I Pay a 0.75% Fee on $1.5M. How Do I Know if I Am Getting My Money’s Worth?

Again, the way to assess your portfolio performance is to determine if your advisor is following through on what they say they are going to do for you.

• If your advisor is investment-focused and suggests their methods will provide you with superior investment performance, you can compare your return against a relevant benchmark to see how your returns stack up.

• If your advisor is more planning-focused and suggests that they will manage your investments in a way to meet various goals, nominal returns may not be the best metric for evaluating them. In that case, you’ll want to assess whether you are in fact meeting your goals in a timely fashion.

Then again, your advisor’s investment style could be a blend between these two. For example, they might manage your investments with the goal of generating a specific amount of tax-free income or dividends per month. (Whether you need help managing investments or creating a financial plan, a financial advisor can help.)

How Much Does It Cost?

Of course, then there’s the cost. Again, it will vary from one advisor to the next and depend on the level and type of service you are receiving, but 0.75% is within the normal range.

Some advisors may charge twice that amount. If you want cheaper management it is certainly available. You can likely find a robo-advisor for half that cost, just be mindful of the general trade-off between service/communication and cost. You can even do it yourself and save the cost entirely. That’s a legitimate option, but before you decide to do that make sure it’s a viable route for you. (And if you need help in your search for financial advice, this tool can help match you with potential advisors.)

Bottom Line

When evaluating your financial advisor or the company that’s managing your investments, you’ll want to consider the services they provide, how much they communicate with you, how well your investments have performed and how much it all costs. If you’re unsatisfied in any of these areas, perhaps it’s time to look for a new advisor.

Tips for Finding a Financial Advisor

• Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three vetted financial advisors who serve your area, and you can have free introductory calls with your advisor matches to decide which one you feel is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.

• Consider a few advisors before settling on one. It’s important to make sure you find someone you trust to manage your money. As you consider your options, these are the questions you should ask an advisor to ensure you make the right choice.

• Keep an emergency fund on hand in case you run into unexpected expenses. An emergency fund should be liquid — in an account that isn’t at risk of significant fluctuation like the stock market. The tradeoff is that the value of liquid cash can be eroded by inflation. But a high-interest account allows you to earn compound interest. Compare savings accounts from these banks.

• Are you a financial advisor looking to grow your business? SmartAsset AMP helps advisors connect with leads and offers marketing automation solutions so you can spend more time making conversions. Learn more about SmartAsset AMP.

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The post Ask an Advisor: I Have $1.5M Invested With My Advisor and I Pay a 0.75% Fee. How Do I Know If I’m Getting the ‘Best Bang for My Buck?’ appeared first on SmartAsset Blog.