I am thinking of investing with a financial planner who wants to charge me 1.9% of my assets. Is that fair?

Question

Just seeing what other people are getting charged out there.

Answer 1

Not sure where these other clowns are getting their information, but allow me to clarify some information:
1. Check to see what types of investments you are being placed into. If it is a managed stock and bond portfolio (not mutual funds, annuities or insurance anything), 1.9% is certainly a fair fee so long as it includes market trades, and expert manager (with a track record) another expert looking at the economics, and the ability to have tax flexibility. While 1.9% sounds expensive, mutual funds (yes even vanguard), including transaction costs can run from 1.25%-3% no matter how much money you have invested with them not to mention some even carry added commissions! (see www.personalfund.com). Annuities are mutual funds plus insurance so add another .75-1.5% to the underlying funds on personalfund.com and you will see that most people are paying about 3.5% to have their money managed through annuites. Typically with fee based planners as your assets go up in value so does the dollar amount of their fee, but the actual percentage goes down, which is not the case with mutual funds, not even vanguard.
Managed stock accounts do allow you to control taxes much better than mutual funds as well. Don't forget that the financial planner wants to see your fee go up in dollars, if is based on a percentage, then as your account grows, so will his fee. If it continues to grow the percentage will drop, but the fee will continue to grow.
See if your financial planner is actually a financial planner. If he doesn't have the letters CFP somewhere after his/her name, he ain't a planner. But being a CFP doesn't mean squat if they aren't adding value (reducing taxes and risk while increasing returns and goals). He should be meeting or willing to meet with your CPA and attorney.
1.9% is high if you are investing in bonds, money market, savings accounts, or something that is guaranteed to pay a certain amount. 1.9% doesn't mean squat to someone who has annualized returns net of fees of 15% for the past 10 years with less risk than the S&P500, that is powerful money making. If they aren't getting the returns and you have time to do it yourself, then you can find cheaper, but not necessarily better.
Be cautious. I have heard of some "advisors/planners" who charge an annual wealth manager fee and say their products don't make them any money, but then put clients in "safe-guaranteed" investments that don't charge commission when in reality they are annuities that pay 10-14% to the broker and the client is told they are free.

Answer 2

No.

The reason I would back off from this is that the advisor already gets paid by the funds families and insurance companies that he represents. Especially insurance companies, in the form of a payment to him from the insurance company every time you make a premium payment.

In addition, if he works for say, Ameriprise Financial, Schwab, Smith Barney, etc. or other financial advisor corporations they ALSO pay him for your purchases as part of sales compensation.

If he wants to agree to a flat fee, say twice a year or four times a year, that would be better for you, and it would be easier to track for your tax deduction at tax time.

We pay our advisor $400 annually.

However, if you have substantial financial holdings, then I would go the "wealth management" route, say at a Schwab or Ameriprise. Then, I believe a percentage is paid.

(BTW, you are also paying portfolio management fees that are built in to the mutual fund shares that you buy. He doesn't see that money but it is another layer of payment that you make.)

Answer 3

Guarantee him 2% for the first million he earns through his expertise and then 3% for the next five millions, five percent for the next ten million and so on.In turn, ask him to guarantee a minimum 10% return for the first year , 12% for the next year and 15% for the third year and so on. Any shortfall should be deducted from the annual fees payable, Those who offer low rates of fees are people who want to play with your money at your risk and cots. Don't trust them with your hard earned cash, even if it is inheritance, someone has already sweated for it. Respect the worth of the Salt.

Answer 4

You only want an advisor who charges a flat fee or hourly rate!!!! Hell, I'd get you passive income started for cool $350, and then follow up reviews scaling downward to $100.

Commission based means aggressive investing w/ a lot of unncessary risk - its your money not his.....

Is he going to pay you 1.9% when he loses your investment?

Answer 5

it is not fair. banks charge annually 2.5% interests on floating income and loans (liquid assets that generate money and income frequently). Landed properties and other fixed assets do not generate income as such except given a long time, if such percentage is charged, the the planner will generate a huge income/profit from you at a long run, which can not be recorvered and if you have to get it back you will pay heavily for it. SO DO NOT AGREE.

Answer 6

That is obscene. 1.9% for him and then the fees for the investments he puts you into. It could end up costing you anywhere from 3% to 7%. Try Vanguard.com they offer this service at a much lower fee and have many good funds.

Answer 7

Vanguard Group of Valley Forge, PA will do it for 0.8 %
Contact them.