More than almost anything else, I believe the financial services industry needs greater price literacy and price transparency. In almost any other business, customers are used to looking at and comparing the prices of the goods they buy from a store or website and the services they buy from a tax preparer or hairdresser, but I meet very few people who have a clear idea how much they are paying their bank, mutual fund managers, insurance agents, or company retirement plan providers.
I was very pleased to see a detailed survey by financial planning author Michael Kitces comparing the all-in costs of a financial advisor based on account size and other factors. What I find encouraging is that a large percentage of the all-in costs of most advisors still goes to relatively expensive actively managed funds for advisors who have not yet moved to lower cost ETFs, and I feel I am am keeping GFM ahead of the curve by integrating our investment management within our practice and keeping our all-in costs to clients competitively within the ranges in this chart, while providing what we believe is a higher level of service.
If more independent financial advisors are able to integrate investment management services (which we believe will become easier and more common with the rise of “robo-advisor” and “cyborg advisor” technology), we may also see more advisors follow our lead in offering a performance fee option to clients currently charged mostly by hedge funds.
Technology should continue to make financial advice and education more efficient, more comprehensive and less expensive for human advisors to deliver to clients, just as we have seen with accounting and insurance services and should hope to see with legal and medical services in the coming decade.
Meanwhile, I encourage you to ask me (or your financial advisor) about fees! You can contact me through the form below.
Until next time,