Quote:
Originally Posted by qba335i
Different market segment - I (we) am not trying to compete with a robo advisors. My space targets $20M+ clients with a lot of accounts paying 200-500k+ in fees annually. I can assure you that our clients are happy and we earn this fee.
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OK. I'm trying to be snarky or a jerk here. I understand the need for most to have a bit of help when trying to manage a $5M+ portfolio. I could see that as being a bit cumbersome with investment opportunities, taxes (err....legal evasion
), estate planning, wills, etc. But I do have to ask the question, what is that you're doing for the client that warrants $500K in fees for a $20M portfolio? That's $42,000/mo, $9,600/wk, or $240/hr based on a 2,080 hour US working year. I get it that there are admin costs and company costs like research, junior/assistant staff, and the general cost to run a business, but I just don't get what you're company is doing that warrants such high fees. For much of the time, the portfolio/investments run themselves with little intervention. I get that there is a lot of effort and complication when large amounts of money need to get moved around or investments change. But in the end, you charge very high fees for seemingly minimal overall effort. Other than risking losing a client because of some bad intel or advice, what risk are you taking? I just don't see it.
Like I said earlier, I was formerly with Morgan Stanley and had an adviser. They were taking 1% to manage my portfolio. Plus, when I'd change things (which wasn't often), there were many other fees. Once I wised up and started researching more, it really started to irritate me how many fees were buried all throughout my statements. When it was all said and done, I was paying more like 3+%+ a year in fees (all fund/investment fees considered in this, not just his) and my adviser wasn't doing much at all. He was responsive to my questions, was honest (I think), was a really nice guy, but looking back, I don't feel like I ever got the entire story/risk/costs to the investment choices he offered and the ones I requested. He could not be spending more than 10 hours a month with "managing" my portfolio. He had a very nice house in a very nice part of Kansas City, drove a very expensive Benz and his kids went to very pricey schools. His wife didn't work. Long story short, I was ignorant. I felt that it was all too complicated to understand and so I trusted his advice.
Back in early 2015, I decided I needed to learn and gut check what I was invested in. I spent 4 months reading and researching. I came to the conclusion that I was spending a massive amount of money in adviser fees, actively managed fund fees, and the like. My portfolio wasn't close to matching the market. I felt like such an idiot. I took all our money from MS and moved it to Vanguard, bought S&P 500 index funds, a decent amount of Berkshire Class B, and some other low fee funds to spread the risk. I manage everything myself. In four years, our overall portfolio grew about 40%. Granted the market has been amazing for the last 8 years and I get that, but there is no way in hell I'd be at the same place if I stayed at MS. Not even close.
Sad thing is, my story isn't very from most people with decent portfolios ($500K-2M) that left their advisers to manage things themselves. I just don't see the value having an adviser if you've got less than $2M as you don't need to be in anything fancy at all. See Warren Buffet's "15-minute retirement plan" and start there then branch a little once you hit $750K-1M. Advisers are happy to collect a lot of fees, offer advice, and make recommendations, but there is little risk for them. When people accounts/funds take big hits, they send out market letters full of excuses as to why their advice didn't work out as planned. LOL