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Not only have you inherited your parents’ portfolio, you’ve also inherited their long-time advisor. You’ll have to decide for yourself if you should move the money elsewhere or even manage it on your own.
Since the portfolio has strong returns, why fix what ain’t broke? This can be a difficult decision, rife with guilt and obligation, especially if your parents have worked with their advisor for decades.
Understanding your options
Given the size of the portfolio, a financial advisor can assist with portfolio management, investment strategy, performance reporting, and aligning asset allocation with risk tolerance. They can also create a personalized plan to help you meet your retirement goals and adjust the portfolio as needed.
If you’re finding it difficult to make sense of the noise and emotion, now could be the right time to get in touch with a financial advisor through Advisor.com, an online platform that connects people with wealth experts.
Behavioral coaching is one of the most valuable things a financial advisor can offer. A skilled advisor can help ease the negative emotions that arise during financial planning and decision-making.
They do this by “working with you to co-develop a plan with clear, measurable, time-bound goals,” says Kellen Thayer, a financial advisor with Advisor.com.
No matter where you move your money, professional advice isn’t free. Advisors typically charge a percentage of your assets under management (AUM), ranging from 0.5% to 2%. A 1.75% fee isn’t out of line for a full-service wealth management firm, meaning that for a $680,000 portfolio, you could pay around $11,900 annually.
With assets under management, the fee serves as an incentive to maximize returns. In other words, growing your assets is in your advisor’s best interests. So, if the returns are exceptional, then the higher rate may be worth it.
Alternatively, you might explore other options, such as an annual retainer or flat fee for specific services. A retainer typically costs between $6,000 and $11,000, according to a 2023 Advisory HQ report.
If you prefer to handle some of the money management yourself, you could work with an advisor who charges by the hour or project, with fees ranging from $120 to $300 per hour.
It’s also important you weigh the costs against the long-term benefits. Research demonstrates the significant impact of working with a financial advisor. According to Vanguard’s research, people who work with financial advisors see a 3% increase in net returns. This difference can be substantial over time. For instance, starting with a $50,000 portfolio, you could potentially retire with an extra $1.3 million after 30 years of professional guidance.
Robo-advisors charge lower fees, but you (obviously) won’t get the human touch. This is what sets financial advisors apart from robo-advisors. You can’t get the same personal connection and customization with an algorithm as you can with another human.
When you get matched with a financial advisor through Advisor.com, you can schedule a free consultation call with a real person to discuss your financial goals and see if you have a good rapport. This relationship is meant to last over the long haul – years, even decades – with your advisor accompanying you on each phase of your financial journey.
There’s also the possibility of managing the money yourself, but you should be financially literate and feel comfortable enough to invest according to your financial goals.
When tackling investing on your own, it’s easy to miss hidden costs. A good financial advisor can implement a cost-effective portfolio to minimize these costs and maximize overall returns.
“It’s not what you make, it’s what you keep,” Thayer says. “Advisors help you develop a plan, stick to it, and can help you to avoid costly mistakes that may exceed any fees you pay them over the long term.”
A good financial advisor will help you look for investment opportunities that offer low costs and don’t charge hidden fees. Depending on the size of your portfolio, professionals found through Advisor.com charge clients through a flat fee or a percentage of assets under management. Both methods are presented upfront, so you know what to expect.
Finding the right fit
Before deciding to fire your parents’ advisor, it’s a good idea to have a detailed conversation to assess if they’re the right fit for your goals.
If you opt to shop around thereafter, you don’t have to go it alone. With almost 400,000 financial advisors in the nation, finding one for yourself might be a tall task.
Finding the right advisor for your needs is simple with Advisor.com. Their platform connects you with an experienced and qualified fiduciary advisor in your local area. As they must, by law, put their clients’ interests ahead of their own.
How it works
Get matched with an advisor for free in three easy steps:
- Step 1: Answer a few quick questions about yourself and your financial goals
- Step 2: Advisor.com will match you with a vetted advisor who can provide you with a personalized plan to meet your goals
- Step 3: Book a free, no-obligation consultation to confirm if your match is right for you
Future needs
If you choose to manage the portfolio yourself, it’s important to understand how to build and maintain a diversified portfolio that aligns with your goals. You’ll need to adjust asset allocation as you age and rebalance periodically. In this case, you could also consider paying for hourly or project-based advice when needed.
No matter what you decide, it doesn’t have to be forever.
The key goal is to start building sustainable wealth-building habits, says Thayer. “People often say they will start investing tomorrow, but tomorrow never arrives. A financial advisor can be the accountability partner they need to ensure they don’t put off what they know they should be doing until it’s too late.”
This article provides information only and should not be construed as advice. It is provided without warranty of any kind.
