from one even with a 1% annual fee. But again, even for the people who may benefit from an advisor from an investing and coaching/consulting perspective, the actual advisor they choose also matters.

[@HaloTupolev]

I'd go a step further and argue that *everything should* be thought of as having opportunity cost. The idea that "you wouldn't pull out your calculator to analyze the consequences of buying diapers" isn't a compelling rebuttal, it's a false dichotomy: it sneaks in an assumption that appreciating opportunity cost necessitates breaking down spending scenarios with extreme granularity, which I'd argue is missing the point. The important thing is having the intuition for *why* the calculator could be useful.

[@bryan61-b2y]

It's possible to hire a CFP for $150 an hour. Why spend thousands annually for this service? Just pay when you want a backtest of your portfolio.

[@rdspam]

IME, you’re not going to get a very experienced/skilled CFP for $150/hr.

[@IwasRetired]

Thanks, Rob. Rather than say yes to 1% AUM fee in my retirement, I said "DIY!" I've also come to realize in my DIY retirement, that the number I truly can control is the Net Expense Ratio of my invested portfolio. No AUM, invest it myself in low-cost ETF funds.

[@wade74567]

I totally agree with your assessment. The one thing I've struggled with would be what would happen to my spouse should something happen to me. Don't get me wrong, I've written out everything but she still says she doesn't even know where our money is even though I go over it with her multiple times a year. I wonder if having a financial advisor would alleviate her fear.

[@EdNelson]

I have a client (I'm the dreaded advisor here) that does not need my help whatsoever. After a couple of years with him I finally asked "why?" and he said 1) he liked having someone to bounce investment ideas with (and I sometimes recommend things he may not know of or be familiar with), and 2) as an insurance policy for his wife.

[@raymiller764]

Exact same reason I want one of the fee only advisers rob listed at the end of the article. To assist when I am gone or incapacitated.

[@sp-tn9yt]

Also, unfortunately over time our capacity to manage our own investment decreases. I have watched this with older relatives and friends. Having a trusted advisor is not the worst solution to protect ourselves. In this era of identity theft and rapidly changing technology having an extra set of eyes reviewing info seems to be worthwhile to me. Despite my natural frugality, I feel like advisors aren't always as bad as people make them out to be

[@donh8833]

It's your self respect, when you realized you lost millions for paying someone who doesn't do better than the market average 99% of the time. I will never trust E.J. again. As a novice investor, my advisor gave me both a 20% front and a 20% backend plus 1% management fee on a fund that lost me money after 3 years not including their fees. But my advisor was like "trust me this is a hot fund for you.". His portfolio was composed of investment in suckers. I should have sued them for conflict of interest as they never disclosed kickbacks to the advisor.

[@Cate5244]

Same here. My former financial advisor never disclosed the kickbacks that were generated for his parent firm when he placed me in high-fee funds that participated in revenue sharing. This parent firm made about $100 million off this undisclosed revenue sharing. The SEC won a $93 million lawsuit against the firm which he also never disclosed to me. When I asked him about the lawsuit, after belatedly stumbling across an article, he claimed that it was a bogus lawsuit that was a matter of simple wording misuse (using "may" instead of "will"). In addition, when I was trying to get clarity about my fees, it was like pulling teeth to get a straight answer from him. At one point he told he charged 80 basis points but it turns out that was part of a blended fee structure he had implemented without my knowledge. The 80 basis points was only for any additional money I gave to him. What I was actually paying was 1%. So he basically straight out lied to me. He also misled me about the mutual fund fees that I was being charged. I must have gone back and forth with him 5 or 6 times, trying to get a straight answer to no avail. These financial advisors should be fined many thousands for misleading clients in this way. This advisor also did nothing to help me prepare for retirement. No education or discussion about anything. He wanted me to keep working so I could keep generating income for his firm. He constantly made mistakes that he tried to disown responsibility for. I was missing statements for years because he never updated an address, for example. He put me in a ridiculous number of overlapping funds. I couldn't see any clear strategy to what he was doing. It was so muddled and convoluted. 1% AUM advisors are Public Enemy #1 now for me. I hope AI replaces them extremely soon. I don't want to see any more people hurt by these people. No one deserves 1% of your hard earned money when it's so easy to do it yourself at this point. I've found the AI tools like Perplexity, ChatGPT and Claude, as well as Portfolio Visualizer, Boldin, Empower, and channels like this, to be far more helpful in educating me than anything this advisor said or did. Also, you can use an extremely reasonably priced firm like PlanVision if you are second guessing yourself. They will set you up in eMoney and then you have a very low cost company that you can seek input from when you need it.

[@johnh2812]

Rob your videos are the best! I'm recently retired and have watched a number of personal financial videos and yours are the best. There are a quadrillion options out there. I like your site because you're not selling anything, simple smart advice, and trust worthy. I'd be interested in you reviewing robo investing.

[@GlennMacIlroy]

Hi Rob. Thank you for your wealth of knowledge and very informative channel. Wanted to see if you would mind doing a video on tax managed US equity funds for tax loss harvesting? Fidelity has recommended them to me and I’m not sure if they were a good idea or not.

[@user-gr6bv5lf8m]

Thank you, Rob, for another excellent and objective presentation!

[@chiparooo]

Interesting analysis! Put the fee in your budget is great advice. Thanks for sharing!

[@valtara]

This was a huge eye opener for me! My AUM fees were my third largest expense, right after taxes and the mortgage. Ouch!

[@ranman1959]

Wouldn’t paying an advisor a 1% AUM fee immediately turn the 4% rule into the 3% rule?

[@mohamedhasan6264]

Excellent point .. of course flat fees may be more expensive when you start investing, but we are here for the long run, AUM % fees will affect us more negatively.

[@alex182618]

Meanwhile this channel is free

[@Arun71150]

‼️‼️‼️

[@billybutcher498]

Jack Bogle would totally ditch ANY AUM % advisor.

[@learning.finances]

Thanks Rob for this video about the Kitces article. I read it a few days ago. I agree with you that Derek and I will just have to agree to disagree on the AUM fee.

[@DavidDLee]

Since most advisors want the AUM type engagement tells you all you need to know

[@bryanschneller4190]

When the fee comes directly out of the investment account, how can anyone say it doesn't affect the long term compounding of the account?

[@BB-cs3kk]

Hi Rob. Would be great to see videos on tax management for retirement with specific steps for low, mid and high marginal tax rates. Investment portfolios is a simple commodity based on goals and risk tolerance (ETFs of indexes). Thanks for all you do.

[@Eric-wc7lx]

Great content as usual. I won’t pay AUM fees on my core equity holdings and keep those assets at Vanguard. I also have a bond ladder at Morgan Stanley that is in a “brokerage” account, and only pay transaction fees on those assets. I pay AUM fees on a sleeve of more advanced strategies at JPM, but less than 1% all-in (advisor and manager fees). If you have enough assets, everything is negotiable. But of course, each FA/custodian tries to get the whole portfolio and it is a constant conversation with each.

[@nickleair]

Yes, they want to manage all your assets which, of course maximizes their income. If a % of a portfolio is in fixed income (treasuries, etc) they want 1% of that as well. The excuse they give is that they need to manage (not just know) the whole picture. Just a sales pitch. Remember all FA are sales people. Many are very good, but they are still sales people trying to make a living. Buyer beware. Do a lot of research.

[@auricgoldfinger8478]

I had a managed muni ladder co- managed by Pimco and Schwab for years. The 24 basis points was quite an anchor for fixed income. I do it all myself now. Vanguard ETFs and my own treasury ladders

[@shanew7361]

I associate them to vampires for tne lazy and uneducated.

[@raymiller764]

@@shanew7361 a little harsh

[@Tess314]

My husband and I had recently been discussing whether it would be worth working with an advisor who works for an AUM fee. Then I did the math and figured out how much more our accounts would have to generate (in dollars) each year jusy to pay the fee. I've been handling our investments myself for decades and done okay. A good advisor mifht be able to save and/or make a bit more for us, but enough to offset the 1% expenses, year after year? I have a hard time believing it.

[@matthewbrice737]

And that’s not even factoring in the fees from the funds your advisor may put you in. I would think advisors would be disincentivized to place clients in index as they are so easy clients would ask “what do I need you for?”

[@davidpowell3347]

The answer right up front is that the s///k (I mean the "advisor") is taking a bit more than half of your dividend income. Assuming S & P index like income to the funds/stocks in the account.

[@jamoscatelli]

I've never used an advisor, but isn't it even worse than the 1%? Doesn't the advisor liquidating enough of your assets each year to net him 1% generate a potentially large tax bill for you? Same difference if your in the 0% capital gains bracket, but a big difference if your paying, say, 32% on ordinary income from a qualified account. Or am I missing something?

[@Andy62814]

I went the AUM route for tax planning after retiring. I'm second guessing this decision. I brought a large account that I had self managed with Vanguard that he rolled over into his retirement plans. He did a traditional 401k rollover into a Roth IRA. My question is, after getting things in place, why would you stay with an AUM plan and not switch to a fee base plan? I'm sure the advisor would discourage this. The whole fiduciary thing is false. I kinda feel trapped now.

[@gardenia8085]

Get out of the trap sooner than later.

[@i-postm4943]

Of course your advisor would discourage you from leaving. You're his cash cow! Why do you care what they think? It's your $. You are free to do with it what you wish.

[@rick_vv7754]

If someone is thinking about following the 4% rule (of thumb) while taking distributions with an AUM advisor, you should then only take 3% since 1% is going to the advisor. So the advisor is being paid 25% of of your safe withdrawal rate. If that advisor is helping save more dollars in taxes or by earning more from better allocations that could offset some of this but there are many resources for DIY retirees today.

[@gizmobowen]

I couldn't agree more. I never thought about having an advisor until recently because I'm a couple years from retiring. When I realized they all wanted to charge a 1% AUM fee, I thought it was crazy. There's absolutely no way they were going to provide that kind of annual value to my wife and I. We've hired a flat fee advisor and am still not sure how it's going to work out. I hope they do a great job and I can feel good about paying them each year, but I still am unsure. I think we'll try it for a few years and if it doesn't work out we'll find someone else, or maybe there will be an AI tool available that will perfectly manage all our savings and I'll just be relaxing on a beach somewhere without a care in the world.

[@jaysoncordrey4272]

The only that was missed, an interesting tangent to think about the advisor fee - AUM and the psychological investor behavior that can cost the investor much more than that advisor aum fee. I'd leave to see an analysis of the opportunity loss/cost of the loss due to fear and being scared where an advisor might be able to keep the investor invested. Rob, I'd like you to do an analysis on the tangent.

[@John-ys7qw]

I don't disagree with your premise, but I think the analysis would be almost impossible to do, since there is a very wide range of potential losses that could be avoided by a good advisor helping an investor to stay the course. What assumptions would you use for the losses, and how frequently would you realize those losses? Ultimately it comes down to understanding whether you are the type of person who will panic when there is a downturn and "buy high/sell low" or not. If you are one of those people for whom emotions are their worst enemy then maybe having a good advisor is worth the fees. However, as Rob points out, generally there are cheaper ways to get a good advisor than an AUM fee-based advisor, such as a flat fee or subscription model. For instance, I haven't used Abundo Wealth but they charge $500 for the first month and then $190/month thereafter. That is about $2,280/year (after the first year), which is a lot less than 1% of a million or more portfolio.

[@chrism9037]

I like the idea of paying someone once a year a set amount... if you really need the help. I think in most cases, it is easy enough to figure things out using resources like this channel, Bogleheads, etc. Constructing and managing a portfolio isn't rocket science.

[@readyplayer2]

Anyone have a link to a calculator or spreadsheet that could be used to compare the impact of AUM fees? That would allow you to specify the number of years until retirement (if not yet retired), AUM fee, expected years in retirement, annual or monthly contributions prior to retirement, anticipated average rate of return, withdrawal rate once in retirement, and any other pertinent factors? It's not a dead simple calculation when you think about all of the variables. A simple compounding interest calculator where you compare a rate (no AUM) against another rate (first rate minus the AUM fee) will assume you're never depleting your portfolio and that you're contributing the same amount each year until the end date.

[@jimv77]

I've managed our assets since marriage for 20+ years. Can't imagine paying fees for questionable help. My wife has ZERO interest in anything financially related. I've tried to get her interested. Once I get older, I do wonder if I should gets the kid(s) involved or finally hire someone.

[@Andy62814]

That's the reason I went with a AUM advisor. My wife has zero interest and wanted to make sure she's going to be alright. Hindsight is 20/20 but I wish I would of let it all play out a little before making changes. Give your self time.

[@janethunt4037]

Love, love your perspective. I've earned a lot of $$ by educating myself with you and a couple other KZbin greats so I could prepare our portfolio for retirement. Note: We do not have anything complicated.

[@Frank-nh9fe]

AUM is an outdated fee structure from investment management decades ago. Makes no sense for anyone but the FA. No other professionals that we hire are compensated similarly: accountants, CPA’s, lawyers….. Financial planning typically requires a bit more work up front (intake) then goes into a maintenance phase that requires minimal work for years, the fee structure should reflect this. For those in the accumulation phase a consultation every 5 years or so is likely enough. The problem is psychological, paying a “hidden” AUM fees is painless, while one feels it when they write a check for few thousand dollars.

[@youtubewatcherrr]

Thanks Rob!

[@338mag]

Isnt there a huge tax advantage for the advisor to charge AUM vs. flat fee? I read somewhere that there is a big difference on how the advisor pays taxes on one vs. the other.

[@ralphparker]

Just think. If you are going to retire and use the 4% rule and you pay your advisor 1%. Now you are living on the 3%. I hope that 1% is paying for more than my advisor to spend 30 minutes inputting my data into a computer 4 times per year and 2 to 4 hrs per year talking to me on the phone telling me the same thing he told his 300 other clients.1% of a Million should buy a weeks worth of effort.

[@EdNelson]

FWIW, most advisors use a tiered fee structure (at least they used to, and I still do). My largest AUM customers generally pay about .30-.60% in a blended rate. And frankly, those customers would NEVER have achieved their large AUM alone. Most were ignoring their portfolios and getting far "less than market" returns. Of course, NONE OF THEM would ever be viewing Rob's channel either, because they would rather focus on other things in their day to day lives. That's generally why people hire advisors. I haven't looked for a customer in years, all have been referred to me by existing customers so I assume they are pleased...

[@auricgoldfinger8478]

You’re a bit biased in favor of your livelihood. .3-.6 % is still way too much.

[@EdNelson]

@@auricgoldfinger8478 Like I said, I doubt anyone watching Rob's videos even needs advice. And I'm sure you are biased in your profession also. I chose to provide advice in order to help people, I don't hide any fees.

[@GiantBlue1963]

The compounding complaint is an attempt at sleight of hand. You are not compounding the fees. What you're doing is looking at the end portfolio value, and how fees affect it. A completely fair evaluation would include the impact of the portfolio created (is there extra return), do they have a sophisticated rebalancing approach that generates extra returns, tax planning, harvesting can also make that 1% a good deal. But if its pay me 1% so I can give you a version of the 3 or 5 fund portfolio, that's going to look awful every time.

[@george6977]

John Bogle in The Little Book of Common Sense Investing provides the best explanation of why fees matter.

[@TheMatadore]

I used to think no one should pay AUM fees. Then I realized not everyone understands markets, is good with money, or watches Rob Berger, et al. After regularly being asked to help with money decisions and investment allocations in my personal life, I am now pursuing a Series 7 and 66 to in fact collect AUM as an FA for the people who can't, won't, or just don't do it themselves.

[@kyletomerick]

You need a Series 65 to charge AUM

[@EdNelson]

Be prepared to catch barbs here...

[@TheMatadore]

@@EdNelson cool.

[@nickleair]

Even the hourly fees for a CFP are way too high. The average lawyer makes $325-350/ hour after 3 years of law school, bar exam and other requirements. The CFP designation is a low cost certification completed in a fraction of the time and then charges $300 an hour.

[@EdNelson]

The CFP curriculum normally takes 2-3 years and then you must get another 2 years working for a firm that sponsors you. I wouldn't say it's as exhaustive a process as becoming a JD, but it's not as simple as you make it out to be. And frankly, the regulatory requirements may be more difficult.

[@robertryan3490]

@Rob Berger do these financial advisors work with existing brokerage (Vanguard, Fidelity, etc) or do they move your money to another location?

[@Markazoid6041]

I don’t think the example of Interest on what you spend in stores is really a good comparison. I think what you spend on home insurance would be a better one. What you spend on Fisher investments or something like that is insurance. It’s a matter of how much insurance you want and when you want to have it. I don’t think you need it when you’re younger but when you retire, it seems like it would be a good idea for the first 5 to 10 years to make sure you’re not messing up in the homestretch. And you certainly don’t have to put all your eggs in that basket. You can just put in the minimum and use the services. You could use it as a template for the rest of your money, as you see fit.

[@tho9464]

How about buying 3 fund portfolio which also adds up to 1% ER?

[@Monipenny1000]

Question? Isn't a big part of the job of investment advisors is to invest and grow our money? It's my understanding that I should expect to earn at least 7% of the AUM. If so, then, 1% is a small fraction of what they are earning for me, especially if my earnings are higher than that. I just want to make sure what I would be paying an advisor for.

[@Yette]

Each time I bring the AUM fee up with a family member, their response is they don't even see it, which somehow makes it palatable?

[@DarwinSwimsWithTheFish]

I'm paying Fidelity 0.30 for Large Cap Strategy advisement. They don't inform me when they take their fees or provide any documentation. I'm good with the fee and tax loss harvesting but it's annoying they don't provide an invoice for services.

[@Lolatyou332]

AUM is terrible UNLESS you are so wealthy 1% doesn't matter to you and you are unable or don't want to manage your funds and withdrawals. You should not use AUM just for investing for a lifetime.. you are 100% wasting your money..

[@EJJ-EvArms]

Actually, the more wealthy one is, the bigger waste that 1% is.

[@we8463]

I had a financial advisor that was working for a big bank and I would have been better off just investing on my own buying and holding stocks from companies I like and I would have made so much more money. These financial advisors are payed regardless if they loose you money or not! I fired my advisor and have been doing so much better!

[@LJ-jq8og]

💯 Rob💪❤... As Warren Buffet / Charles Munger as well as Boggle✝ would say: financial advisors are a WASTE 🔥 of money ❗

[@johnwietfeldt6238]

A 1% fee is 25% of my allowed withdrawals each year. That’s how I think about it.

[@greggarner9515]

Exactly! Well done. I cringed reading his article because of the one-sided analysis he performed with such obviously skewed assumptions.

[@williamrobinson7352]

Paying a 1% AUM fee only makes sense if the advisor can deliver a yearly increase in your investment of at least 1% more than you could do yourself. If, for instance you only invested in a fund that followed the S&P index, would that have a lower return than your advisor's investments, by at least 1%. Probably not. But, a lot of people are afraid of doing it themselves.

[@La_sagne]

more than you could do, more than you want to do and more than you trust yourself that you would do.. if you feel bad whenever the market is down 1% then maybe its better to not have immediate access to your portfolio

[@rdspam]

Financial advising is much more than investment selection. Roth conversion/tax arbitrage, SS optimization, IRMAA cost avoidance, etc., etc. Get this wrong, it will cost a lot more than 1%.

[@i-postm4943]

​@rdspam That's why God made low cost or free wealth management tools and software. All of that is essy to figure out on your own.

[@SD-co9xe]

Rob, what about using ai to make investment choices?

[@Norman-z3s]

If you have an advisor who happens to be a great stock picker, then I suppose his performance would justify his fee. Has there been a study of a 1% AUM advisors vs. a DYI index fund investor performance?

[@SpookyEng1]

Many, none of the advisors beat the market over time, net expenses.

[@learning.finances]

Just check the SPIVA report and you will have your answer.

[@we8463]

I had a financial advisor that was working for a big bank and I would have been better off just investing on my own buying and holding stocks from companies I like and I would have made so much more money. These financial advisors are payed regardless if they loose you money or not!

[@KJFC388]

This has been a tough call for me. At 67 I went with AUM. It’s 1.25 on 1st mil, then.8 on out.I figured I would screw this up more than 1% so I bit the bullet and have the full service ( tax planning, income, estate, etc) . We are 4 months into it. At the year mark I will fire them if we are not better than market by at least 1.25%. . We will see. The people are nice ( team of CFP/CPAs ). I don’t contact them much ,but I am certainly free to do so. By contract , they are fiduciary to me, they receive no funds other than what I pay. FYI, they get paid tax free direct from your IRA.

[@KJFC388]

Also, I plan to take a flat 5% per year from my portfolio , not adjusted for inflation. Some years will pay out better than others. 1% of the 5 will go to my AUM advisor, leaving me with 4%

[@lynnkalin8908]

How do they get paid tax free from your IRA? I have never heard of that.

[@scottb9628]

I have been investing since high school. Now 57. Made some mistakes, made some good choices. But kind of not really as good as it could be. Until my parents died, I did not use an advisor. I ended up using the advisor he had and it's probably been worth the 1.25%. They assisted with my limited 401k choices too, which have rocketed up the past 10 years. Overall, it's been a set it and forget it. Now I can retire.

[@jamesodell3064]

If you get an 8% return before the 1% fee then the fee is 12.5% of your return. That seems like a lot more money.

[@JamesCaballero-q2r]

I'm confused! I have about 30% of my money under an AUM arrangement. I get a performance report every quarter. It shows that, including fees, the account is doing about 1% better than the S&P 500, or in my case VOO. The fee calculates out to be about 1.3%, but even with that the account beats the S&P 500 consistently. Isn't that what I am getting for paying the fee?

[@george6977]

You can beat the S&P 500 by taking more risk. A DIY investor could do that without a 1.3 % annual fee.

[@DonaldMark-ne7se]

As an investment enthusiast, I often wonder how top level investors are able to become millionaires off investing. I do have a significant amount of capital that is required to start up but I have no idea what strategies and direction I need to approach to help me make over $400k like some people are this season.

[@Jamessmith-12]

I believe the safest approach is to diversify investments especially under professional; guide. You can mitigate the effects of a market meltdown by diversifying their investments across different asset classes such as stocks, etfs etc It is important to seek the advice of an expert.

[@dancooper6002]

@@Jamessmith-12 False, you are spreading lies and misinformation. The entire point of the video is that these "advisors" cost you most of your return. Do the rest of us a favor and shut up.

[@laurenstewartd]

Unfortunately, not all of us were financially literate early, I was 35 when I finally educated myself and started taking steps. I went from $176,000 in debt with zero savings or retirement to now, 2 years later, fully debt-free and over $1000,000 net worth. I know that doesn't SOUND like a lot, but l'm incredibly proud of it. Now I'm fast-tracking my wealth building (investing $400,000 annually) and don't owe a dime to anyone. It's a good feeling! Thanks Charlotte Miller.

[@sarapalin]

The very first time we tried, we invested $1400 and after a week, we received $5230. That really helped us a lot to pay up our bills.

[@DianaLinden-l6q]

I'm new at this, please how can I reach her?

[@laurenstewartd]

she's mostly on TikToks, using the user name

[@laurenstewartd]

FXMILLER 17 💯.. that's it

[@laurenstewartd]

Please tell her that I reffed you 👍 She'll guide you💯

[@lonestrtgr55]

I got absolutely screwed by Fidelity with their 1% fee and got terrible results. Terrible advisors as well. Glad I learned and got out and now managing it on my own. These places don’t care about your money only their fees. Sad there’s not better consumer protection in the industry to prevent taking advantage of people just trying to save for retirement. Hourly fee just makes more sense like you pay lawyers, CPA, etc. They know darn well this model allows them to take advantage of people. Disgusting really.

[@lonestrtgr55]

The other problem getting under AUM it’s no fun getting out. Force you to sell all the proprietary AUM funds and figuring out how get out of all the funds they put in your taxable account without getting hit with a large tax bill.

[@johnguertin5054]

why didn't you tell me this 35 years ago? I would be in the top 1%!

[@raleedy]

Without an advisor, all my savings would eventually end up in the mattress.

[@disch972]

I need an AI Rob that pops up on my screen every time I invest in any new stock/etf or sell any stock/etf. AI Rob would go over my buy/sell strategy and either give me a thumbs up/down. Better yet, AI Rob would have to pre approve the transaction before it will be executed.

[@travis1240]

Yeah it's pretty disingenuous to compare a 1% AUM fee against a $2k flat fee at asset levels below $100k. I haven't heard of an AUM advisor that would accept clients with assets below $500k or so, and if they did the fee would be more than 1%.

[@SpookyEng1]

I used Planvision. Fee was about$300 if I remember correctly and $8 a month for continuing consultations.

[@Kung_fu_s2]

You’re not buy diapers for 30 years, like you’re charged the fee for 30 years

[@andrewbruce1737]

This discussion was assuming that markets only go up. Looking at the other side of the coin. If the market is down 20% for the year and, your advisor has your account down only 10%. How much of your fees are paid back to you in just that one event? Not to mention the decisions that you (the investor) would make during the 20% decline may cost your account much more than the 20% decline going forward. What is more common, my financial advisor (a fiduciary) lost all my money or, some DIY investor lost his/her retirement in a crash?

[@agbook2007]

I see it as insurance and a hedge of risk to have the advisor. Minimize risks and minimize the costs... and then INVEST.

[@jerrylabat550]

But do FAs beat the market on down years? I suspect the percentage that beat the market is about the same whether the market is up or down.

[@dennislockwood7352]

What I didn't hear in any of this is the type of investments that you get access to using an AUM advisor. Yeah you can do hours & hours of research and calculating where best to put your money, but on your own you still only have access to retail level investments. My AUM advisor has me in funds you can't get access to at the retail level such as institutional grade bond and equity funds. Once we hit retirement we only have so much time left, how much of your retirement do you really want to spend managing your portfolio, especially in increasingly volatile markets? Lastly do you want to still be actively managing all of your portfolio at 80 or 85 years old? What if your mental acuity diminishes? Who will do it then?

[@Barolo818]

just say no to AUM fees

[@FunStuffBuddy]

🚨 The Money Guy Show has their own wealth management firm ‘Abound wealth management’ that charges 1.25-1.5% AUM. It’s a steal…for the client or the firm? That’s up to you. 🚨

[@learning.finances]

Wow! Is it really that high? I have enjoyed watching their show but would never pay that kind of fee.

[@FunStuffBuddy]

@@learning.finances yup, I just looked up their ADV again. It’s 1.25% for 1st million and then sliding scale beyond that at various levels

[@HelenaMichael-s4x]

l've been a long time jasmy holder for some time, but I'm new to the crypto space. What are the most effective ways to profit in this market?"

[@VictoriaGHayes]

I think all you need is an expert assigned by a brokerage company that will trade for you and handle your capital professionally and give you weekly returns of investment without any extra fees attached

[@HelenaMichael-s4x]

@@VictoriaGHayes This is definitely considerable! think you could suggest any professional/advisors i can get on the phone with? i'm in dire need of proper portfolio allocation

[@TeresaEKeister]

Thomas Leon Schubert

[@jensbrandt564]

@@TeresaEKeister Goodness gracious I'm so excited seeing Thomas Leon Schubert been mentioned here also. Didn't know he has been good to other people too, this is wonderful because I also started with a KZbin referral like this

[@LisaPaus-p9h]

​@@jensbrandt564How do I reach him please?

[@riumudamc4686]

1 or 2% can be justified IF (big if) the fund manager is performing above the S&P average

[@learning.finances]

Majority of advisors don't. Just check the SPIVA report.

[@fishynut8252]

That's not happening!

[@riumudamc4686]

@learning.finances there's is a difference between advisors and fund managers too