UnThreaded | Threaded | Whole Thread (59) | Ignore Thread Prev Thread | Prev | Next | Next Thread
Author: MajorMajor78 One star, 50 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 76384  
Subject: Re: Professional management Date: 7/8/2011 6:09 PM
Post New | Post Reply | Reply Later | Create Poll Report this Post | Recommend it!
Recommendations: 2
"And if you are withdrawing 0% ? "

A 1% assets under management fee on top of any high ER's and/or loads for active funds the advisor places you into can take a massive blow to retirement income safe withdrawl rates. At 56 and all of your goals taken care of then withdrawls are probably not terribly far off. Even if you are not making any withdrawls yet these fees can drastically undercut any returns you earn on your portfolio. If inflation averages 3%, AUM fee of 1%, ER on the active funds at an average of 1-1.5% and you would need a return of over 5% to just break even (God help you if there are loads).

This doesn't mean active managment doesn't have it's place, only that you need to be aware of potential pitfalls so you can avoid them. BruceCM mentioned the Garret network and finding an advisor that charges by the hour. I would say this is probably the best way to go if you have a large portfolio (7 figures) and no longer want to take the time to manage them yourself. I've always scratched my head at the Assets Under Managment fee schedule. If I had two million with an advisor he would charge me $20,000 a year to control my investments (1%). If I had four million that fee would increase to $40,000 and for what? It's the same advisor, same skill and experience level, similar tax considerations, almost the same investments (maybe a few more muni's?), and he'd probably spend almost the same amount of time working on the two portfolios. Good financial advice deserves to be well paid but I can't stomach the idea that the bigger the whale the more blubber that can be squeezed out.
Post New | Post Reply | Reply Later | Create Poll Report this Post | Recommend it!
Print the post  
UnThreaded | Threaded | Whole Thread (59) | Ignore Thread Prev Thread | Prev | Next | Next Thread

Announcements

The Retire Early Home Page
Discussion on accelerating retirement day.
Pencils of Promise - Back to School Drive
"Pencils of Promise works with communities across the globe to build schools and create programs that provide education opportunities for children."
Post of the Day:
Macro Economics

Russia Collapsing Again?
What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Community Home
Speak Your Mind, Start Your Blog, Rate Your Stocks

Community Team Fools - who are those TMF's?
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and "#1 Media Company to Work For" (BusinessInsider 2011)! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.
Advertisement