It is demonstrably not false; the financial advisors I know (and I know quite a few) all adapt the same strategy— get leads to find wealthiest clients and hook in as many as possible to gain wealth— NOT grow portfolios. If you are telling me you honestly believe that financial advisors make money by building wealth and not by marketing and expanding client base I’ve got a bridge to sell you. When you have 50 clients like me with assets at or over $1M and you are getting 1%+; you get at least $500k per year if you never make them another penny. My personal advisor is managing a bit more than that, and she gets very disturbed when I bring this up— I would prefer an arrangement where she is incentivized and is forced to gain wealth by making money on every portfolio, instead of just by expanding client base and coasting. That would force her to do actual analysis, take risk, and be accountable for decisions instead of just parking money in different places. She is the best I have found, because she is like family and absolutely trust her to treat my money like her own, but I want someone who wants to get rich, not treat my money like their own.
You are correct. I went to a finantial advisor. I learned that they got 1% of my total investment whether I made any money or not.
If I made the average of about 7% a year, they got 15% of my income for their advise! If I made 1% a year, they got it all!
If I made 10%, they got 10% of my income from the investment.
I ditched that. Much better off with an index fund, and very low fees.
An advisor who made say, 5% of income from a portfolio would have real incentive to grow the portfolio.
Given that I was an RIA for 27 years, I can tell you that not everyone is as you describe. I know many, many advisors who work hard to grow portfolios. That is not to say there are not those like your friends. I suggest you choose a different group.If you are telling me you honestly believe that financial advisors make money by building wealth and not by marketing and expanding client base I’ve got a bridge to sell you.
Same. I was the president of a very large association of investment managers. There are great ones out there.When you have 50 clients like me with assets at or over $1M and you are getting 1%+; you get at least $500k per year if you never make them another penny.
I managed a large multiple of that, including a mutual fund and hedge fund. If we did not grow money, we might lose clients. It was not in our best interest to lose money in the markets. It wasn't in the client's best interest to lose money. Worked great.My personal advisor is managing a bit more than that, and she gets very disturbed when I bring this up— I would prefer an arrangement where she is incentivized and is forced to gain wealth by making money on every portfolio, instead of just by expanding client base and coasting. That would force her to do actual analysis, take risk, and be accountable for decisions instead of just parking money in different places. She is the best I have found, because she is like family and absolutely trust her to treat my money like her own, but I want someone who wants to get rich, not treat my money like their own.You are leaving out the costs of running a professional firm, by the way. It isn't all gravy. Just staying compliant is extremely expensive.
You have the wrong advisor, given your expressed preferences. May I suggest you LEAVE and find an advisor you believe is aligned with your purposes? If you stay, you have only yourself to blame. I think you'd be happier if you left.You may qualify as an accredited investor, to have a performance based fee instead of asset-based.
Good luck.