Need Advice: Asset Management of Family Portfolio

I’ve been tasked with helping find a suitable asset manager for my family’s assets. As such, I’ve been shopping around and what I’m finding is that advisor fees will be about 50-100bps and blended investment management fees (fund fees) are about 20-150bps (depending on whether we went active vs. passive say a Fido vs. DFA).

I’m coming to the conclusion that paying anything over 100bps all-in is outrageous. Say you have $10M, over 10yrs at a 7% return less 100bps for fees amounts to about $1.4M in fees!!! Too much. I don’t feel comfortable nor have the time and experience to run the family portfolio it myself. Curious if anyone here has some advice on how I might get the all-in fees down.


Just put it in a few diversified index funds and have it rebalance. Solid strategy for anyone.

Put it all in something like VWINX or VWELX depending on the appropriate risk tolerance and go on about your life.

1% on $10M would be crazy. we would typically charge 0.5-0.7% at that asset level depending on the complexity. what asset level are we talking?

1% is way too much, especially if you’re only looking for someone to manage the investments. If there’s complicated financial planning or estate planning that needs to be done, then maybe you should pay a 0.5% management fee, but still that comes out to $50,000 PER YEAR. That advisor better be providing a sh*tload of advice for $50K every year.

If it’s simply an investment allocation that you’re looking for…

40% - VTI

15% - VEA

5% - VWO

5% - VNQ

Remaining balance goes to solve your liquidity needs and the rest is placed in fixed income. BND will suffice, use MUB if this is nonqualified money.

Remember, simple investing isn’t unsophisticated. Don’t get sucked into the idea that you HAVE to pay high fees to get good diversification and advice. You just need a solid financial plan and someone who can spend 10 hours a year ensuring that the investmetns are being rebalanced to target. Find an independent fee based financial advisor who will assess your needs, give you a financial plan for $3K and then do the rest on your own.


Thanks. Around the asset level you mentioned for the liquid portfolio. Generally, I’m finding at this level I could negotiate down to about 0.5-0.75% for the advisory fees. However, stacking on the fund fees makes the aggregate fee range 0.75% - 2%. Unless I’m getting someone that is consistently outperforming, I’m just not sure why I should be paying above 1% on that asset base. If we were to go completely index/passive, 0.5-0.6% almost feels like it should be the ceiling for fees.


Thanks. The more I research this, the more I’m being drawn to your strategy. The part that I get a little nervous about is doing it fully on my own. Not because I don’t think I couldn’t learn it, but of the fiduciary risk. An advisor (even a very cheap one as you mentioned) can serve as a buffer against potential conflicts among the family and possibly any hairbrained schemes (even those from myself) any of us could conjure up. Simply put, there’s a degree of seperation there.

How about this… You meet with a fee-only financial advisor who will build you a financial plan and an investment policy statement which includes a simple low cost investment portfolio such as the one I listed above. At most, you’ll pay $5K for this. Get the family to agree to an annual review with this advisor where you reassess the investments and update the financial plan for any new information or needs. This annual review shouldn’t cost more than $3K. Even great advisors won’t turn down the opportunity to make several thousand dollars for one meeting a year. And you’re not looking for someone to manage the Ford Foundation, overall your needs are going to be relatively simple.

Over 10 years you’re looking at potential savings of $500,000 to $1,000,000 in advisory fees. As long as your family can understand that investments go up and down, but over the long term a diversified portfolio will be just fine, you don’t need someone managing that portfolio. Most advisors aren’t going to be watching it anyways, they’ll just do a review in the hours leading up to your annual appointment. Even good managers who make small tactical moves are still going to be challenged to deliver the kind of value that makes up a 0.5-1% management fee. Some can, but the odds that you’ll find one are small.

You’re not just paying for advice in your situation. You’re also paying for it not to be your fault when some relative gets pissed about a down year. Attach whatever price tag you may to that.

Geo is right. OP if you feel like it’s worth $50K per year to blame someone else, send me a PM. I’ll gladly take the blame.

OP: Asset Management is only one part of managing your family wealth. There can be complex tax and estate planning that needs to be coordinated with your portfolio strategy. It would be big mistake for you to try to do this yourself.

I would suggest you do some homework and interview a few family offices (and Greenman too?) to find out more about how they service their clientele, their investment philosophy and cost. I’m an Advisor and I can tell you from personal experience that emotions will run high and when you incorporate family dynamics (and spouses) things can get messy really quick, especially when dealing with this kind of wealth.

^you can get all that for $5K from a fee based guy who, as stated, will address any tax and estate planning issues. You can also visit him on whatever regular basis you feel comfortable with to reassess the families needs and adjust the plan as new issues arise. At 1% management fees that’s $100,000…thats twenty $5,000 meetings…twenty! Even if your family is very needy and you have to have quarterly meetings, and assume a 25 basis point fund fee, you’re talking about being all in for under 50 basis points.

Don’t pay an advisor $50,000-$100,000 per year to ‘watch over’ your assets when the same job can be done by someone who you pay on an hourly basis can do just as well. Financial advisors are incrediby overpaid relative to the value they deliver. I’m in the industry, I know this first hand. I could throw a rock and hit two overpaid shmucks right now…if i had rocks laying around my office.

The point is this… except in extreme situations, a diversified low cost portfolio will be suitable for 99% of investors. If your family does have some special tax circumstances, that will be addressed during your first meeting with the advisor you pay by the hour. If all you need is to rebalance once per year to remain diversified, why pay someone to monitor the investments in the meantime? Yes, pay someone five grand to do your planning each year, just like you pay an accountant to do your taxes once per year. But you’d never pay an accountant an annual fee to ‘monitor your tax situation’.

our larger accounts ($5M+) typically involve complex tax planning that cannot be dealt with in one meeting per year, complex insurance planning so that you’re not holding traditional fixed income like an idiot, philantropy planning and managing philantropic accounts (i.e. DAFs) on behalf of donors, dealing with the numerous beneficiairies that comes with a large family account (e.g. our largest account has 2 owners and 7 beneficiaries who will all get close to eight figures at the end of the day) and all of these benes get the discounted rate and all the handholding/service starting on day zero, rather than the 2%+ we’d charge and less attention typically paid on small accounts. most AFers minds would spin out of control if they knew the number of account transfers/withdrawals/deposits and contact points that occur within a large family account. it’s insane. trust me, margins are not that incredibly high with large accounts. there are usually far better margins with some $1-$2 million households as many only want to meet once a year and many do not like constant contact. and you charge ~1% on those accounts.

you’re not paying $50,000 on a $10M account for just investment management. in fact, i’d hazard to say that we are probably cheaper than most active ETFs if you segmented our fees into different baskets and allocated say 50% of what we do toward investment management. and $50,000 is pretty close to the actual number as we use few ETFs and funds for large clients as this is just lazy and unnecessary. and we can service anyone anywhere in north america at any time. hint hint.

I think it really comes down to how much estate planning, trust administration, etc. is required. You could sign on with someone you like for a year or two, get all the legal work done and then leave if you want. Complex estate strategies are f’n expensive, but they can provide ‘tax alpha’ that far outstrips any fees. Taxes are stupid high right now. On 10m you are way above the estate exemption.

Price is what you pay, value is what you get.

There is a difference between Fee-based and Fee only. The OP may be a good candidate for a fee only planner. Maybe not; we don’t know the bigger picture here.

You can cetainly build a low cost portfolio, but the cost of the investment only represents one component of the overall fee.

OP needs to first detrmine the type of service he and family are looking for and then find a firm that they feel comforable working with.

Huskie: are you an Advisor?

I fully agree that we can’t determine what level of need the OP has through this simple discussion.

However, the argument that an annual management fee as a percentage of AUM is necessary because estate planning is complex is incorrect. There are plenty of good advisors out there that will charge you an hourly rate for their services and will provide excellent estate planning and tax advice.

Let’s say you want the best advisor you can buy. Lets get crazy here and say he charges $500/hour. Just to match the low 0.50% wrap fee, that would require 100 hours of work. And he’d have to do that every year going forward. I don’t care how complex your situation is, you’re not going to need 100 hours of work from your advisor each year. Double that if we use the industry standard of 1%.

Mike, I build investment strategies for financial advisors.

From MLA’s lips (well fingertips) to gods ears (or allah if you prefer). “the 2%+ we’d charge and less attention typically paid on small accounts”. Now that’s a value proposition I can get behind.

The average hourly rate for an advisor is roughly $200, so even if your definition of ‘small accounts’ is $500,000, we’re talking about the equivalent of 50 hours in work that you’re charging them for each year. I’m not saying that financial advisors have no value, they just have a business model built on over charging. There’s no way a $500,000 account will require 500 hours of advising over the next ten years.

Wow, some of you are drinking the cool-aid. Must be retail advisors. I know multiple 10 million plus couples that manage their own affairs. They hire an attorney to set up the trusts. Title accounts. Easy peasy from then on. Always avoid “fee-based” and simply pay fee-for-service. You’ll come out ahead. If you decide to pay for active management, make sure the fee is justified. For example, a client wanted exposure to bank preferreds years ago. I found a CEF with primarily bank preferreds trading at a discount. The CEFs discount narrowed by 13% by the time the position was closed not to mention a negative realized expense ratio because of the severe discount. That’s a significant alpha compared to buying an ETF with similar assets. My fee was justified.

MLA is an advisor in Canada, like me. (Our fees are higher here than in the U.S.)

There is no cost or risk in having discovery meetings with Fee-based and Fee-only advisors to find out how they look after clients. A good buddy of mine is a retail advisor (like me) who works specifally in the UHNW market and refers me business from time to time so I’m familar with the process.

why are your fees higher in Canada?