Advisor wants to charge a fee

Question: We have had the same advisor for approximately 10 years and have paid the yearly administration costs per account plus the commissions on purchases of stocks, mutual funds, etc. Our advisor has approached us requesting that we pay 0.75% of our portfolio value annually. This will increase our fees fourfold.

Is this a reasonable request? We are being led to believe that it is the way of the future for all advisors. – J.B.


It is true that many advisors are moving to a fee-based system, using a percentage of assets under management. Usually the percentage is higher than 0.75%, but the trade-off is that no transaction commissions are charged. In this case it appears that the advisor does intend to keep charging commissions, and wants to add the service fee on top.

Whether this is ‘reasonable’ depends on the level of service you are receiving, the total cost you will end up paying, the performance of your portfolio and the overall degree of satisfaction you have with the advisor. That’s a question only you can answer, but now you at least have a starting point from which to make your assessment.