The debate about advisory fees usually gets stuck on the number. One percent, half a percent, a flat retainer, an hourly rate. The number matters, but it is the second question. The first is what the fee is buying, because in our view a low fee for very little can be worse value than a fair fee for substantial work.
Asset allocation alone is not the answer. Low-cost diversified portfolios are widely available today; a single target-date fund, for example, can provide diversified exposure at a low cost. If a fee buys only that, it is difficult to justify.
What the fee should actually cover
Here is what we think belongs inside a comprehensive advisory relationship. Use it as a checklist against whatever you are paying for today.
- A written plan. Not a projection printed once, but a document stating your target allocation, income strategy, tax sequence, and protection gaps — updated as your life changes.
- Tax coordination. Asset location, Roth conversion analysis, loss harvesting, charitable structure, and a conversation with your CPA before December rather than a reaction in April.
- Retirement income strategy. Withdrawal sequencing, Social Security timing, required distribution planning, and a cash reserve strategy designed with the risks of a difficult early retirement period in mind.
- Beneficiary and titling review. The unglamorous review that can catch an ex-spouse still named on a rollover IRA. In our experience, it is one of the most valuable reviews a family can have done.
- Insurance review, including honest subtraction. Someone willing to tell you a policy is no longer needed, not just to sell you the next one.
- Held-away account guidance. Advice on your 401(k) and other accounts we do not manage, because for many people the 401(k) is one of their largest accounts.
- Behavioral coaching at the moments that matter. Someone who returns your call during a market decline like March 2020 and helps you think through a decision before you make it.
- Access to the person doing the work. Not a service team, not a rotating relationship manager.
In my experience, one of the most valuable things an advisor can do is help a client avoid one bad decision at the wrong moment.
Questions worth asking any advisor
Ask these before you hire anyone, including us. Reasonable answers exist for all of them; evasive answers are the signal.
- How are you compensated, in total? Advisory fees, commissions, revenue sharing, referral arrangements, third-party payments — all of it, in writing.
- What are your conflicts of interest? Every compensation model has them. A clear answer should point you to where they are disclosed in writing.
- Are you a fiduciary in every part of this relationship, at all times? Some advisors are fiduciaries for advisory accounts and operate under a different standard when selling insurance or brokerage products. That is permitted and common. You should know which standard applies.
- What is specifically included, and what costs extra? Get the scope in writing. Financial planning, tax coordination, and estate review are sometimes billed separately.
- What do the investments themselves cost, on top of your fee? Fund expense ratios, trading costs, and platform fees are layers that are not always shown as a single total.
- Who actually does the work, and who will I talk to? These are not always the same person.
- How often will we meet, and what happens between meetings? Get the service commitment defined.
- What happens to my accounts if something happens to you? Succession is a real risk in a small practice and deserves a real answer.
How Providence Wealth Management handles it
Investment advisory services are billed as an ongoing fee based on the assets we manage, calculated and charged monthly. The rate declines as household assets grow, and accounts within a household are aggregated so families reach lower rates sooner. There is one published schedule applied consistently, and any negotiated exception is documented.
When insurance is appropriate, it is compensated by the issuing carrier rather than billed to you. We will tell you which arrangement applies before you decide anything, and you will receive our written fee schedule and disclosure documents before engaging us.
The takeaway
Fees matter, but in our view they should not be the only consideration. Look for clear pricing, a defined scope of work, and an advisor who will tell you when the answer is to do nothing.
And run the checklist above against your current arrangement. If most of the items are missing, the conversation to have is not about price. It is about what you are actually receiving.