How much do you pay for wealth management? About $1,000 a month or more? If your account is $1 million or larger, that may be the case. It has become the industry standard for wealth management firms to provide their services for an annual fee approximating 1% of the assets managed.
What are you getting for that 1% fee? You should be getting more than basic investment advice. A financial professional with a fee-based business should be able to provide you with insight into retirement planning, tax and estate planning, risk management, and college planning. He or she should provide more than just a second opinion on your investment choices.
A Certified Financial Planner™ is the type of professional who will provide you with expert advice regarding your investment choices. A CFP® possesses the education, experience, and perspective to offer a truly holistic overview of your financial situation and the possible paths toward your financial goals.
When a financial professional gives you truly comprehensive guidance, that 1% fee may be worth every penny. A 1% annual advisory fee is a tiny price to pay if the insight gained keeps you from making an expensive error. A CFP® who provides financial planning services must also abide by a fiduciary standard meaning that person offering financial advice must act solely in a client’s best interest.
At Kendall Capital we not only charge 1% for the first two million in investable assets, but we also abide by the fiduciary standard and have two CFPs® on staff, Clark Kendall and Carol Petrov.
When it comes to wealth management, avoid buying on price. This could prove to be a major error. Some investors think even a 1% annual fee is too much to pay, probably because they have been receiving so little in return for it. They decide to manage their wealth themselves, or they opt for a “robo-advisor.” Both of these alternatives have drawbacks.
As we have mentioned in prior Kendall Capital publications, do-it-yourself wealth management can potentially undermine your wealth-building effort. It demands immense responsibility, time and acumen. Do you have the knowledge and education of a CFP® professional? Do you think you can regularly outperform the benchmarks, or for that matter Wall Street money managers?
Many people think they can, and they may in the short term but at considerable risk. Do-it-yourself wealth management tends to create a day trading mentality, in which investors chronically buy high, sell low and underperform the markets. Do-it-yourselfers tend to “chase the return” to their detriment. Tax and risk management may get short shrift. A great return may not look all that great after taxes.
In life, business, and wealth management, there really is no substitute for personal interaction. That lesson is being learned by investors who rely on robo-advisors. A robo-advisor deploys computer algorithms to make investment and asset allocation decisions for you. It has no understanding of what you and your family want out of life or retirement. It will not sit down with you to create a retirement plan or a risk management strategy. It does not have to uphold a fiduciary standard that places your best interest first.
Yes, it may charge you a lower annual fee than a live wealth manager, but that discount may be offset by directing your assets into investments that come with relatively high management fees. A robo-advisor is ultimately making decisions on behalf of your investor profile, not you.
In paying that 1% fee for wealth management, make sure you get what you deserve. You should receive comprehensive financial planning for that expense. A Certified Financial Planner™ can provide that to you. You can rest assured that Kendall Capital has your best interest in mind with every decision we make regarding your financial accounts and retirement plans.