Help, I Have Too Much Money!

Question


Hi Scott,

I’m in my mid-40s and making $600k a year (with bonuses). We have a house worth over $2 million fully paid off, about $850k in cash and $250k in super. I’m now trying to get organised and have engaged a financial advisor for our super and investments. I just cannot get to the bottom of what is a reasonable cost: he is charging me $16,000 a year for my SMSF and family trust, plus $11,000 a year in advice fees. In addition we are being charged about 1 per cent advisory fee on our investments. What is ‘okay’?

Brendan

Scott's Answer


Brendan,

You’re obviously a smart guy. So you’ll no doubt understand that your financial advisor looks at your assets in pretty much the same way a horny teenage boy looks at Kate Upton’s … err … assets. In both cases they dream of getting their hands on them, and never letting go.

Back of the envelope: they’re charging you $37,000 a year in fees … which will grow in line with your investments. How did they come up with that figure? Basically it’s a ‘rich bastard tax’. They know you can afford it.

Personally, I’d pay $25,000 to have a coordinated team of lawyers, financial advisors and accountants design and implement your asset structuring, and importantly your asset protection. Then I’d pay them $5,000 a year for a full annual review of your tax situation, with them advising on what loopholes they can exploit (at your income level, and wealth, there are always loopholes). Finally, I’d invest most of the money into my favourite rock-bottom-cost share funds, sign up for the dividend reinvestment plans, and focus on enjoying life.

Scott