Why are managed assets important? This is how most financial advisors get paid, and it has been that way for decades. Most charge a commission based on the “AUM” of 1%, sometimes more, sometimes less, but always linked to their general level of assets, managed by their advisor. This is what you pay them for financial planning and investment advice, and conceptually speaking, it makes sense: when your investments work well and your assets grow, so does the amount of money the advisor earns. On the other hand, if the advisor loses money, you pay less in fees.
But the reality is that, win or lose, these fees are affecting the profitability of your portfolio and the truth is that they are costing you a substantial amount of money. So what's the use of basis points if they're so similar to percentages? Changes in the return on an investment can be quite small, so it's sometimes easier to understand them in tens or hundreds of basis points rather than in tenths or hundreds of percentage points. A full-service financial advisor can charge at least 100 basis points (or 1%). Our full-service advisor charges 75 basis points, or 25% less than the average market advisor.
Do not hesitate to request information about an information-only meeting that will allow you to better understand what a financial advisor can do for you. They may still have more than one type of commission, for example, charging an AUM fee for investment management and a fixed fee for financial planning. True financial well-being comes when you free yourself from financial worries and the power to choose: the ability to see your variety of options and make the best decisions based on what matters to you. To calculate the financial advisor's costs that may be charged to you, refer to the company's ADV (documentation filed by the SEC) form.
As you work to achieve your financial goals and prepare for retirement, you may want to consider consulting a financial advisor. Due to the variety of fee structures and certifications used by financial advisors, the wide range of services offered by advisors, and geographical disparities in pricing, it can be difficult to know how much you should pay for financial advice. Traditionally, comprehensive financial planners have provided investment planning and management services, often charging a percentage of the assets of the clients they manage. According to the report, for advisors who charge a percentage of the assets under management (known as AUM in industrial language), the typical 1% per year is still quite normal.
Affordable and quality financial advice is essential to living well and should be accessible with or without money to invest. Their time may seem expensive, but consider how much time you would need to spend learning everything they know, and it quickly becomes apparent why financial advisors may charge for their knowledge. But what I have a problem with is price discrimination, especially in an industry as complex and risky as financial planning. Others, such as Personal Capital and Facet Wealth, offer each client a certified and dedicated financial planner, a credential that requires extensive training, and works with you to build your investment portfolio and create a complete financial plan.
Because consumers have difficulty distinguishing one advisor from another, financial advisors have never had to compete on price. Because of this disconnect between the services provided and the commissions paid, financial advisors usually have a large number of clients that are not profitable at all. .
