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Ask-the-Advisor
Dear Dr. David Edward Marcinko,
Are financial advisors a wise investment? Mine charges me 1% each year for all my assets under their management. Is it worth it?
—Allen
It is hard to know for sure. But the fact that many financial advisers have different hidden fees suggests to me that they themselves don’t think that people would pay if they charged for their services in a clear and upfront way.
Re-Frame
To help you think about this question in your own life, let’s contrast two cases: In case one, you are charged 1% of your assets under management, and this amount is taken directly from your brokerage account once a month. In case two, you pay the same overall amount, but you send a monthly check to your financial adviser.
Consider
The second case more directly and clearly depicts the cost of your financial adviser, providing a better frame for your question. So, put yourself in the mindset of the second case, and ask yourself if you would pay directly for these services.
I think the best answer, according to colleague and economist Dan Ariely PhD, can be expressed in this manner.
If the answer is yes, keep your financial adviser; if the answer is no, you have your first action plan for the New Year.
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Conclusion
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