**Should You Fire Your Parent’s Financial Advisor and Manage the Portfolio Yourself?**
When you inherit a significant investment portfolio from your parents, you may be faced with the decision of whether to keep the existing advisor or manage the portfolio yourself. In this article, we’ll explore the pros and cons of each option and provide some guidance to help you make an informed decision.
**The Benefits of Hiring a Financial Advisor**
A financial advisor can provide valuable expertise in managing your investment portfolio, helping you achieve your retirement goals, and creating customized strategies to suit your risk tolerance. They can also assist with portfolio management, investment management, and performance reporting.
However, advisors do charge fees for their services. The fee may be a percentage of your assets under management (AUM), usually between 0.5% and 2%. In your case, the 1.75% fee translates to $11,900 per year.
**The Benefits of Managing Your Portfolio Yourself**
On the other hand, you can manage your portfolio yourself, which would eliminate the fee. This approach requires financial literacy and the ability to invest according to your goals. You would need to understand how to select and manage a diversified portfolio that meets your needs.
**The Pros and Cons of Robo-Advisors**
Robo-advisors are another option that offers lower fees, but you wouldn’t have the human touch. They offer a narrow range of investment options and limited personalization of advice.
**Alternatives to Full-Service Advisors**
If you’re not satisfied with the current advisor or want to explore other options, you may consider an advisor who charges an hourly or project-based fee. Hourly rates range from $120 to $300, according to Consulting Headquarters.
**Before Making a Decision**
Before making a decision, it’s a good idea to sit down with your parent’s counselor to discuss your options. If you’re not clicking, or you feel like your needs aren’t being met, that might be a good reason to shop around.
**Resources**
If you do decide to consider your options, you should seek out an advisor who is also a fiduciary. Being a fiduciary means that they are required by law to put the interests of their clients before their own. You can find qualified advisers through directories such as NAPFA, Wealthramp, and Nectarine.
**FAQs**
* Q: What should I do if I’m not satisfied with the current advisor?
A: You should consider shopping around for a new advisor or exploring alternative options, such as robo-advisors or managing the portfolio yourself.
* Q: Is a 1.75% fee high?
A: Not necessarily. According to a 2019 survey, the average advisory fee is approximately 1%. However, it’s important to compare the fee to the portfolio’s returns.
* Q: What are the benefits of hiring a financial advisor?
A: A financial advisor can provide valuable expertise in managing your investment portfolio, helping you achieve your retirement goals, and creating customized strategies to suit your risk tolerance.
**Conclusion**
Inheriting a sizable investment portfolio can be a daunting task, especially when it’s managed by a long-term advisor. However, by weighing the pros and cons of each option, you can make an informed decision that suits your needs. Whether you decide to keep the current advisor, explore alternative options, or manage the portfolio yourself, it’s essential to prioritize your financial goals and take the necessary steps to ensure your financial well-being.
