I’m in the process of advising some clients with a fairly substantial investment portfolio.
They are invested in what I think was a very good investment product. They are well diversified. The asset allocation is right. The investment methodology is sound, and they are likely to receive returns somewhat equivalent to the market.
Their fees are reasonable. Without a doubt, there are many investment portfolios with substantially higher fees than the product they are in.
But there are other options available on the market, with investment methodologies that are similar and, to my mind, are equally sound. Over the long-run, I don’t think a single person could predict with certainty which fund would provide the greater returns.
This alternative fund has lower fees. The difference in fees are in the vicinity of 0.4% per year.
Fees of 0.4% don’t sound like a lot. But for an investment portfolio of $1 million, we’re looking at savings of $4,000 per year.
Fees are one of the few things you can control when it comes to investing. They can have a huge impact over time. My philosophy as an adviser is that I should be making sure clients don’t pay more in fees than they need to. I think of this as helping clients to “de-fee” their portfolio.
Engaging an adviser who can keep track of these things, and ensure you’re not paying more than you need to – while also considering factors such as asset allocation and whether the investment methodology is appropriate – can provide concrete, clear value in terms of dollars saved.
In this case, I’m saving my clients more than $5,000 per year. $5,000 a year adds up quickly over time.
This isn’t the only value I’m providing. I’m helping them get clarity about their financial situation and what they want to achieve. I’ve worked with them in relation to their succession planning. I’m helping them through the process of becoming good stewards for their family wealth. This is all valuable.
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But it’s nice to point to a dollar figure and say, without qualification, that I’m adding substantial value to their financial situation.