Finding the right investment manager that aligns with people’s mission can be a daunting and complex task. One of the biggest issues for people seeking to invest their funds in a company or product is the often overcharging from investment firms and banks. These entities typically charge a combined investment fee of up to 2%. 

High fees are a result of investment firms perceiving that higher investment fees equate to better investment performance and a higher level of service. Paying more in the investment world does not equate to actual better results. The crux of it all is that investors seek perceived value when what they really want is actual value. The more complex an investment product or investment service, the more it is perceived to be offering. However, the less complex an investment product is, the more actual value it offers. The more complicated something is, and the higher fees it has, the more likely it will end up underperforming and becoming a problem. 

The industry standard is to charge clients 1% on investment assets. This equates to obviously $1,000 per $100,000 of assets or $10,000 of fees per $1,000,000 of assets. Trading fees, mutual fund management fees and exchange-traded fund management fees also add up. Banks are notorious for charging you the 1% management fee plus the mutual

fund management fee on that bank’s proprietary mutual fund. Thus, fees can easily exceed 1.75%-to-2.00% at banks which is too high for marginal investment management.

According to Miller, before he is eligible for the 20% performance based fee he has to generate a return on his clients’ current investment. He says this incentivizes him as an investment manager to avoid high fees and portfolio losses. He says one of the best ways for people to start avoiding high investment fees is to simply ask their current investment managers to lower their fees. 

“Directly asking your manager to lower their fees is the most efficient means to portfolio cost reduction. People often forget that a dollar saved in costs or fees is actually worth more than a dollar earned from investment returns,” says Miller. In addition, investing in cost and fee reduction can provide far greater returns per unit of risk than anything else. Fee savings simply represent risk-free returns to investors. And, if your current investment manager does not lower their fees, then there are plenty of other investment managers out there.”

Miller says Independent investment managers are not required to sell their clients an expensive proprietary bank investment mutual fund or a similar bank product. Instead, they can more suitably and efficiently allocate your investments with no cost and likely higher returns. When people invest through a bank or large brokerage firm, their investment advisor is likely spending close to 40% of their day in bureaucratic meetings. This takes away a significant amount of time that could be spent working on their clients’ investment portfolio. 

As an independent investment manager, Miller has the majority of his own money invested in the same manner as his clients. This directly aligns his clients’ interest with his, which are investment returns with maximum liquidity.

Sean Miller is an independent investment manager and can be contacted directly at sean@millerasset.com or 434-825-0000.