Quote:
Originally Posted by MikeWaters
I guy I have worked with on a number of things is probably going to take up my stock portfolio (i.e. retirement accounts).
I pretty much trust him. I knew his brother in med school. I've known him now for several years.
With my small retirement fund, he had recommended I mainly invest in index funds.
But now he says my little pot of money is large enough to manage.
He says that historically he beats the S&P 500 by 2-3%. He would charge 1% per year for him and his employees to manage my accounts.
Is 1% a reasonable charge for a relatively high-maintenance management?
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Mike, here are my thoughts.
1. I don't think a financial advisor is EVER worth 1% of your return, unless you're into the $10M+ range of assets.
2. <$10M, don't even think about it--use Vanguard index funds and modern portfolio theory and balanced asset allocation. here are a couple places to learn.
http://www.moneychimp.com/articles/risk/riskintro.htm
http://www.indexfundeducator.com/allocation.htm
3. >$10M you may think about additional diversification or the use of funds like Dimensional Fund Advisors.
http://www.dfaus.com/
4. Any financial advisor who is telling you he beats S&P by 2-3% is probably dishonest or incompetent and I would run away as fast as you can.