Investment Fees are Important Yet Guidance is Indispensable

In my office at Merrill Lynch over 25 years ago, a colleague and I were discussing the future of investment fees. Looking into the future, we speculated that the majority of all annual portfolio management fees would settle around 1.00%. At the time of our discussion, only a handful of our clients wanted to pay annual fees for selected managers. At that time, many clients felt that several stock trades during the year at the commission rate proved to be less expensive than an annual 1-1.50% discretionary fee.  

Today, 100% of our clients elect to pay a low annual fixed fee for professional discretionary portfolio management. In our case, clients are seeking enhanced income with risk reduction in unpredictable markets. In retirement, the preservation of investment capital should be the singular focus in selecting a portfolio manager.

However, since certain fees (trading commissions) have gone to $0, so many investors looking to conserve costs make the mistake of confusing the cost of trading stocks or ETF's with the cost of professional management. Obviously cost is an important consideration, however guidance is indispensable!

Success in all your efforts,


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John R. Kinkead

Vice President of Wealth Advisement