My father recently passed and my mom who is 69 is trying to figure out her retirement. I'm recommending a fee based wealth planner. But my aunt is trying to get my mom to use her UBS financial guy whom she's used for 20+ years. He charges 1% of the balance to 'manage' the funds. So a $600k balance in the first year would be $6k in fees and when the balance is $1 million the fee that year would be $10k and so on.
Here is a calculator showing a $600k balance with a 7% avg rate of return over the next 15 years with a 1% fee. She'd be paying the advisor/company over $217,000 in fees, wtf. (Actually both this and the following example would be less because she'd be withdrawing 4% of the balance per year for her retirement - thus the total ongoing balance would wouldn't reach as high but you can still see my point).
Meanwhile, here is a calculator showing the same $600k starting balance, 7% avg rate of return over 15 years in something like VTSAX which only as a 0.04% fee.
Warren Buffet already proved that the best account managers couldn't beat the S&P500 in the long run. No one has a crystal ball; old people don't need to be pulling in and out of something, right? I'm not saying to invest in VTSAX necessarily; we'll see what the wealth planner says. But my point is that I bet we could simply put it in the recommended fund with a much lower fee than an ongoing financial advisor. Am I missing anything?
Submitted May 16, 2022 at 10:24PM by amiatthetop3 https://ift.tt/GcQlXd9
