When choosing between financial advisors, high-net-worth individuals should evaluate the cost-effectiveness of advisory fees. A flat fee of $10,000 per year is considerably lower than a 0.5% AUM fee, which would equate to $25,000 annually for a $5 million portfolio. Over a decade, opting for the flat fee could save the investor over $150,000. Furthermore, while AUM advisors may have a vested interest in growing the portfolio, the overall savings from a flat fee model can lead to substantial reinvestment and compounding, contributing to long-term financial health.
The flat fee advisor's charge remains $10,000 regardless of portfolio growth, while the AUM advisor's fee increases with the portfolio, costing $25,000 for a $5 million estate.
In a 10-year period, choosing a flat fee advisor can save you over $150,000 compared to the percentage-based AUM advisor, allowing for greater wealth accumulation.
#financial-advisors #estate-management #investment-strategies #high-net-worth-individuals #fee-structures
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