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How do I know if my financial adviser is doing a good job?

Marketplace Staff Dec 6, 2013


I have about a quarter of my retirement money with a financial advisor who charges the following: The advisor gets 1 percent of assets under management; 0.2 percent goes to the third-party custodian; 0.3 percent goes to the company that decided the asset allocation that was set up, based on my age, answers to questions about risk, volatility.

Now I find out there is an expense ratio for the ETFs; as well as the costs of commissions when buying and selling the ETFs to rebalance, as well as something called the bid/ask spread. I am thinking of moving this money to Vanguard. 


Carmen Wong Ulrich Dec 6, 2013 Former Host
Wowzers. That’s a lotta fees. I don’t blame you for looking elsewhere, however, a good financial planner can be well worth their 1 percent. If your planner or advisor is worthwhile depends on a couple of things: Do you feel that he or she is worth the money? Meaning, are you getting great service; have you kept up-to-date on moves you may need or want to make; do you get your calls and emails answered promptly and to your satisfaction; do you feel comfortable and well-informed as to where your money is and what other options you have that are lower cost? I take it that this is not the case. 

Also, do you really want to manage all this on your own? You may save a lot in fees going with a big discount broker however know that it will require more work on your part to stay on top of where your money is invested and why. Fleeing to D.I.Y. may not be necessary just yet.

Interview a few more fee-based or fee-only planners — ask for referrals and search at FPAnet.org. Instead of someone holding onto your funds (and paying management fees, etc.) there may be an hourly planner who instead can help you make asset allocation choices but simply on an hourly basis rather than a percentage off the top. 

Paying retail is no fun but you may not want to yet head to rock bottom prices.  Sometimes the ’30 percent off’ rack rather than the ’75 percent off’ rack yields better value long term.

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