I am a retired conservative and by choice passive investor. On your recommendation I have consolidated my 401K’s and removed any “company participation”.

Currently my advisor is recommending I add “portfolio advisory services” which cost 0.9 % to 1.07% depending on the “target equity” I choose. Other than working for the same company my advisor does not appear to receive any benefit from these management fees. Do you have any thoughts/opinions about such fees?
My current portfolio balance which is largely tied to the S&P seems to be “OK”, but I do not know how to determine whether I am “leaving opportunities on the table” or whether active management will increase earnings and reduce risk.

Your thoughts and opinions are appreciated. Thank you.

Steve Brown

Terry Says:

That is the latest trend in investment advice — annual fees for UNNECESSARY services.  It started when the Fiduciary Rule was going to be passed — a rule requiring full disclosure of all fees and costs, and requiring your advisor to put your interests ahead of his or her own.  The rule hasn’t passed yet — but the firms figured they couldn’t justify their huge and mostly hidden commissions, so they’d just charge an annual fee — even if the account was invested and no changes were made.

And yes, about half that money goes into your “advisor’s” pocket — and the other half to his firm.  If you know what you are doing, then just manage your portfolio yourself and avoid this huge fee.

Is your money still in a 401(k) account? If so, there is guidance available through your plan for your investment decisions.  Have you “rolled” your 40l(k) into an IRA Rollover account?  If so, why not go with Vanguard or Fidelity?  Each of them will give you free asset allocation advice, along with low-cost funds — AND help with your required minimum distributions.  It’s easy to roll your rollover account to a new custodian.  Just call Fidelity or Vanguard and they will handle the paperwork.

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