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A Little Mistake That Can Cost Hundreds of Thousands of Dollars

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You being in the top 97th percentile in good looks and wealth might be good. But being in the top 97th percentile in the fees you pay your investment advisor is…not so good.

PriceMetrix, a wealth-management software firm, has come out with a report showing that a significant variation in pricing exists between investment advisors. The firm has quite a database to pull from—15,000 advisor books, 2.3 million investors, 380 million transactions, 1 million fee-based accounts, and over $850 billion in investment assets. The study examined the pricing on balanced accounts for households with between $250,000 and $500,000 in assets to eliminate any asset allocation or asset size influence.

Twenty-five percent of advisors charge more than 1.75%, averaging 2.08%. Twenty-five percent charge less than 1.01%, averaging 0.81%. I like to show prospective clients this chart to illustrate the importance of keeping fees low. It’s pretty clear you don’t want to be in the 97th percentile—advisor fees of 3% or higher can cost an investor hundreds of thousands of dollars.

 

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E.J. Smith

Editor-in-Chief
E.J. Smith is Founder of YourSurvivalGuy.com, Managing Director at Richard C. Young & Co., Ltd., a Managing Editor of Richardcyoung.com, and Editor-in-Chief of Youngresearch.com. E.J. graduated from Babson College in Wellesley, Massachusetts, with a B.S. in finance and investments. In 1995, E.J. began his investment career at Fidelity Investments in Boston before joining Richard C. Young & Co., Ltd. in 1998. E.J. has trained at Sig Sauer Academy in Epping, NH. His first drum set was a 5-piece Slingerland with Zilldjians. He grew-up worshiping Neil Peart of the band Rush, and loves the song Tom Sawyer—the name of his family’s boat, a Grady-White Canyon 306. He grew up in Mattapoisett, MA, an idyllic small town on the water near Cape Cod. He spends time in Newport, RI and Bartlett, NH—both as far away from Wall Street as one could mentally get. The Newport office is on a quiet, tree lined street not far from the harbor and the log cabin in Bartlett, NH, the “Live Free or Die” state, sits on the edge of the White Mountain National Forest. He enjoys spending time in Key West and Paris. Please get in touch with E.J. at ejsmith@youngresearch.com.