Low-Fee Financial Advisor

At One Day In July we are Fee-Only Financial Advisors

John Bogle, the founder of Vanguard, famously said, "In investing, you get what you don't pay for."

What did he mean by this?

Playing on the famous adage "you get what you pay for," he meant simply that investors often pay so much in financial advisor and other financial fees that the cost of their investment over time makes them lose money, primarily in opportunity cost, rather than earn.

Therefore: every dollar you don't pay to an active manager, you keep.

Consider this: what could you do with all of the money that you didn't lose to high fees and large financial institutions? If you are paying 1% or more of your assets under management to your financial advisor, we believe you are paying too much. It's that simple.

Always Fiduciaries

As fee-only financial advisors, One Day In July does not take commissions. We make all decisions in a fiduciary manner - in your best interest. As you search for the best financial advisor for you, here are a few things to keep in mind:

• A "fee-only" financial advisor is different from a "low-fee" financial advisor. "Fee-only" financial advisors do not take commissions.
• More than 1% is too much to pay a financial advisor.
• This is your hard-earned money. Hold onto it.
• Ask your financial advisor questions. Lots of them!

Pay Less, Get More

Just because you pay less does not mean you get less. We often have this perception in life; in investing, it is not always true.

Warren Buffett writes an annual letter to all of his stockholders. In his 2017 annual shareholder letter, Buffett said:

"The wealthy are accustomed to feeling that it is their lot in life to get the best food, schooling, entertainment, housing, plastic surgery, sports ticket, you name it. Their money, they feel, should buy them something superior compared to what the masses receive."

He went on: "The financial 'elites' - wealthy individuals, pension funds, college endowments and the like - have great trouble meekly signing up for a financial product or service that is available as well to people investing only a few thousand dollars."

Wealthy individuals, Mr. Buffett said, get pulled in by consultants selling them huge promises. "Can you imagine an investment consultant telling clients, year after year, to keep adding to an index fund replicating the S. & P. 500? That would be career suicide. Large fees flow to these hyper-helpers, however, if they recommend small managerial shifts every year or so."(1)

At One Day In July, we help you avoid the critical error that Warren Buffett describes by using low-cost index funds and charging you below-average fees for our services. We are transparent, independent, and act as fiduciaries on all accounts, for all clients. Our fees are low but our product is high.

Yes, something to ponder indeed.

And, for those of us who are more visual learners, here's another way to think about it:

This hypothetical illustration doesn't represent any particular investment nor does it account for inflation. It assumes $100,000 is invested into an account that earns 6% a year for 25 years. The bar on the left assumes no investment costs or fees (in reality, you should expect to pay some costs to invest). The bar on the right assumes 2% annual fees. "What you lose to costs" represents both the amount paid in expenses as well as the "opportunity costs"—the amount you lose because the costs you paid are no longer invested. There may be other material differences between investment products that must be considered prior to investing. Numbers are rounded.

Convinced that low fees really do matter? Contact us to set up a free consultation with a financial advisor. We'd love to have you join the conversation.

Notes:
1. New York Times. "Buffett Asks Big Money: Why Pay High Fees?" 2.27.2017