Help me compare what other financial advosiros are doing with savings/retirement funds. Is it common for an advisor to collect a fee of $4000 for handling $300,000 which earns only $1000 a year in his investments?
well 1 1/3% is not an outrageous management fee. Of course you should be able to earn as much you are plus the fee in just a bank CD. OTOH you’ve given no idea what is being done with your money. If it’s in stocks, this hasn’t been a good time for them so it might just be bad luck.
The advice I’ve heard is that you’re better off with a fee-only financial advisor, who gets paid a fixed fee, rather than one who is compensated based on how actively you trade your account. The one who gets a commission on every transaction may be motivated to “churn” your account.
Management fees of 1.0% to 1.5% are probably the most common range. You’ll find a few people above and below that, of course. I don’t know of anyone who bases their fees off of net earnings, since that really isn’t under the control of an advisor.
As someone mentioned, there are plenty of commission-based advisors, who earn money only when investments are purchased and sold. They may look free because those commissions are sometimes paid behind the scenes rather than being deducted from your account. Either way, there’s definitely the potential for a conflict of interests in that arrangement.
They key thing to focus on is that job of the advisor is to help you define your goals, come up with strategies to reach them and choose investments that are suitable. If you feel like your advisor is helping on that front, then they’re probably earning their keep.