I’ve been a bit of a broken record lately, but here we go again.
This week Morgan Housel was the one asking questions about investment advisory fees based on a portfolio size. His rather hilarious grocery-store analogy hits the nail on the head: why are we using arbitrary factors to calculate how much investors should pay for investment advice? From his piece:
“I think one of the biggest trends we’ll see over the next decade are financial management fees falling like a rock. They’ve already dropped in recent years, but there’s still enormous fat to cut. Not only will AUM fees be pressured to decline, but the way advisors charge may be upended. The winner is you, the investor.”
Yes, I’m biased because he quoted both from this website and from me personally, but I am simply happy that we are starting to have a conversation about investment advisor compensation. Investors deserve better, and my industry needs to start being straightforward about compensation if we ever want to reach a true level of professionalism.
The Wrong Way to Pay for Financial Advice – Motley Fool