From Burnout to Balance - Part 3

From Burnout to Balance – Three Part Series for Physicians – Part Three

KNOW THE TRUE COST AND IMPACT OF INVESTMENT EXPENSES!

An often overlooked, yet key aspect of investment management is the fee structure. Many investment firms are old-school and charge based on what they can sell, not necessarily aligning their incentives with your best interests. You know, not being a true fiduciary. It’s common for an advisor to devote similar levels of time and resources to a $5 million client and a $50,000 one. The standard 1% advisory fee could mean a tenfold difference in costs between these clients for essentially the same service.

Further, many advisors opt for higher-cost investment products like mutual funds and annuities, rather than exploring more cost and tax-efficient options. These more expensive products might carry an additional 1% annual fee, driving up your costs without necessarily delivering higher returns.

Over time, these seemingly minor fees, often just 1-2% of your investment value, can significantly erode your wealth. Due to the compounding effect, these “small” fees could potentially reduce your investment wealth by 50% or more over the long term.

At Forward Thinking Wealth Management, we approach this differently. Our firm operates on a single flat-fee structure of $10,000 a year. This single fee is based on our knowledge, experience, and services provided. This structure is part of our broader theme of encouraging you to understand how fees can impact your portfolio and wealth. It’s crucial to understand the cost of investment management isn’t merely about the fee you pay your advisor. It’s also about the cost of the investment products you choose and the long-term impact these fees have.

By gaining insight into investment fees and their long-term impact, you can make informed decisions that protect and grow your wealth. This final step brings us closer to the regret-free life you envision, where your wealth is a tool for life transformation, not a source of stress.

A few final facts for you.

• 1 out of 3 people don’t know what they pay their financial advisor.
• 1 out of 5 people think their advisor works for free.
• A client with a $3 million portfolio (my average client size) could see his portfolio worth about $8 million less working with an old-school advisor who charges average fees than my flat fee structure. This is over a 30-year period of time. I don’t know about you, but $8 million feels like real money.

The most important takeaway, to me, is for you to get complete clarity on what you pay your advisor and the investment fees you are paying.