Suppose you have a nest egg of $100,000. That’s about the minimum needed to interest an advisor. Let’s further suppose you invest it for 20 years and earn 11.9% per year which as we’ve seen is the average annual return of the past 40 years (January 1975 - January 2015)1. You end up with $947,549.3 Not bad. Now suppose you give up 2% of these annual gains to a management fee. Your net return is now 9.9% and after 20 years that yields $660,623.3 That’s a whopping $286,926 less. Yikes! You not only give up the 2% each year, you give up all the money that money would have earned compounding for
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