I’m 69, retired and my husband and I have about $675,000 invested. I’ve gotten returns of about 3.94% but my financial adviser is charging 1.5%. What’s my move?

• Starting investment amount $237,000, with today’s amount $337,000

• Equities 43.44%, fixed income 38.75%, real assets 1%, cash alternatives 16.81%

• Performance since inception 3.94%

• Big losses were in 2018 for $48,500 and 2022 for $45,000

• I recently withdrew $20,000 to put towards a new vehicle. Other than that, there have been no withdrawals.

Looking for a new financial adviser? This free tool can match you to an adviser who may meet your needs.

Answer: Many experts agree that a 1% fee is around industry average, so 1.5% is on the higher side. Eric Presogna, a certified financial planner (CFP) at OneUp Financial says you should figure out exactly what type of value you’re receiving for that fee. “Much like service-based businesses offer quotes to prospective buyers detailing the work to be performed, any investor looking to hire a financial adviser would ask for the same detail,” Presogna says.

Have an issue with your financial adviser or looking for a new one? Email [email protected].

That means you’ll want a description of services included in a 1.5% fee, an estimate of when and how often said services will be performed and a proposed meeting schedule for the year, says James Daniel, a CFP at The Advisory Firm. “You will want to know if the fee includes ancillary services such as financial planning or tax preparation,” Daniel says.

It’s also important to determine whether the fee structure is a flat 1.5% or if there are tiers, Presogna adds. “Often, advisers charging a percentage of AUM will have a tiered fee schedule where the management fee declines as the client assets exceed certain tiers,” Presogna says. “Next, I’d want to ensure the adviser is … combining both investment accounts together for fee purposes to ensure the clients are receiving the lowest overall fee.”

For example, if the adviser has a tiered fee schedule of 1.5% on the first $500,000 and 1% on the next $500,000, the total fee would be 1.37% assuming both $337,000 accounts are added together when calculating the management fee.

Looking for a new financial adviser too? This free tool can match you to an adviser who may meet your needs.

“Investment management, like any service, can be shopped around,” Daniel adds. “Simply make a list of must-haves with the relationship and compare with other wealth managers you’d consider.” Indeed, most financial advisers will give you a free consultation, so this is a good way to get a sense of what others might charge and provide.

That said, at the end of the day, fees aren’t everything. “I’d place as much importance on the services you want like investment management, financial planning, retirement planning, estate planning and taxes, and what you value, and what a successful advisory relationship means to you,” Presogna says.

Where to find a new adviser and how to vet them

When hiring an adviser, it can be helpful to ask them these eight questions to ensure you’re on the same page and to set your expectations for the relationship. There are many individuals who market themselves as financial advisers, but working with a CFP ensures that you’re working with a trained professional.

In order to earn the CFP designation, you have to complete extensive education requirements, pass exams, perform thousands of hours of work related experience and act as a fiduciary. Additionally, working with a fee-only CFP limits the potential for conflicts of interest as they’re generally paid directly by the client and they don’t earn commissions for the sale or recommendation of financial products.

To find candidates, visit the CFP Board’s Let’s Make a Plan site, the National Association of Personal Financial Advisors (NAPFA) or Garrett Planning Network. You can also use this free tool to get matched to an adviser who may meet your needs.

Should you switch advisers?

The fees you’re paying to your adviser are for the recommendations, advice and ongoing watching of your accounts. But if you don’t think it’s worth the cost, Anthony Ferreira, a CFP at WorthPointe Wealth Management says you might consider doing it yourself. “I know I could do a lot of things myself around my house and on my car but I don’t think I would do it as well as an expert and I don’t think it’s the best use of my time,” Ferreira says. “I’d rather be enjoying myself or working in my business than doing things which I lack proficiency in.”

Switching to a large investment management company is also an option. Joe Favorito, a CFP at Landmark Wealth Management notes that these large firms “offer numerous low-cost product solutions” and can be “great for self-directed investors” but you seem to want a lot of one on one help. Thus, Favorito says, “you’re probably better suited for an independent, fee-only adviser that uses low-cost products from firms like Fidelity or Vanguard.” 

When looking into a large firm — or really any adviser you’re considering — look into how the adviser is paid. Sometimes advisers work on commission, which could mean they don’t recommend the absolute best investment for you,” says Bruce Primeau, a CFP at Summit Wealth Advocates. “There’s no free lunch and you need to pay for quality financial planning advice and portfolio management,” Primeau says.

Is your adviser doing a good job?

Without knowing when you started investing with the adviser, it’s difficult to determine if your experience is consistent with how the market has performed for the same time. Part of the reason your returns are muted is that you have less than 50% in equities, so the upside is inherently going to be somewhat less. “That may or may not be appropriate based on your goals and income needs, which is impossible to say without completing a financial analysis of your circumstances,” Favorito says. 

Favorito adds that the amount in cash alternatives of 16.81% seems high. “Sometimes software programs that analyze investments classify short-term fixed income as a cash alternative which can be misleading,” he says. “If you actually have that big of a cash position, that means your adviser is being very conservative or timing the market and waiting for the right opportunity to deploy cash, which is not a strategy I endorse.”

To evaluate your 2018 and 2022 losses, consider checking benchmarks such as the S&P 500 Index, which is often used for equities; or compare your portfolio against the Dow Jones Industrial Average or the Russel 2000. You can also measure your fixed income losses against the Bloomberg Aggregate Bond Index.

To evaluate your adviser’s performance, ask them for a copy of your detailed financial plan, find out how they’re paid, confirm whether or not they’re a fiduciary and simply ask them to explain why they believe the losses occurred and what their plan is to avoid a similar situation.

Have an issue with your financial adviser or looking for a new one? Email [email protected].

Questions edited for brevity and clarity.