Originally Posted by
GrummanIron
Background…I’m in no way a financial guy. I have a surface understanding of various investment strategies. Also, I am not involved with it…I just invest the money and let it ride.
How does the delta/fidelity program with its fee structure compare to hiring a dedicated local financial advisor?
If I just let the investments run with its current lifecycle fund, am I paying management fees that are hidden? My local guy says I can bring that all under him and have a more focused and personalized strategy for a 1.3% annual fee.
What do you guys think?
I’m on a similar plan - ie let it ride. I used the Lifecycle fund for the first couple years and then gave Financial Engines a try when they were offering 6 months for free.
After all that I took a little bit of time and ran out the calculations using their ER’s (annual fees) and the impact on compounded returns over several decades.
My takeaway was I could basically build the same thing using the cheap (low fee) index funds available in the 401k.
If all you’re doing is index set & forget investing, which supposedly outperforms active mgmt over the long haul, I think you’ll find that 1.3% is a ridiculously high price to pay.
Don’t take anyone else’s word for it though. Go play around with a compound interest calculator and consider that your investment guy needs to outperform his fee just to get you back to where you’d be with passive indexing.