I'm fortunate to share in many of the good posts here in the WCI forum, as well as publish the occasional article. One of the misconceptions I often see is how much a good fee only planner costs. I'm both a physician and a fee only planner, with almost 100 physician client families.
Younger physicians with few assets do indeed pay the well known 1% annual fee for advice and access. They are usually getting a fair if not excellent deal considering that they often have many issues and take extra time in the early years. But most of my physician clients come with established portfolios. My firm drops the fee as assets go up, such that a physician who comes with three million dollars will be charged 0.5% a year. As assets increase, their blended fee drops toward 0.25% progressively. I have several senior physicians that pay us around 0.3% a year-what they'd pay Vanguard to have some young "planners" who change on the phone from time to time.
I see that Johanna Fox-another fee only planner on the site, charges a flat fee but it looks like her fee would be much like mine for the same client. I know of many fee only planners that can be found at this cost (no, not all-but many).
A physician who comes with a three million dollar portfolio can think of our fee like this: 0.25% a year for asset management/portfolio design, implementation and management and then 0.25% a year for Fiduciary fee only planning including unlimited access on topics like estate planning, insurance issues, educational planning, retirement planning (including retirement plan design and implementation), asset protection and more. As the portfolio grows, the blended rate keeps dropping.
Paraphrased from author Nick Murray-there are at least three ways that I earn this fee:
1) I might have better investment performance. Now, there are certainly many astute investors on this site, on the Bogleheads site, etc that should do as well as we do. But there are many "self invested" portfolios out there that are easy to beat over the long run (buying the best actively managed funds from Money magazine, etc).
2) I"ll probably stop you from making many kinds of mistakes. This might be euphoric buying (Tesla stock comes to mind right now), or selling from panic and fear. It might be avoiding a bad real estate investment or a "silent" investment in a private company. It might be having the right title on rental property and your car to avoid lawsuits. It might be having a retirement plan for your independent practice that allows you more in contributions while minimizing employee costs. On and on.
3) You won't personally have to worry about all this "stuff". You'll be paying us to worry about it.
Any one or all three of these functions should more than cover the extra cost of having an advisor-which again I'll argue is small for most physicians.
Younger physicians with few assets do indeed pay the well known 1% annual fee for advice and access. They are usually getting a fair if not excellent deal considering that they often have many issues and take extra time in the early years. But most of my physician clients come with established portfolios. My firm drops the fee as assets go up, such that a physician who comes with three million dollars will be charged 0.5% a year. As assets increase, their blended fee drops toward 0.25% progressively. I have several senior physicians that pay us around 0.3% a year-what they'd pay Vanguard to have some young "planners" who change on the phone from time to time.
I see that Johanna Fox-another fee only planner on the site, charges a flat fee but it looks like her fee would be much like mine for the same client. I know of many fee only planners that can be found at this cost (no, not all-but many).
A physician who comes with a three million dollar portfolio can think of our fee like this: 0.25% a year for asset management/portfolio design, implementation and management and then 0.25% a year for Fiduciary fee only planning including unlimited access on topics like estate planning, insurance issues, educational planning, retirement planning (including retirement plan design and implementation), asset protection and more. As the portfolio grows, the blended rate keeps dropping.
Paraphrased from author Nick Murray-there are at least three ways that I earn this fee:
1) I might have better investment performance. Now, there are certainly many astute investors on this site, on the Bogleheads site, etc that should do as well as we do. But there are many "self invested" portfolios out there that are easy to beat over the long run (buying the best actively managed funds from Money magazine, etc).
2) I"ll probably stop you from making many kinds of mistakes. This might be euphoric buying (Tesla stock comes to mind right now), or selling from panic and fear. It might be avoiding a bad real estate investment or a "silent" investment in a private company. It might be having the right title on rental property and your car to avoid lawsuits. It might be having a retirement plan for your independent practice that allows you more in contributions while minimizing employee costs. On and on.
3) You won't personally have to worry about all this "stuff". You'll be paying us to worry about it.
Any one or all three of these functions should more than cover the extra cost of having an advisor-which again I'll argue is small for most physicians.
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