My advisor fees are 1.6% each year… is that too high?

General
1

I’m in my mid-30s. My advisor takes 1.6% yearly, only overseeing this one account and withdrawing quarterly fees. Started with about $250k in 2022, now it’s around $276k. I was pulling out dividends every quarter (total $25k so far), but planning to reinvest going forward.

Most of my portfolio is in individual stocks (NVDA, AVGO, SMCI, QCOM, COHR, IRM, PANW, AAPL, GOOGL, CAT, ZS, etc.). Only 1% is in USBSX.

Would I be better off just going for a 3-fund portfolio and meeting with a fee-based advisor a few times a year?

2

You realize 1.6% of your balance is $4,416! Just drop the advisor and use some index funds instead.

3

Shan said:
You realize 1.6% of your balance is $4,416! Just drop the advisor and use some index funds instead.

Don’t index funds have fees too? Which ones have the lowest fees?

4

Ridley said:

Shan said:
You realize 1.6% of your balance is $4,416! Just drop the advisor and use some index funds instead.

Don’t index funds have fees too? Which ones have the lowest fees?

The idea is to avoid extra fees with an advisor if they don’t outperform the market. VTI, for example, only has a 0.03% fee.

5

@Oli
If they’re with Schwab, SCHB or SWPPX might be better picks… only 0.02% fee.

6

@Oli
Good tip, thanks.

7

@Oli
Those fees make sense since they’re actually managing the index tracking.

8

@Oli
BKLC has zero fees. I mix it with SPLG to keep fees low. BKLC’s only three years old, but Schwab uses the bank managing it, so it’s solid.

9

Ridley said:

Shan said:
You realize 1.6% of your balance is $4,416! Just drop the advisor and use some index funds instead.

Don’t index funds have fees too? Which ones have the lowest fees?

Just think, 0.03% versus 1.6%!

10

You’re probably out $30k by not being in the S&P 500 directly.

11

Whitney said:
You’re probably out $30k by not being in the S&P 500 directly.

So far…

12

Reminds me of the old saying, “Where are the customers’ yachts?” You see the bankers and brokers with theirs, but where are the customers’ yachts? :motor_boat:

13

Drew said:
Reminds me of the old saying, “Where are the customers’ yachts?” You see the bankers and brokers with theirs, but where are the customers’ yachts? :motor_boat:

On my first day on Wall Street, someone told me, ‘The firm makes money, the broker makes money. And two out of three ain’t bad!’

14

You really just need a simple 2-3 fund portfolio that you can manage yourself.

15

Perrin said:
You really just need a simple 2-3 fund portfolio that you can manage yourself.

Even if you didn’t do a perfect job managing it, you’d probably still beat that 1.6% advisor fee!

16

@Cruz
Thanks for the reassurance, haha.

17

@Cruz
So true, lol.

18

If your account only gained 10% since 2022, your advisor really underperformed… especially considering stocks like NVDA and AVGO in that mix. My advisor was charging 1.5% but grew my account from $190k CAD to $275k CAD.

19

@Emory
With $25k in dividends taken out, it’s more like a 20% gain. But advisors really shouldn’t have clients taking out dividends if they’re aiming for growth.

20

Landry said:
@Emory
With $25k in dividends taken out, it’s more like a 20% gain. But advisors really shouldn’t have clients taking out dividends if they’re aiming for growth.

True, but the advisor can’t control what the client does. If you want dividends, they can’t stop you.