Cloud-Based Financial Advisers

Cloud-Based Financial Advisers

August 28, 2012 Research Insights
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(Last Updated On: March 14, 2017)

Wall Street is VERY afraid!

There are a wave of internet-based financial advisers working hard to save you fees.

The Quick Math:

$1,000,000 at a “reasonable” financial adviser fee of 50bps a year is $5,000/year

$1,000,000 managed by an individual who spends $500 (generous) on a cloud-based tool, has $4,500 left over. Let’s say it takes an investor 2hrs a month to rebalance their portfolio across a bunch of ETFs. 2hrsX12months =24hrs/year. $4,500/24 =$187.5/hr in ‘shadow pay’.

Is your time in retirement worth more than $187.5/hr? For many, it probably is not!!!

The Lesson Learned:

Think hard about your financial adviser decision. Many can be worth 10x their fee; but a lot should be fired and the cloud-based solution should be hired.

Good luck!

 

 


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Definitions of common statistics used in our analysis are available here (towards the bottom)




About the Author

Wesley R. Gray, Ph.D.

After serving as a Captain in the United States Marine Corps, Dr. Gray earned a PhD, and worked as a finance professor at Drexel University. Dr. Gray’s interest in bridging the research gap between academia and industry led him to found Alpha Architect, an asset management that delivers affordable active exposures for tax-sensitive investors. Dr. Gray has published four books and a number of academic articles. Wes is a regular contributor to multiple industry outlets, to include the following: Wall Street Journal, Forbes, ETF.com, and the CFA Institute. Dr. Gray earned an MBA and a PhD in finance from the University of Chicago and graduated magna cum laude with a BS from The Wharton School of the University of Pennsylvania.