Average Wealth Management Fees


A number of Millennial’s may be thinking that they don’t have nearly enough money to consider a financial advisor. I’m here to tell you that most financial advisors are actively seeking new Millennial clients. We Millennial’s are the up-and-coming generation and the future of their industry.

While Baby Boomers and Generation X’ers obviously have more wealth accumulated than us currently, obviously because of time and compound interest, we are the future of wealth management advisory services. I have read countless articles recently about how financial advisory firms and certified financial planners are looking for younger clients. They want successful Millennial’s who may not have the assets as of right now but appear to be well on their way in the next decade or two plus. If a financial advisor can get you in under their management in your late 20’s or early 30’s, they know long-term you are a great client for them as your portfolio and investable assets continue to grow (as well as your personal income).

I personally think a Millennial is better off managing their money. I have no formal financial education but I read, listen and research investing, personal finance and money topics virtually every day. I want to successfully manage my money on my own and there are a number of mediums out there to do just that. I would encourage all Millennial’s to do their own wealth management and forego any financial advisory fees. It’s all very possible. I manage my own portfolio and I am beating the market.

With that said, there are some people who just like to be hands-off when it comes to their money. They would prefer to have someone else managing their money for them so they don’t have to. Behaviorally speaking from a financial standpoint, a financial advisor makes sense in that respect because they prevent you from during something drastic during a downturn. They help you stay the course (at least they should!).

Below are average fees a Millennial can expect to pay for the services of a financial advisor and/or wealth management firm. Using a “fee only” firm would be your best option.

Less than $500,000 in investable assets

Most of us Millennial’s will fall into this group as a starting point, in terms of overall investable assets. If you have less than $500k in investable assets, you should expect to pay approximately 1.25% in annual fees. For example, if you have a portfolio worth $400,000 and pay 1.25% in management fees, that would equate to $5,000 annually. Decent chuck, huh?

Less than $1,000,000 in investable assets

If you are closer to one million dollars in your portfolio then you can expect your fees to drop slightly – to the tune of 1.0% flat. So about 25 basis points less than if you have under $500k. For example, if you have a portfolio worth $800,000 and pay 1.0% in management fees, that would equate to $8,000 annually.

Between $1-5 million in investable assets

Once you hit the one million dollar plus mark is when you start to see a sizable savings in your wealth management fees. At this stage is when I personally would begin entertaining such a service from a financial advisor, because the fees are low enough that it may make sense for a Millennial. The average management fees for a portfolio ranging in value from $1-5 million is 0.75%. For example, if you have a portfolio worth $2 million and pay 0.75% in management fees, that would equate to $15,000 annually. $4 million would obviously equate to $30,000.

Over $5 million in investable assets

Now is when you really start to see the savings with a lesser management fee average of approximately 0.50% when your investable assets is above $5 million dollar. At this stage you should strongly consider having your assets under management if your porfolio is this large. For most of us Millennial’s this won’t be until we’re really closer to retirement, like in our 50’s or 60’s, if ever. It would without a doubt be a good problem to have…possessing a portfolio of more than $5 million dollars. Your management fees of 0.50% would equate to $25,000 annually.

Vanguard charges a flat 0.30% on all portfolio sizes

I have all of my investable assets saved with Vanguard and I love them. Great website, amazingly low-cost funds, and terrific customer support. On top of all of that, Vanguard only charges 0.30% for your assets under management. For example, with a $250,000 investment, the low cost of Vanguard’s advice service is only $750 annually compared with the industry average of $2,550 (1.02%). That means you’d keep $1,800 more annually invested toward reaching your goals. And there’s no fee for leaving the service.

Robo-advisor fees

Robo-advisors are all the rage now. And they are especially going after the entry-level, tech-savvy, Millennial investor. Its actually a very smart plan on their part. But what does a robo-advisor cost? They come in very low actually, ranging from 0.15-0.35%. The obvious drawback to a robo-advisor is the lack of human intervention, from yourself or a financial advisor. The benefit to using a robo-adviosor? The fact there is no human intervention. You take emotional decisions off the table completely, which is very important when investing (and staying the course) for the long-term.

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