Financial Adviser Cost

Here is Christmas gift information the media overlooks all the time.

It has to do with how your financial advisers 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 to you.

You will pay the advisor’s fee, on the management of your assets, It can be1% to 3%, but generally 1½%. That’s $1,500 for every $100,000 they manage.

(Note the asset-management fee may not be the only cost. 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 1 ½% management costs add up to a considerable chunk of your annual returns. After all, you’re lucky if you earn $5,000, or 5% for each $100,000. The advisory fee, in other words, is 30%.( See the Earl J Weinreb NewsHole® comments.)