Your Financial Advisor Is Charging Too Much…And I’ve Got The Receipts
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If you're paying your financial advisor 1% and all you're getting is someone clicking buttons to manage your investments, I’ve got some bad news.
You’re paying too much money for too little value.
In this episode, I break down four levels of financial advisor service that (spoiler!) all cost you the same amount of money.
I also explain what you should be getting for a fee that starts at 1% of assets under management.
Listen for a rundown of Sunnybranch's full client service calendar, from January tax letters to year-end charitable giving strategies, so you can see exactly what comprehensive wealth management looks like.
Whether you're an inheritor trying to figure out if your advisor is actually working for you, or you just realized you’re paying too much money for too little advice, this episode is your wake-up call.
It's time to find an advisor who provides real value for the fee you pay them.
🗓️ Schedule a FREE call to talk more about how I can help you navigate a current or future inheritance.
Transcript:
Why Do Financial Advisors Charge 1%?
Hey, I'm Katherine and thanks for joining me at Heir Necessities, the podcast that turns complex financial topics into real talk for Gen X, millennial and Gen Z inheritors. Each episode of this podcast, I break down a different topic related to generational wealth and inheritance. My goal is that you can stop asking Google or ChatGPT what to do with your money and come here instead for real talk, real advice and real solutions that you can start implementing in your life today.
On today's episode of the podcast, I am diving into why so many people are getting fleeced by their financial advisors. Specifically, if you have a financial advisor who you're paying 1% to manage your assets and all they're doing is providing investment management, you are missing out on a huge amount of value. And honestly, you are way overpaying for what they're actually doing for you.
Before I dive into it, if you're enjoying Heir Necessities and want to help support the show, I would be so appreciative if you could leave us a five-star review wherever you listen to podcasts, Apple, Spotify, wherever. It hugely helps the show, and more importantly, it helps me connect with and support more inheritors like you.
What Services Does A Financial Advisor Provide?
Now, let's get into why you're paying your financial advisor too much money. I want you to think of this like a four-lane highway, okay? On the left lane, you have advisors who are only providing investment management — it is clogged up in there, tons of traffic, tons of people.
Next lane over, you have advisors that are providing investment management, but they also offer some impact investing, some values-aligned socially responsible investing. There's still a lot of cars in this lane, right? But it's significantly less crowded — you're not in gridlock, you're moving along at a good clip, but there's still a lot of people there.
Next lane over, you have advisors who offer full investment management with impact ESG socially responsible options and full financial planning. So they're not just managing your money, they're helping you evaluate every decision related to your financial life. They're helping you build a path forward and helping support you as you reach your life and your financial goals. There's still some cars in this lane, but it's pretty empty — we're not talking about 5am on Sunday morning empty, but you're cruising along at a good clip.
What Do You Get If You Pay A Financial Advisor 1%?
But then I want to take you to this fourth lane over here, which is HOV Sunday morning, 5am. This is advisors who offer full service investment management with those impact ESG and socially responsible options, full financial planning, every area of your money life. Nothing is off limits, no question too small, nothing we can't work together to get you the information you need to make a decision.
These advisors also offer tax planning throughout the year, so you don't need to make a whole bunch of decisions and then wonder what you're going to be paying in April. And you don't need to be the sole person who's responsible for reminding your CPA what they need to get done or for communicating with someone who, when they give you advice, you don't really understand.
So this right lane all the way over here is where Sunnybranch sits. There are very few firms that offer the level of service that Sunnybranch offers and who give you such a high amount of individualized attention as a client. Sunnybranch is a very boutique firm — I prefer to go really deep with fewer clients rather than having the 80 or 90 clients that most financial advisors have.
Do All Financial Advisors Charge 1%?
Okay, whatever, there's four lanes, your lane is best, I get it — you know, you're a financial advisor, you're trying to sell me, right? Okay, but now I'm gonna blow your mind because all those four lanes, they all cost you exactly the same thing. In that left lane where you're only getting investment management, you're paying 1%.
In the next lane where you're getting investment management with impact, you're paying 1%. That third lane, investment management with impact and financial planning, you're paying 1%. Or more — 1% is sort of a base fee. And then in this lane that I'm over in at Sunnybranch where there really isn't a whole lot of traffic, you're paying the same. If you're interested in my full fee schedule, it's disclosed in my ADV.
But think about the difference in services that you are getting between that left lane and that right lane, and then think about the fact that we are charging exactly the same amount of money if we're managing your assets. That to me is crazy. And that's what a lot of people who work with these bigger banks — if you are with Edward Jones, Bank of America, Merrill Lynch, Chase, Wells Fargo, Morgan Stanley, or Schwab — you're paying a lot of money and you are not getting a lot of value relative to what you could be getting in the marketplace.
What Services Do Inheritors Working with Sunnybranch Get?
Sunnybranch justifies that fee by the amount of services and the value and the quality of those services that we provide. To dive into that a little bit deeper, I want to give you an overview of what Sunnybranch's client service calendar actually looks like. I say that I'm over here in this right lane with tax planning and impact investing and financial planning and all these bells and whistles — like, what does that actually mean?
What are you getting as a Sunnybranch client? I'm gonna drop a link to Sunnybranch's client service calendar in the show notes, because that is what I am looking at right now — I'm literally looking at the client service calendar that I have at Sunnybranch, and I'm walking you through what you get for that fee that you pay. And just to clarify, this is the minimum amount of service that you get.
There's no cap on this, and oftentimes financial planning becomes most valuable when things in our life get crazy — when you're trying to buy a house when you're not gonna sell the house for another year, or you just inherited and you needed help with the estate settlement process. There are a million things that can happen in our lives that sit on top of this client service calendar, but this is the base that Sunnybranch clients can expect in a year when they don't have a whole lot of other stuff going on on the financial planning side.
How Does Sunnybranch Help Inheritors?
The client service calendar is split into three sections: a beginning of the year winter section, a spring/summer section, and then an end of year fall section — October, November, December. The goal is that clients should be hearing from me basically every four to six weeks with an offer of services. And it might be that all of these services are not relevant to all clients, but you never know when things come up and when things become valuable.
First off, in January all Wealth Management clients receive a tax letter. This is a summary of all of the relevant tax transactions that happen for you in the prior calendar year — everything that I have visibility into. If you gave stocks to charity, if you made a gift to someone, if you realized capital gains, everything that I know about goes on this letter.
In addition to that summary, it also summarizes all of the forms that, based on my knowledge, you should expect to receive and that you'll have to pass along to your tax preparer. This letter goes to you to help you with filling out your organizer and gathering documents so there's one less mental piece to sit in your brain. And it also goes to your CPA so that they have a jumpstart on preparing your return, and if there's anything that you left out of the organizer, they know about it so it's not missing from your tax return.
What is an Annual Report for Current and Future Inheritors?
The next piece that Sunnybranch clients get is an annual report — this report I'm so proud of, I worked so hard on it, iterating new versions over the last three years. The report starts with a full progress report covering everything that we tackled in the previous year and everything that's on my agenda to work with you in the coming year. So that you know, whoa, I actually did a lot last year, and you can see everything that I have on the horizon for our work in the next 12 months.
It's also a full performance summary of how your investment accounts did in the previous year — okay, table stakes, not that exciting. But it's also a balance sheet and net worth snapshot so that every year you can see, through your work with Sunnybranch, how your net worth is changing and how the decisions that we're making together are growing your wealth.
Also in the first quarter of the year, I help my clients build a spending and giving distribution plan. If clients have inherited IRAs, if clients are taking RMDs, if clients rely on their portfolio for cash flow, then we're building a plan at the beginning of the year that will then be implemented throughout the whole year. A plan that takes into account what are we going to do if the market crashes, what are the triggers that I need to be watching for throughout the year, what are we gonna do now, what are we gonna take in the middle of the year, and what are we gonna take at the end of the year.
How Do You Build A Tax Plan for Inherited IRA Distributions?
You're not waiting to take that inherited IRA withdrawal or that RMD or whatever it is until December. You know what your plan for distributions is at the beginning of the year, and then we modify that plan as necessary throughout the year.
The last piece that I offer at the beginning of the year is saving and expense goal setting. I work with a lot of Sunnybranch clients — not on budgeting, but on tracking, on understanding where their money is going and seeing if they want to make any changes to that. Generally, I don't work with budgeting on my clients — my clients don't need to budget.
But what they might need to do is realign their spending with their values, or they might need to direct more of their income to savings. And so we focus on setting those spending and saving targets, tracking them throughout the year with progress updates as needed.
What Tax Planning Should Inheritors Be Doing?
In the spring and summer, the tax planning piece really kicks up. We have five to six months of data, we have more information on how much you owed in the prior tax year, and we start building out your preliminary tax analysis based on the information that we already have for what's happened in the year and also what is coming next. This mid-year tax planning piece is huge because a lot of life happens between January and December.
And if you wait to do any tax planning until December, you end up crunched and you often have fewer options than if someone is keeping their eye on the tax piece for you throughout the entire year.
Also in the summer, I offer my clients an impact investing deep dive. This is where I give all of my clients their impact investing report that shows how their portfolio compared to a traditional basket of stocks in terms of the type of impact created. What does your fossil fuel exposure look like? What does your exposure to private prisons look like? What does your exposure to gender diversity look like? Across the board there are tons of different categories that this report captures, but it's a real concrete way for you to see the impact that your portfolio is making.
What Is an Impact Investing Portfolio Review?
In the middle of the year, we also update financial plans, check in on financial goals, and see if there are any questions that are on your mind that haven't been brought up to me. This is a really flexible deliverable because some people are gonna really want that update and have a lot to talk about, and other people are just living their lives and don't wanna talk to me in the summer, which is obviously totally fine.
The last piece in that spring/summer checklist is the estate plan and risk review. I offer this to all of my clients every year — you're not necessarily going to need to do it every year, but it's a full review of your estate plan, making sure everything is titled the way it should be to align with your estate plan. It also makes sure that there isn't anything in your estate plan that has changed that needs to be updated because your documents are old or taxes changed or whatever.
The risk review is a full property and casualty insurance review, with suggestions to improve your coverage or potentially decrease the cost of those policies, making sure that your credit is frozen, helping you if you need to get a password manager installed, and making sure that you have trusted contact information on file at Schwab and any other places where you bank. This ensures that if something were to happen to you, whoever's supposed to be in charge can actually access those accounts.
What Tax Planning Should Inheritors Complete Before December 31?
As we move into the end of the year, we're wrapping up our tax conversations. We're doing a full-scale end-of-year tax planning review, communicating with your CPA for any questions to make sure that while we can still do something about your tax picture we're not leaving anything on the table. We're also taking any last IRA distributions, inherited IRAs or RMDs, and finalizing other retirement account contributions — your Roth contributions, your backdoor Roth IRAs, whatever it is.
We're offering a year-end review if there are any questions you have on the tax planning side or the distribution side. A lot of times the issues that we work through at year-end are more complex and they're easier to talk about in a meeting. I don't have a rigid cadence for meetings — clients are always welcome to schedule, and I kind of offer these standard meetings sort of towards the middle and towards the end of the year.
I'd say clients tend to take me up on those end-of-year meetings most because we have so much to cover. We need to talk about all the distributions, all the cash flow planning, all the end-of-year goals that need to squeak in under that 12/31 deadline, and also all of the tax planning pieces and any questions that clients have around that.
How Can Inheritors Build a Charitable Giving Strategy That Aligns with Their Values?
The last piece that often happens at year-end — although technically it could really happen at any point throughout the year — is customized giving recommendations. Philanthropic and charitable planning is a huge part of what I do at Sunnybranch, a huge part of who I am, and a huge part of the value that I offer my clients.
For clients who are interested, that year-end planning process may include charitable giving recommendations — specific amounts, how to give, but also research into the types of organizations that are interesting and where you might like to give. More broadly, it's about thinking about building a targeted impact strategy so that you're giving in line with your process and with your values, as opposed to that kind of scattershot giving that a lot of us do that isn't really all that satisfying.
If you're interested in learning more about what it looks like to work with Sunnybranch, if you wanna have an audit done of everything your financial advisor is providing you and how much they're charging you versus what it would look like if you moved over to Sunnybranch, send me an email: katherine@sunnybranchwealth.com. You can also find me on Instagram @sunnybranchwealth. I'd love to chat more if you're interested, and if not, I'll plan to catch you again on the next episode of Heir Necessities.
Let’s take the next step together
Understanding how to manage, invest, grow, and/or give away multi-million dollar inheritance isn’t easy. Inheritors can encounter a wide variety of different situations requiring knowledge and finesse to manage. If you need more help, reach out to Katherine Fox, CFP® and CAP®, financial planner for inheritors, to learn how Sunnybranch can help you evaluate your financial situation and build a plan for your financial future.
