Skipping a $50K Advisor Fee After Losing a Spouse—Wise or Foolish?

A 54-year-old Reddit user is trying to figure out whether she should be paying $50K for a financial advisor or not.

While that may sound like a lot of money, some circumstances could more than justify the cost, so it’s worth considering the big picture before deciding whether such a large fee is worth shelling out for.

Let’s take a look at the Redditor’s situation to get insight into whether she should opt out of working with the advisor and save the money she’d have spent on their services, or whether doing so would be penny-wise and pound-foolish. 

Is paying a $50K financial advisor fee worth it, or is it smarter to skip it?

To understand whether paying $50K for an advisor is worth it, it’s important to look at the situation the original poster (OP) finds herself facing.

Specifically, her husband worked in finance and managed the couple’s investments, but he has passed away, and she has been left a widow. The good news is that she has $5 million in assets. She’s also getting ready to retire, which will mean that those assets are going to need to support her for a long time to come. 

The advisor that she is considering working with is someone she trusts, but she’s not happy that he charges a fee equal to 1% of assets under management.  However, the reality is that this isn’t an unreasonable amount of money for a $5 million investment portfolio. A lot depends on what services the advisor will offer, but if he helps her access investments she might not be able to on her own, works with her to arrange for tax-efficient withdrawals, and helps her manage her money in a way that enables it to last throughout her retirement, then that fee isn’t out of bounds. 

That’s especially true given the fact that the OP has a lot of money at stake, which was previously managed by her husband. If she left the money stuff to her spouse and has little or no experience with managing investments, determining an appropriate asset allocation, or choosing a safe withdrawal rate, she could cost herself a lot more than $50K with money mistakes.

Working with someone you trust and getting the advice you need to avoid big errors when you have never managed your own investments before could be well worth it to preserve your wealth. 

Understand what services a financial advisor can offer

While a fee equal to 1% of assets under management is not unreasonable and is on par with what many advisors charge, the OP still should consider exploring all of her options before choosing an advisor that is the right fit. The OP needs to understand the services the advisor will provide, and compare different fee structures — not to see which is the cheapest option, but to see which one provides the most value. 

By taking the time to research details about the advisor’s experience, credentials, customer service reputation, and willingness to offer her the help she needs, the OP can find an advisor whom she trusts completely and whose fees she believes are fair.

That may very well be the person who is planning to charge her $50K, but it is also worth looking at what other financial professionals offer. That way,  the OP can make sure she doesn’t pass up working with an advisor who is truly the best fit in terms of affordable cost, knowledge, and making her feel comfortable and confident about her financial situation.