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Featured Advisor



Kim Butler
President

Partners for Prosperity, Inc.

City:Mt. Enterprise

State: TX



BIOGRAPHY:
I have 20+ years of handling alternative investments in cash, growth and income for clients nationwide.  I strive to help my clients with all things financial in every way possible over the phone and the web.  I own an alpaca farm which I enjoy working during my downtime.  I also enjoy gardening, writing and reading books.  I also train other advisors on Prosperity Economics.

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It's All About the Fees

Investors who use advisors have opinions on how fees are structured.

| BY Kent McDill


Financial advisors cost money. That’s why many investors, especially those who do not consider themselves wealthy, do not use financial advisors for investment decisions.

However, those investors who do use advisors have a great many concerns when it comes to the fees they pay.

Spectrem’s Wealth Segmentation Series analysis of investors and advisors – Advisor Relationships and Changing Advice Requirements – shows just how much fees mean to investors with a net worth under $1 million. Referred to in the study as the Mass Affluent, 27 percent said they cannot afford to hire a financial advisor, and 31 percent don’t believe their level of assets is worth using a financial advisor.

Among Mass Affluent investors, 83 percent consider fees to be an important factor in choosing an advisor, and that was the fourth most important consideration, behind honesty, transparency and investment record.

Asked to rate their level of understanding regarding fees, with “0’’ being no understanding and “100’’ being complete understanding, the Mass Affluent investors put themselves at 66.45, well below the understanding level of wealthier investors.

Are advisor fees expensive? Fifty-seven percent of Mass Affluent investors consider advisor fees to be very expensive, and 77 percent of Mass Affluent investors under the age of 36 found the fees to be very expensive. However, 29 percent don’t care about the fee amounts as long as their assets continue to grow.

The percentage of investors who don’t care about their fees grows as dependence upon their advisor for investment decisions grows.

Asked to rate their level of understanding regarding fees, with “0’’ being no understanding and “100’’ being complete understanding, the Mass Affluent investors put themselves at 66.45, well below the understanding level of wealthier investors.

Fees are charged in two different ways, and mass Affluent investors are fairly evenly split on how they feel about fee structure. Fifty-four percent of investors want their fees to be a part of the commission the advisor gets in a transaction, while 46 percent want to pay a flat fee for an advisor’s services.

Should a fixed fee be based on the amount of assets being invested? Only 31 percent agree with that, while 69 percent want a fixed fee for services no matter what level of wealth is being handled.

Despite all the consternation and conversation that goes on regarding fees, 54 percent of Mass Affluent investors are very comfortable with the fees they pay to their advisor.

 

 



About the Author


Kent McDill

kmcdill@spectrem.com

Kent McDill is a staff writer for Millionaire Corner. McDill spent 30 years as a sports writer, working for United Press International and the Daily Herald of Arlington Heights, Ill. From 1988-1999, he covered the Chicago Bulls for the Daily Herald, traveling with them every day through the nine-month season. He also covered the Bulls for UPI from 1985-88, and currently covers the team for www.nba.com. He has written two books on the Bulls, including the new title “100 Things Bulls Fans Should Know And Do Before They Die’, published by Triumph Books. In August 2013, his new book “100 Things Bears Fans Should Know And Do Before They Die” gets published.

In 2008, he resigned from the Herald and became a freelance writer. The Herald hired him to write business features and speeches for the Daily Herald Business Conferences and Awards presentations.

McDill also writes a monthly parenting column for the Herald’s Suburban Parent magazine.

McDill is the father of four children, and an active fan of soccer, Jimmy  Buffett and all things Disney.