Q&A: 1.5% Advisor Fees, Becoming a Pilot ($340K in 4 Years) & Healthcare Costs

When you are paying a 1.5% AUM fee on a $510,000 portfolio with Northwestern Mutual, the actual cost is closer to 2% or 2.5% once you factor in the expense ratios of the mutual funds they put you in. That is the kind of line-item math that can quietly cost a dentist making $600,000 a year in practice profit tens of thousands of dollars over a decade, and it is exactly the kind of friction the hosts of Rich Habits want listeners to feel before they decide whether to pay someone to manage their money.

When to Fire Your Financial Advisor (and When to Keep One)

Kenneth, a 40-year-old dentist with a practice collecting $1.5 million annually, asked whether he should ditch his Northwestern Mutual advisor charging 1.5% on assets under management. Austin and Robert agreed that the fee is too high for a portfolio of that size—typically, fees drop under 1% once you cross $1.5 million. But the deeper problem, Austin explained, is that Northwestern Mutual advisors are often paid by wholesalers to put clients into expensive mutual funds with expense ratios of 0.5% to 1%, on top of the AUM fee. The result is that Kenneth is effectively paying 2% to 2.5% annually for a service that, in Austin's view, amounts to little more than a quarterly email and an expensive Christmas card.