1% FEE TRAP

Video Description

A 1% advisor fee sounds small — until you do the math. If you have a million-dollar retirement portfolio, a 1% advisor fee can cost you $10,000 every year — before fund expenses, platform fees, trading costs, or compounding over decades. That’s real money leaving your nest egg, and most financial conversations *never* translate percentages into dollars the way retirees need to see them. ([NerdWallet][1]) In this episode of **The Guy Midkiff Show**, retired airline captain and naval aviator **Guy Midkiff** breaks down the **simplest math in retirement**, explains why fees matter *in dollars, not percentages*, and gives you a cockpit-style checklist for any advisor conversation. ## 📊 **Key Data You’ll Hear in the Video** ### 💸 Average Advisor Fees * Many traditional financial advisors still charge a fee tied to your assets under management (AUM), with average rates commonly around **1% of assets per year**. ([NerdWallet][1]) * That means on **$500,000** you might pay **$5,000/year**, on **$1,000,000** you pay **$10,000/year**, and on **$2,000,000**, **$20,000/year** — not counting underlying fund expenses or additional fees. ([NerdWallet][1]) * Some advisors charge less (0.25%–0.5%), especially robo-advisor models, but many human advisors still use the 1% AUM model as their main revenue source. ([SmartAsset][2]) 👥 Who Uses Financial Advisors? * Only around **27–41% of Americans** work with a traditional financial advisor or planner, depending on the survey. ([Investopedia][3]) * Older adults (including retirees and those 65+) are the group *most likely* to say they rely on professional financial advisors — with roughly half reporting they use advisors as a source of advice. ([Gallup.com][4]) A solid “all-in” annual spend estimate for financial advice/portfolio management in the U.S. is: ≈ $591.2 billion in 2024 (industry market size) and ≈ $603.0 billion in 2025. IBISWorld What this number represents (important) IBISWorld’s figure is the market size for “Portfolio Management & Investment Advice in the US (NAICS 52394)”—which is best understood as total industry revenue (i.e., what clients collectively pay, broadly defined) across portfolio management and investment advice businesses. IBISWorld Caveat: This is the best single headline estimate for “money spent on advisors,” but it is broader than retail-only ‘my advisor manages my IRA’: It can include institutional portfolio management alongside retail advisory relationships. “In total, Americans pay on the order of ~$600 billion a year for portfolio management and investment advice in the U.S. — that’s the industry’s estimated annual revenue.” --- ## 🔍 What You’ll Learn in This Video **✔️ Why “1%” isn’t harmless**: we translate fee percentages into *real dollars* **✔️ How fees compound over time** and silently erode your retirement income **✔️ The Aviate • Navigate • Communicate playbook** for clear financial decisions **✔️ The Captain’s Checklist for auditing fee structures with your advisor** **✔️ When paying for help *is* worth it — and when it isn’t** --- ## ✈️ Captain’s Checklist (Screenshot This!) 1. Are you a fiduciary **at all times**? 2. What is my **all-in annual cost in dollars**? 3. Are there commissions or incentives — yes or no? 4. What services do I get each year for that fee? 5. Show performance **net of all fees** vs. a benchmark. 6. Are there surrender charges or penalties if I leave? 7. If I moved everything into low-cost index funds tomorrow, what would you still do — and what would you charge? --- ## 💡 Bottom Line Percentages are invisible. **Dollars are real.** This episode is not about being anti-advisor — it’s about being **fee-literate**, empowered to ask the right questions, and confident in your retirement decisions. --- ## ⚠️ Disclaimer Educational content only. Not personal financial advice. Consult a qualified professional before making changes to your financial plan. --- ## 📺 Up Next Want to master retirement timing and maximize income? Watch the video on **Social Security timing / Roth conversions / IRMAA strategy** next. [1]: https://www.nerdwallet.com/article/investing/how-much-does-a-financial-advisor-cost?utm_source=chatgpt.com "How Much Does a Financial Advisor Cost in 2025?" [2]: https://smartasset.com/financial-advisor/financial-advisor-cost?utm_source=chatgpt.com "How Much Does a Financial Advisor Cost?" [3]: https://www.investopedia.com/americans-using-a-financial-advisor-11812935?utm_source=chatgpt.com "Only 41% of Americans Use a Financial Advisor—And ..." [4]: https://news.gallup.com/poll/660467/americans-financial-advice-rooted-people.aspx?utm_source=chatgpt.com "Americans Still Turn to People for Financial Advice"