Dollars and Sense: Make sure your financial adviser is worth what you’re paying

Written by MCJStaff   // June 16, 2014   // 0 Comments

get-attachment.aspxArticle courtesy of the Dallas Morning News via “The Rundown”

I recently wrote a column about how important it is to pay attention to fees and costs when investing.

These fees may seem small, but over time they can have a major impact on your investment portfolio.

Steve Scanlon said investors also should ensure that what they’re paying their financial adviser is worth it.

“Most people pay much more than they think for the advice they get,” said Scanlon, a former managing director at Bernstein Global Wealth Management in Dallas. “If you are paying 2 percent to get 5.7 percent [in an investment return], what that really means is that you are paying 35 percent of your return for this advice, which is outrageous.”

To help investors stay on top of investment costs, Scanlon and partner Audie Apple started GuardVest, a website that measures and tracks key portfolio measurements so that investors can “hold advisers accountable for the advice they deliver.”

The free service will enable investors to see a confidential evaluation of their financial adviser based on investment risks, the investor’s return and the fees they’re paying, compared with a “less expensive alternative.”

“Your adviser has no idea you’re running your report,” Scanlon said.

According to Scanlon, 87 percent of money managers don’t beat the performance of market indexes, like the Standard & Poor’s 500.

The advice to pay close attention to what you’re getting for your money is sound. But some investors may want to keep their adviser simply because they like him or her.

That’s fine, Scanlon said, but ask yourself is the adviser delivering for you? “What are you paying for liking your financial adviser?”

Scanlon likens his service to Carfax, which provides consumers with a used vehicle’s history report that includes such things as structural damage reported, accidents, previous owners and airbag deployment.

“Eighty-seven percent of managers underperform the indexes, and the indexes cost you pennies to own,” Scanlon said. “If you don’t know how your adviser is doing vs. the index, then it is entirely likely that you are underperforming and paying 10 times more for the privilege.”


Audie Apple


Steve Scanlon

your investment portfolio

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