Ep. 7 – 21 Questions (Series) – 6. Will you consider charging by the hour or retainer instead of an annual fee based on my assets?

Welcome to the Real Retirement Financial Planning Podcast. 

This series covers the 21 Questions to Ask Your Financial Advisor. 

The list of questions was inspired by Jason Zweig of the Wall Street Journal, and his blog post: The 19 Questions to Ask Your Financial Adviser.

Responses to Jason’s questions I read from other advisor websites lacked depth.

Yes, or No, sometimes needs more context and a greater explanation into the whys.

The goal of this series is to target the essence of what I think Jason is trying to protect you from, and help you make a better educated decision.

21 Questions to Ask Your Financial Advisor

6. Will you consider charging by the hour or retainer instead of an annual fee based on my assets?

Jason is looking for a “Yes” here.

Yes, of course! MARGIN was built around providing good advice (value=margin) for a fair price. 

Charging 1% for assets adds up!

Do you work with any of the firms mentioned in the episode?

If so, you could be paying way more than necessary….Listen on…

If you have $2,000,000 in assets, and a firm is charging 1% on assets, that’s $20,000 in year one.

If you earn 6.25% over the next 15 years on $2,000,000, your portfolio now is worth just shy of $5,000,000.

At a 1% asset-based fee, now you are paying $50,000…

Did the advisors value, time invested, or service more than double over 15 years?


Why did your fee?

If I were paying $20,000 to $50,000 in fees each year I’d expect:

a.  A team of CFPs, CFAs, CPAs, attorneys, and insurance agents working together to flawlessly execute my plan, and pay all my bills;

b. Helping my high school student with their college admissions package, and getting them ready for their first job at the country club as a caddy;

c. Negotiating all my various insurance coverage;

d. Overseeing the contractors on my home renovations, and

e. An accompanying personal chauffeur and travel coordinator.

Well…What about paying hourly for advice?

Hourly doesn’t make sense to us

Also, we feel a creditable professionals’ hourly fees would add up faster than just paying a flat fee on a moderate to advanced complexity level.

More importantly, leaving the onus on clients to execute things at the right times, and factor in all changes is not a good trade for either party.

I want our work to be used; nothing worse than a passionate architect that never sees his blueprint come to life.

We believe that the best long-term relationships compound over time; not a one-time high fee for a stack of paper.

If you are a DIY, or want to put all your money into an annuity, like a SPIA or DIA, for guaranteed income, we’re probably not the best fit.

What are you really paying in investment fees?

How much is that really costing you over the long-term?

Do you know their are alternatives to paying an asset-based fee?

Show Notes:

(1) https://www.personalcapital.com/assets/public/src/Personal-Capital-Advisor-Fee-Report.pdf

(2) https://www.whitecoatinvestor.com/the-perfect-financial-advisor/