Personal Finance (Not Investing) • Legitimate reasons for an advisor?

Although I would not hire an AUM advisor, I can see why most of them still use the AUM business model. Most people are terrible at managing their assets. Bogleheads are not most people.

If an adviser doesn't use an AUM model they'd probably be excluding a huge percentage of potential clients due to the outrageous percentage of assets they'd have to be billing the fixed-fee at for a typical investor.

Here's a case. Andy Panko (Tenon Financial) charges a flat $9600/single or $10800/couple, and he only takes clients who have $1M to $10M in assets. So that's a sliding percentage of about 1% down to about 0.1%. Oh, and he currently isn't even taking new clients so he's all booked up.

Exactly: $1M in AUM excludes a large percentage of potential clients. That's why I asked about the career path for an adviser; apparently this advisor worked in the financial industry for roughly 20 years before starting this business. Wouldn't you expect that a very high percentage of advisers have considerably less experience? So my question is whether those other advisers could survive without a large number of very low AUM clients. And, if all advisers limit themselves to $1M+ clients, wouldn't that leave a very large unserved client base?

Statistics: Posted by tibbitts — Tue Sep 24, 2024 7:53 pm — Replies 14 — Views 651

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