Doubting Doctor AUM Model

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Dear Medical Executive-Post

This is an excellent communications forum and blog; I tell all my friends about it. So, here is my dilemma. 

The Problem?

My financial planner charges me a percentage of assets-under-management. He explained that in this way we are both on the “same side of the economic table”, with aligned interests. It all sounded good at first; but now I am wondering after doing some research and readings?  

For example: 

  1. Doesn’t this produce an “equity bias”, as he earns more income with equities than cash or bonds? This seems especially problematic with automated DRIP programs that don’t produce cash for purchases during market price downturns, but seem to constantly buy-up; at least 2/3 of the time according to my readings.
  2. Why can’t I pay a percentage of the assets he “grows” for me, rather than on the assets I have already amassed myself – without his help, or brought in from elsewhere?  And, why pay if he looses money?
  3. Is it true that my account is just bundled and outsourced with many other similar accounts, and is not really specific for me at all? Of course, this probably does reduce his risk by remaining within the “standard of care” for his industry. But, common industry practice doesn’t mean it’s good for me. And, why do I have to sign a brokerage arbitration agreement? Why is he not a fiduciary like my CPA and attorney?
  4. What is the deal with all these meetings and client engagements that don’t seem to add any value? And, he doesn’t seem interested in financial planning at all, despite being a “financial planner.” My other concerns are glossed-over, and then he just recommends I see an “expert”, when pressed.


Is it time for me to “do-it-myself”; and go to a passive investment management style, use index funds or ETFs, and be done with it all? This strategy sure seems a lot cheaper. Of course, I fear my “doubts” will affect our relationship.


Am I wrong, or right? The more I investigate and learn about all these industry practices, the more concerned I have become. Any thoughts are appreciated?  Yet, maybe I don’t really have a problem at all! 

Nevertheless, where does a doctor (or anyone else for that matter) go for “honest advice”?  

PS: Your books are excellent sources, but I still need some help with execution.

Thank you. 

Dr. Mark-Me Anonymous

[Washington, DC]   


Comprehensive Financial Planning Strategies for Doctors and Advisors: Best Practices from Leading Consultants and Certified Medical Planners™



2 Responses

  1. Medical Executive-Post,

    I found your site on google blog search and read a few of your other posts. Keep up the good work. Just added your RSS feed to my feed reader. Look forward to reading more from you.



  2. The Conflicted AUM Fee-Corollary

    The Assets Under Management [AUM] fee system of charging clients based on the amount of assets under management is flawed for the financial advisor.

    Why; because it often forces clients with simple lives to pay more for services, than those with more complex financial affairs.

    The Assets Under Management [AUM] fee system of charging clients assets on the amount of assets under management is also flawed for the client.

    Why; because advisors often take more risks than necessary in order to maintain income levels, with a risk-reward ratio heavily against the client as they are “decidedly-not on the same-side-of-the-table.”

    And so, what is the answer to this opposing situation; client versus advisor? Your comments are appreciated.



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