The Unspoken Perks of reaching the $500k Investment Milestone

SGH Wealth Management

Congratulations on the disciplined saving that it took to get your investments up to $500,000, we hope that you were able to dodge the commission advisors along the way. An unfortunate reality of the financial services industry is that it takes some economies of scale to justify the time of a high caliber advisor along with a lower percentage fee for advice.

When your assets were smaller, the net fees charged (usually in the form of hidden commissions) could lead to a percentage fee that is close to unsurmountable for any portfolio manager to overcome in investment performance alone:

$375/MO IN FEES ON A $100,000 PORTFOLIO = 4.50% ANNUALIZED FEE

$375/MO IN FEES ON A $500,000 PORTFOLIO = 0.90% ANNUALIZED FEE

No one wants to be overcharged and hiring a lower quality advisor could cost you even more due to bad advice. Similar to a lawyer or an accountant, many times you get what you pay for, but the complexity of hidden commission product fees clouds the ability of the prospective client to easily make this assessment. We would argue that once you reach this financial milestone of $500k in investable assets you can have your cake and eat it too, justifying the time of the nation’s higher caliber financial advisors at a reasonable percentage-wise fee to boot.

Many times we hear “I’ve never seen this type of financial planning analysis before” from investors with over 20 years experience in investing. The highest level of financial planning doesn’t end at the active investment management and should comprise of long term tax planning along with custom financial projections to help put data behind every financial decision you make. Always “measuring twice and cutting once” for those big financial decisions that you only get one chance to get right.