At HCP Wealth Planning, we believe the fees you pay your advisor should only be based on the expertise and services you receive, not the size of your portfolio. We actually think its a little ridiculous that someone should pay an advisor higher fees, just because they have more money. Why is this? Because the little secret that many financial advisors don't want you to know is that it generally doesn't cost them any more time or money to manage a $1,000,000 portfolio than it does a $100,000 portfolio. But they may try to make you think otherwise and charge you a higher fee, because they know you can afford to pay more. Imagine asking a trusted attorney or CPA how much they charge for their professional services and their response was, "That depends. How much money do you have?" Unfortunately this type of pricing model which is known as the Asssets Under Management (AUM) model, is still the most popular fee method in the industry. And that's not going to change unless more consumers demand a better alternative because it generates too much money for those advisors. Our mission is to be a leader in that movement towards a better model.
Conflicts of Interest
One of the biggest issues with the traditional AUM model is that it creates many conflicts of interest when the advisor is delivering advice. Take a look at the examples below:
- Paying off debt: