I have $15 million with big Wall Street bank — what’s a fair fee for professional management services?

What is it with rich people and asking silly, easy-to-answer questions online just to have an opportunity to show off how much money they have? No matter how much money people have, it is human nature to want to receive validation from other human beings. That being said, if you have a significant amount of money in various investments, how do you know if you’re getting a good deal on your asset management?

24/7 Wall St. Key Points:

You can find cheap and affordable rates for asset management if you’re willing to do the work.

Financial advisors cannot and often do not beat the market on a regular basis.

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One rich person, in particular, had these exact questions and took them to the people in the r/fatFIRE community, a group of people focused on financial independence and retiring early with vast amounts of wealth. Here is what they said.

Keep in mind, of course, that the opinions in the comments and this article included are not legal nor financial advice. You should always speak to an expert before making any kind of decision.

The Question

A man speaking with an asset manager.

The author of the post in question said they have around $15 million in an account managed by Merrill Lynch, and they were too busy running their own business to manage the account themselves anymore. They asked the community what a fair AUM fee was for managing assets of this size.

AUM stands for assets-under-management, and the fee is usually expressed in basis points.

The Community Response

An image showing a man managing his own investments.

Many of the comments included first-hand accounts of prices at other companies and what some users had paid or were paying for management. The amount varied from 70bps to manage $10 million to 35bps for assets under $10 million. Of course, with this much money, prices can and do vary wildly from company to company and from manager to manager, so many other commenters recommended the author actually speak with a few to see how much they are willing to negotiate. Managing money is simple and easy, so very few asset managers are willing to turn down thousands of dollars to email a monthly report.

Other commenters added important information, saying that asset managers don’t actually do anything, and if what you want is advice on how to invest, there are plenty of asset managers who charge a small monthly fee instead of a percentage for doing just that.

In the end there was a plethora of recommendations and a mountain of advice but it all essentially boils down to this: there are many very cheap options for asset managers that unless your current asset manager is beating the US stock market index on a regular basis, they are not worth the money you are paying them.