Bogleheads

[Allan Roth]

I'm working on a column on the costs of indexing and would like your opinion:

Thanks.

[Boglenaut]

[Alex Frakt]

What services does the hypothetical adviser provide for the client? I also think you might be skewing the responses by using such a small portfolio, Considering the work and overhead that goes with professional money management, 500k is a more reasonable minimum for an adviser to take on someone on an AUM fee basis. I'd be concerned that anyone taking it on for less is going to find a way make up their costs somehow - to the investor's detriment. Someone with a 250k portfolio is better off paying for advice on an hourly basis.

[EmergDoc]

[Allan Roth]

[ruralavalon]

Is the advisor just providing a plan, does he/she manage the account, or both? It makes a great deal of difference what the advisor's function is.

IMO a planner should generally charge by the hour or by the project. The portfolio manager might be better compensated on a percentage basis, but I have no real opinion on that.
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"Everything should be as simple as it is, but not simpler." - Albert Einstein

[slick_dealer_05]

[Triple digit golfer]

Just something to consider: You're asking that question at a website where the biggest proponents of low-cost investing hang out!

I bet if you asked it at other forums people would give you more votes in the higher costs.

I voted 0.5% - 1.0%. I think $2,500 is very reasonable for a $250k portfolio if you can't or don't want to manage it on your own. By using index funds, it's a piece of cake. If using active funds, I'd say even higher costs would be reasonable because you have to keep up on what those fund managers are currently investing in.

As a Boglehead, I use index funds and do it on my own, spending just minutes a few times a year rebalancing.

[Taylor Larimore]

[tetractys]

[Tall Grass]

By the hour or none at all...
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"I am less interested in the return on my money than the return of my money."
- Will Rogers