Price is what you pay, and value is what you get. Are you getting the value for the fees you’re paying an investment advisor to manage your money?
Business owners want to optimize their investment portfolios to achieve their long-term financial goals, but finding the right professional is the hardest part.
Understanding what you’re paying for, the differences in fees charged, and the value received are very important considerations when choosing who to work with and trust to manage your hard-earned money.
How to Decide Who Should Manage Your Investments
Managing an investment portfolio requires time, expertise, and years of experience. Have you heard of the concept “Who Not How”?
If researching and analyzing investment options is overwhelming and not your area of expertise, then figuring out how to manage your portfolio is the wrong approach. If you change the approach to who can build and manage my investment portfolio to optimize for performance, tax efficiency, and my long-term goals, then you will have a lot less to stress about. By outsourcing investment management, you can focus on running your businesses and growing your wealth how you know best while the right investment professional (the right who) grows your investment portfolio.
Let’s break down the differences in fees and value between having your portfolio managed through a self-directed investment platform, a big bank, a boutique financial firm, and Ocean 6.
Self-Directed Investment Platforms Investment Fees
Self-directed investment platforms are a do-it-yourself approach where you are responsible for choosing the account type, asset allocation, tax optimization, risk assessment, and alignment with your goals. Since you are managing your own portfolio, these platforms typically charge lower fees. These fees may include trading commissions, account maintenance fees, and mutual fund expense ratios and will vary depending on where you hold the portfolio.
Big Banks Investment Fees
Big banks offer a range of investment management services, including mutual funds, ETFs, and managed portfolios. Fees at big banks can include management fees, administration fees, and embedded fees and commissions within mutual funds or ETFs. These fees are often much higher and can vary depending on the funds. They are usually included in the fund itself, so they can be difficult to understand and see.
It is vague whether these fees include financial planning and other financial services, but we rarely see additional value offered for the higher fees. The lack of clarity about the cost paid to the value they offer leaves a lot of ambiguity about what exactly you are paying for with all the added costs.
Boutique Financial Firms Investment Fees
Many boutique firms offer investment management and propriety portfolios on a fee-based model. This allows for more transparency on your fees, as they are separate from the funds. These boutique firms may also offer some form of financial planning as a part of their fees. Unfortunately, when financial planning is included in the fees, we rarely see the proactive added value of any high-level planning, especially for business owners.
Financial planning should include a deep dive into cash flow, retirement, financial freedom, estate maximization, tax planning, alignment with other investment options like real estate and integration into your business. It doesn’t consider the full financial picture when offered as part of your investment fees.
Ocean 6 Investment Solutions + Wealth Management
At Ocean 6, we have recognized that separating investment management from high-level financial planning is imperative to ensure accountability on all your financial needs.
We specialize in providing personalized and tailored investment management services and unique coaching and planning services to high-net-worth individuals and business owners. With over twenty years of experience in the financial planning industry, we recognize how broken it is. The high fees for investment management, which include financial planning, simply do not correlate to the value people are getting. It becomes even more challenging when there’s the added complexity of having a corporation, and you want your investment strategy optimized in all areas, not just the stock market. Instead of embedding investment fees with financial planning options, we have separated the fees for investment management and planning to ensure we are accountable for providing more value than the cost. You deserve transparency with all the fees you pay.
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Determining the value of the amount you should pay in asset management fees requires careful consideration of factors like the level of service provided, the complexity of your financial situation, and the value added by the investment management firm. The correct asset management fees should align with your needs, financial goals, risk tolerance, and overall investment strategy. Book a call today to grow your money in all the right places.
