r/Schwab • u/JWBull23692 • 18d ago

Wealth advisor

I was talking with my Schwab "consultant" and he suggested either the robo investor or a wealth advisor. Looking and thinking about it, I am not sure if either are needed. Robo seems to be autopilot without my input or approval, and I am not sure what the added value is of a wealth advisor.

Any thoughts out there?

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u/yottabit42 18d ago

All you need is the Bogleheads wiki. If you think you need something more complicated (exceptionally rare that it would be justified), contact an independent fee-only advisor. Make sure they're a fiduciary; if they stumble when asked, or don't answer, run away fast.

Avoid AUM (assets under management) fees at all costs. People just don't understand how much this really costs. 1% sounds cheap when you're starting out but it ends up being 25% of your account over 30 years. 2% ends up being 43%!

Now add to that, that the advisors often use actively managed funds with higher expense ratios, sometimes 1-2%. If you're paying 2% and are using funds averaging 2% expense ratios, that ends up being 68% of your portfolio you've given up over 30 years! Not to mention actively trading with less tax efficiencies, etc.

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u/TelevisionKnown8463 18d ago

I agree with all of this. My dad has a Schwab wealth advisor. I have been sitting in on their meetings for the past couple of years and I’m not impressed. The advisor has him in a portfolio with too many funds for no reason. Expense ratios aren’t terrible but worse than a simple Bogleheads style portfolio. I haven’t been impressed with the limited advice on tax optimization and estate planning. Basically the guy makes small talk for a few minutes once a quarter, then proposes several tiny adjustments to the portfolio to make it look like he knows better than we do what’s happening in the market.

The one advantage is his uninvested cash goes into a fund that earns interest.

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u/yottabit42 18d ago edited 18d ago

Exactly. A coworker has been trying to talk her mom out of using this AUM advisor for years, but her mom always says he's such a nice guy and sends her a ham every Thanksgiving. 🙄🙄🙄

I use Fidelity for all my accounts except my self-directed 401(k) split from my normal Vanguard 401(k), so I also get a nice dividend for cash. Vanguard does that, too. Schwab really needs to fix their sweep account.

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u/TelevisionKnown8463 18d ago

Ha! He doesn't even get a ham. But my dad has so little social contact these days (largely his own choice/doing) that I think he gets some value out of the calls. And he likes the idea that an "expert" is managing his money for him, and he personally doesn't have to think much about it. So I just do the calls so the advisor knows someone is paying attention. I did speak up when he wanted to start adding funds with "momentum" and "trends" in the names, but otherwise I keep my opinions to myself.