Should I seek a new financial advisor?
There are no standard procedures. It all depends on the investments, your risk tolerance, etc. The following are differing structures most financial advisors use:
- Percentage of assets that they manage on your behalf, typically anywhere from 1% - 2% per year. The more assets you have, the lower the fee.
- Commissions paid to them from financial products you buy through them.
- Combination of fees and commissions.
- Hourly rate.
- Flat fee to complete a specified project.
There are times that the percentage of assets is appropriate then there are other times that a commission is to your advantage. Personally, I use both. It depends on the client and the client's assets. It looks like you are being charged on the high end of percentage of assets perhaps because of the amount of your account. Is this your only account? Usually an advisor will give you a lower rate contingent on all assets under management or accounts. At times it is not in the client's best interest to be paying an ongoing fee specifically when their account activity demonstrates that they would be better served by being in a commission/transaction based account. This is a subject that is usually discussed prior to investing or entering into a relationship with an advisor. Or in your case, you may want to revisit the question with your advisor to see if you have any alternatives.
It is important to always ask a financial advisor for a clear explanation of how they will be compensated before you hire them. If your current advisor is not willing to work with you regarding your concerns, I would look to interview other advisors that may have a more flexible compensation plan that puts your interests first. A broker's recommendation should be consistent with their client's best interests.
This is a good question and one you must put some thought into.
Simply looking at the fee, 2%, it may be abit high compared to industry standards. I would also imagine that the investments you have your funds in most likely carry some type of charge as well, so you are probaly paying north of 2% annually.
I think the big question is, what are you getting for the 2% plus? Are you getting advice and guidance in other areas of your financial life than simply on the invetments of the account? Is the advisor doing planning for you under that fee too? I think you get the idea..
I would imagine that the advisor is simply managing and guiding you on this account and that alone, if that is the case I would say it is a bit high and I would look elsewhere. Keep in mind, your fee should be commensurate with the services provided, needed and wanted.
I would try and find a fiduciary advisor, like us, and discuss your situation and see what they would recommend for you in your specific situation. Best of luck!
You're being overcharged. Although it might have been worthwhile to speak with this advisor about reducing the fees, you're probably better off finding a new advisor at https://www.napfa.org/find-an-advisor. That's the National Association of Personal Financial Advisors, which includes some of the finest planners in the country. What's more, the fees are almost certainly going to be a lot lower and you will be getting first-rate advice. When you're paying a fee for advice, you should be getting appropriate recommendations as well as assistance on whatever financial matters concern you.
Your present situation sounds like time for a change.
While 1-2% is considered industry standard for asset management, many advisors have fees lower than 1.5% with comparable value. You should feel comfortable with the service you are receiving at a rate you think is fair. Some advisors may even offer a discount!
2% is a little high especially if he or she isn't actively managing your account. Sending out the bills monthly is standard for most fee-only advisors. They bill client's monthly instead of taking it all at once at the end of the year. The bottom line is if your advisor isn't listening to your concerns or if you are just uncomfortable, then it is time to make a move. There are many advisors out there that may be a better fit. I recommend using Investopedia to help you find your next one.