Wealthy clients know that having a very good advisor who has your best interests at heart is definitely the key to weathering future market uncertainties.  But many Americans approaching retirement, tend to panic and begin making risky investment choices to try to make up for their past lack of effort to lower debt and build wealth.  This is when you need a finance coach or advisor that will provide the much-needed assistance to ensure you get to retirement debt-free and intact with a comfortable retirement fund.  Yes – comfortable retirement fund!  It does not have to be millions.  If all your debts are paid, you can live comfortably into old age.  The right advisor will ensure you do things correctly, not taking on too much market exposure to make up for lost time and ensuring you stay within your risk tolerance.

Now let’s talk about fees.  What should you pay?

Many financial planners are paid a base salary with a commission matrix based on how they grow their book of business and bring on new clients.  Typically, fees are preset based on the mutual fund you choose for your portfolio ranging from 1% to 2.5%.   Investment advisors are generally paid differently and on straight commission making them highly motivated to ensure you make a profit of which they in turn are compensated on.  I have seen advisor fee-based services range from .75% all the way up to 3%.  Some advisors act as personal bankers for ultra-rich clients, doing everything for them, hence I can see the higher fee structure.  But for most of us we do not need someone to pay our bills and handle are budgets, so if you are paying more than 1.5% for a fee-based portfolio, you may be paying too much.  If you have different SMA products or Separately Managed Accounts your advisor may increase their fee up to 1.8%.  Bottom line, fees are all over the map and vary from one advisor to another and really should be based on your comfort zone.

Do you feel that you are getting your money’s worth on your fee-based portfolio or would you prefer a transaction-based portfolio?  Is your advisor a valued partner that you are willing to pay for, and most importantly are you satisfied with their services?  It is always a good idea to periodically check out the competition, talk to your friends and see what they pay.  Only you will know what feels comfortable to pay for investment advice.

Christine’s Tip:

Remember the key is to maintain a well-diversified portfolio which includes bonds, cash, and high-quality stocks.  When you are looking for an investment “partner,” try to pick an advisor who really has your best interests at heart; something you will definitely need when weathering future market uncertainties.  Please make sure to do your homework and find out what the firm and the new advisor’s value proposition is.  It goes without saying that you should interview more than one and make sure you find a good fit with not only the advisor but the brokerage firm.