Ask your advisers how they are being compensated. There may be a big difference between what they earn and what you pay them.
I am not only referring to the fact that they may be getting referral fees for recommending you as a client. That would be a conflict of interest harmful to your interests.
No, I am calculating actual cost.
You will pay the advisor’s fee, on the management of your assets, It can be1% to 3%, generally 1½%. That’s $1500 for every $100,000 they manage.
(But the asset-management fee may not be the only cost. Remember: You pay other charges, which include mutual fund and exchange-traded fund fees for management. And if you use a hedge fund, you may also pay about 20% or so of fund earnings.)
The problem is that these 1 1/2% management costs add up to a considerable chunk of your annual returns. After all, you’re lucky if you earn $6000, or 6% for each $100,000. The advisory fee, in other words, is 25%.
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