YFP 412: Does a 1% Fee Really Cost You 25% of Returns?

Does a 1% AUM fee really cost you 25% of your returns? Tim Ulbrich and Tim Baker run the numbers and give you a framework to evaluate the real cost and the real value of financial planning.

Episode Summary

YFP Co-Founder & CEO, Tim Ulbrich, PharmD, and YFP Co-Founder & COO, Tim Baker, CFP®, RLP®, RICP®, tackle a common concern about working with a financial advisor: Does paying a 1% fee for assets under management (AUM) really eat away a quarter of your investment gains over time?

We run the actual numbers using compound interest calculators to see how much a 1% advisory fee could cost over the long term and whether the 25% claim holds true.

But this episode isn’t just about math.

Tim and Tim also zoom out to look at the bigger picture: What’s the ROI of the fee you’re paying? Because it’s not just about investment returns, it’s also about the potential behavioral coaching, tax strategies, withdrawal planning, and comprehensive financial guidance that a good advisor brings to the table.

Whether you’re a die-hard DIY investor, already working with an advisor, or considering working with a financial planner for the first time, this episode will give you a practical framework to evaluate the real cost and real value of financial advice.

Mentioned on the Show

• YFP YouTube Channel
• YFP 404: 5 Key Questions to Ask Before Hiring a Financial Planner 
• Vanguard: Putting a value on your value: Quantifying Vanguard Advisor’s Alpha®
• The Investment Funds Institute of Canada. Financial Advice in Canada, November 2022.
• Kitces Quantifying the Value of Financial Planning Advice
• Record a Question to be Featured on an Ask YFP Episode
• Email YFP: info@yourfinancialpharmacist.com