I believe everyone is capable of managing their personal finances and don’t believe the majority of financial advisors are providing value for their service. How many advisors/managers are able to bring market returns to their clients AFTER fees?
All the people I know who pay a fee based on assets under management(AUM) don’t know if they are at least getting market returns after fees. I don’t mean stock market returns, I mean total portfolio returns. If you have a million dollar portfolio and are paying a 1%/year fee, you will be paying $10,000 a year in fees, even if you lose money. So why not ask your broker, what was my total portfolio return for the past 1, 3, 5, and 10 year periods? He/she will say you cannot compare apples to oranges because their is no benchmark for your portfolio, which happens to be 75% stock, 10% bond, and 15% money market (just an example). But their is one mutual fund (VTMFX) that has been around for over 30 years and is 50% stocks and 50% municipal bonds. Most advisors should be able to beat this because it is conservative at only 50% stock since most managed portfolios have significantly more stock exposure. VTMFX return for the past 1, 3, 5, and 10 years is 12.08%, 3.32%, 7.18%, and 7.17%. You need to beat these returns by at least 1% (if that is the asset management fee you are paying), otherwise you are paying too much.
