At GuardVest, we always strive to keep our subscribers informed. Lately, we’ve had plenty of opportunities, as there seems to be quite the renewed interest in what financial advisors provide in the way of service—and how that service is measured versus what you’re paying in fees.
Take for instance this recent Forbes article, in which contributor Phil DeMuth cautions investors with a tale we find all too common. Due in part to its catchy title, “Wealth Management of the Body Snatchers”, it definitely caught our attention. DeMuth makes several salient points, the gist of which echoes Warren Buffett’s safe-route investment strategy for long-term holdings. The author even includes the line, “…I wish I had bought stock in Berkshire Hathaway a decade earlier.” Here’s what you should take away his well-written article: simple index funds beat professional managers over time.
DeMuth goes on to lament the 20/20 hindsight defense of high risk-high yield investing, utilizing such phraseology as, “pursuing great opportunities after they have left the station” and “buy[ing] tickets to a succession of roller coaster rides that start at the top of the hill and riding them to the bottom.” However, he saves his most cautionary language when describing the fee structure of professional money management.
This is where GuardVest comes in. That’s because we believe in creating informed investors with accountable advisors. As an investor, you need to know not just what you pay in fees, but to whom you are paying exactly. Do you have a professionally managed account that includes fees for two managers, each charging 1% annually on your assets? How about three managers? Seven? At this rate, fees compound, add up quickly and can take a huge chunk of your earnings. Expenses are important and good advisors often do a lot more than provide steady performance. But making sure you know exactly what you’re paying and whether or not it’s warranted is the key.
DeMuth continues to caution that when it comes to assessing your financial advisor or firm’s performance, beware of presentations which never seem to indicate a declining arrow on a linear graph. At the close of his article, DeMuth gets personal—going so far as to compare the tactic of presenting attractive investment proposals to putting clients to sleep in order to harvest a continual stream of fees.
Don’t allow yourself to be put to sleep and have your fees harvested. Sign up for a free trial subscription to GuardVest, where we can quickly provide vital information on your portfolio’s performance and a report card on individual advisors. There’s a reason we named these respective services the “Free Look Portfolio” and the “Advisor Report Card”. We provide you with the power to stay awake--right at your fingertips.
Always remember that GuardVest is an unbiased source of information. This company receives no compensation or fees from financial firms and we are not money managers. We’re simply interested in keeping investors apprised of their money management as it relates to the financial professionals managing their portfolios.