Last week before leaving Thailand (more about that trip shortly), I learned that my brief reader's comment about financial advisory services, would be included in a Wall Street Journal article found HERE.
The common practice of paying an advisor one percent (or more) of assets under management (AUM) on top of all the other fund investment expenses, is a relic and many people don't realize there are alternatives.
This is not to say that all financial advisors who are paid a percentage of AUM never provide a valuable service, many do, but the point is that clients would do well to pay for advice about asset allocation, fund selection, tax planning etc. on a fixed fee, or hourly fee basis. Pay only for what you receive.
I cringe when I hear commercial pitches like "We do better when our clients do better". Anyone can be a fiduciary and still overcharge for a service. The fact is, an advisor gets paid with the percentage of AUM fee model, even when their clients' portfolios don't perform well, or when the advisor delivers poor advice and/or poor service.
Still think the traditional fee model is fair because clients are charged the same percentage? Consider two investors paying Joe Advisor 1.25% of AUM. Claude has $1,000,000 portfolio and Julian has a $2,000,000 portfolio. All other factors equal, can Joe justify charging Julian $25,000 vs. only $12,500 for Claude? Has Joe done twice the amount of work for Julian?
The people in all three countries are generally very poor by our standards. They have little, but they are also happy and peaceful. Beautiful people. In Cambodia, a group of schoolchildren waved, called out to us and smiled so energetically that tears came to my eyes. I won't forget the moment. Most of us in the USA have an abundance of riches compared to these citizens, yet many of us remain unhappy, always wanting more.
Perhaps part of their abundant sense of well being is underpinned by the fact that there is almost NO violent crime in these SE Asian countries. I never felt safer.
The problem of course, is a demonstrable lack of personal freedoms, freedoms which some of us take for granted. In SE Asia, one can criticize the government(s) until one has developed a group of followers. I was told by a local that initially if criticism is overheard by a party member, one might be invited to the police station for a "chat over tea". Afterwards, speech against the state will land one in jail.
Why can't we have public safety and peaceable citizens AND ALSO enjoy personal protections afforded us by the US Constitution and our legal system?
Is that what heaven looks like?
