Is an Investment Advisor Really Worth the Investment Advisory Fee?
A recent survey indicates that an increasing number of high net worth investors are willing to pay for solid, unbiased, fee-only investment advice, which is not surprising considering the challenges of today's markets. What is surprising is that there are still some investors who would rather go it alone, thinking they can do better on their own, or that investment advice is not worth the cost, or both. With the average fee charged by an investment advisor around 1 percent, some investors are asking themselves if they could do better on their investment returns if they didn't have to pay the 1 percent fee.
On the surface that may seem like a fair question, at least until you examine what value the right fee-only investment advisor actually brings to the relationship. I would add one important caveat: investors really shouldn't ask the question when the markets are doing well. That's because most advisors, and for that matter, many do-it-yourself investors, generally look good in up markets.
The time to evaluate the worth of an investment advisor's advice is during the down markets. Here's why:
A truly honest appraisal of the value of investment advice would have to consider when the going gets tough, not while everyone is riding the wave of a market rally. If a good investment advisor can help you in any one of the four ways described above, they could be worth their weight in gold. But, a really good advisor will typically help you in all four ways. What's that worth to you?
*This content is developed from sources believed to be providing accurate information. The information provided is not written or intended as tax or legal advice and may not be relied on for purposes of avoiding any Federal tax penalties. Individuals are encouraged to seek advice from their own tax or legal counsel. Individuals involved in the estate planning process should work with an estate planning team, including their own personal legal or tax counsel. Neither the information presented nor any opinion expressed constitutes a representation by us of a specific investment or the purchase or sale of any securities. Asset allocation and diversification do not ensure a profit or protect against loss in declining markets. This material was developed and produced by Advisor Websites to provide information on a topic that may be of interest. Copyright 2014-2016 Advisor Websites.Back to Articles