Paying Your Financial Adviser: How Much Is Too Much?

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Q: My late mother had her money managed by a man she trusted completely. We have kept our inheritance with him. For his services, we pay about $500 a quarter. My mother-in-law's portfolio is managed through her bank, and she pays nothing in management fees. I have also heard about management through the Internet with much lower fees. While I'm not dissatisfied with his services, $2,000 a year seems a great deal of money. What are some things to consider when choosing portfolio management services?M.V.E., via e-mail

A: In general, 1 percent is a normal fee for asset management. In your case, $2,000 would equate to $200,000 in assets. Amounts that small, says certified financial planner Raymond Nasser, of Midlothian, Va., often have fees of about 1.5 percent, so 1 percent might be a bargain.

Mr. Nasser questions cheaper alternatives for asset management. Fees will be assessed one way or another, he says, either directly or, in the case of mutual funds, indirectly by the financial professionals who recommend these investments. …