Are asset management services worth the cost?

I inherited a large sum of money and would like to protect it and also generate income from it. I am quite clueless about finance, so I thought of hiring an asset manager to handle my financial affairs. My only qualm is that the costs seem high.

My question is: Do asset managers deliver good enough returns on money to justify their high fees? Would I be better off just keeping the money in a savings account even though interest rates are low?

Hi there,

In many cases the answer to your question is "no".

The main reasons for this is that fees are often high and, unfortunately, not all asset managers are scrupulous, which creates a certain amount of risk.

Active asset management in particular is often very costly. Passive asset management - in which the asset manager does not actively manage investments - is generally cheaper.

Whichever solution you opt for, make sure to get a clear breakdown of fees, charges and other costs. Comparing multiple asset management services is also recommended.

In some cases, taking on the services of a personal asset manager may be worth it. Possible reasons for using an asset manager are:

You want your investments to be managed by an expert who can put together solid, custom solutions based on your risk capacity and risk tolerance.

You have a large amount of money (several hundred thousand francs) to invest. The larger the amount of capital, the more sense it makes to use asset management services.

You do not have the time to manage your finances and investments yourself.

The asset manager offers passive investment strategies and does not charge high fees.

You want a one-stop solution for a number of different needs. For example, if you need tax advice as well as asset management, a good asset manager will be able to handle both. Try to find an asset manager which can competently provide a scope of services.

Robo advisors (automated asset management systems) provide an alternative to conventional asset management services. These digital services normally make use of passive investment strategies like exchange traded funds (ETFs) and may have fees as low as 0.5% per annum (plus ETF fees). These services can make sense even for small investors.

Managing your investments yourself (using cheap online brokers, for example) is the most affordable way to invest, but it requires more active involvement and know-how.

Best regards from Moneyguru

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