Is your financial manager worth it? Walter Updegrave from CNN/Money answers a writer’s question. The writer has had a financial manager in charge of $400,000 in mutual funds and stocks since 2001, to whom the writer has paid 1% per year, or $16,000 total, in fees. The assets have increased 1% over the past 4 years.
Updegrave tells the reader how to go about determining whether the $16,000 in fees was worth the 1% increase in assets. Some calculations are involved in order to create an appropriate benchmark, and Updegrave points the reader to the Instant X-Ray Calculator in which you may enter your mutual fund holdings to determine your total composition in stocks, bonds and cash.
If you’re paying a crazy fee, your financial manager damn well better be blowing past the market averages. As we all know, the likelihood of leaving the benchmark in the dust is very low.
My previously-mediocre-but-not-horrible discount brokerage firm decided to start charging an annual fee… a fee higer than some full-service brokerages. I’m high-tailing it out of there ASAP, and I’m looking to do it without any tax implications. Although, even if I have to sell, the tax burden shouldn’t be too bad.
So, with the several thousand dollars in that account, I’m most likely looking at Scottrade. They have no annual fees and seem to be generally non-evil.
Currently, the entirety of my brokerage account is invested in AIVSX, American Funds’ “Investment Company of America” fund, which seems to do a good job of matching the S&P 500, but not much else. It also has a pretty ugly 5.25% up-front load fee, which pisses me off about as much—or more—than annual fees. In effect, every time I bought shares of this fund, I paid 5.25% higher than the market price per share, with the extra going to the broker. That also means that (put simply) if the fund was getting a 10% yield, it was only a 4.75% improvement over what I paid.
Fees like this on the smaller investors, like me, bug me to no end. It’s obvious the brokerage firms prefer the clients with large sums to invest. They are the people who make the brokers rich. The brokers should accept that (instead of giving the top investors breaks) and leave the little guys alone.
It’s not technically spam in this case. I signed up for an ING Direct savings account a while ago, and my regular readers have probably seen many entries on Consumerism Commentary about how happy I am with this bank. In fact, at the moment they offer 2.2% APY on their savings account which is quite generous compared to the rest of the world.
About once a week (although it seems less frequent) they send an email containing money savings tips. I had the option of opting in when I signed up. I like the emails because it’s good to be reminded to stay on track and not to spend exuberantly.
Here are their tips for this week. Of course it’s all common sense, but it’s good to have reminders. Be aware that their tips push their products under the guise of a partnership with ihatefinancialplanning.com, which is owned by the ING companies.
Ulysses S. Grant looks ready to go to war with Iraq in this new portrait. Here’s the announcement of the new bills entering circulation. I’m enjoying the new renaissance in bill and coin design.