How to Save on Investment Management Fees

In my advisor practice, a client brought up the question as to whether he could save some money by referring a relative or friend and have that person’s assets to be considered when management fees are calculated.

Here’s how it works. All fee-based investment advisors have a sliding fee schedule for their clients. The higher your portfolio value, the smaller the management fee.

For example, let’s say your managed portfolio has a value of $80k and you are referring a family member with a portfolio value of $40k. In my practice, we have fee break points for accounts under $50k, under $100k, under $250k and so on.

In the above example, you, with the $80k portfolio, would benefit greatly by referring your friend with a $40k portfolio. You would both slide into the lower fee bracket between $100k and $250k, which would result in considerable savings.

It’s a win-win situation. Your cost has been reduced, your friend starts out at a much lower fee schedule and the advisor has gained a new client.

If you’re working with a fee-only advisor (and you should), be sure to ask the question about combining assets to reduce your investment management costs.

About Ulli Niemann

Ulli Niemann is the publisher of "The ETF Bully" and is a Registered Investment Advisor. Learn more
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