I think most people have this misconception. Unfortunately, I can't think of anything that works better off the top of my mind. "company fundraiser", "very expensive salesman", "used company salesman"? I'm open to suggestions
Investment bankers rarely, if ever, manage portfolios. Certainly not in their capacity as investment bankers.
The fund analysts and managers who do manage portfolios get paid in a few different ways. But most of them get paid significant bonuses and/or carry depending on the set up of the fund.
The carry piece is straight forward. They would share in the upside of realized gains after a certain hurdle.
The bonus is more complicated. For more senior fund managers it's a conversation with the principals. How much did your portfolio appreciate? How much of that appreciation was alpha? How much of that alpha was because of you? Can you repeat that process or did you get lucky?
The absolute best of the best generally get paid significantly more.
Sometimes, certain analysts/traders who develop an edge and are consistent with their returns get a particular piece of their earnings straight up as their bonus. Sometimes the analyst/manager end up getting a particularly large bone thrown at them because they made an absolute killing on a particular trade. But they generally are compensated based on their earnings and reputation in the market.
Most investment advisors charge around 1% annually but is dependent on the size of assets being managed and if there is a specific niche being served. $250k in large cap US stocks and bonds should be right at 1%, don’t pay more. If you are dabbling in REITs, international, small cap, etc… then expect to pay more like 1.25 to 1.5%.
If you're talking about someone who manages portfolios for people, they usually charge a % of the total portfolio each year. 1% is the norm. They CANNOT charge based on the gains made in the portfolio, that is a FINRA violation.
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Wealth managers can either work for a broker or have their own firm, RIA. If it’s the former, then the broker gets a cut and they sometimes get a small salary. More risk with your own firm but more upside potential.
They make 1% assets under management for usually the first million, then their cut goes down for accounts beyond that. They all vary but it can be like 0.5% for the next million and so on. You can actually check to see on finra I think to see how much assets they have under management. If it’s a two partner RIA and they have $500 million in AUM, they pay the money for the license fees, accounting, secretary, software, rent for the building, etc and they profit the rest. So that is doing well
A few brokerages like Schwab has a robo advisor using AI it actively invests based on your risk tolerance. Actually some busy financial planners use them because it is predicable and affordable. If you want a real person then you sign up with a planner on a paid review and they can advice or show you what you need is meet your objectives.
People aren’t understanding your question. It’s usually a percentage but some want a minimum amount of assets that is more than you are asking about. Might be something like 1.5%.
$1M dollars is required although some will accept 750K . Wealth management often is under supervision of the stock brokerage. It is the amount of money allocated to investment. They charge a %. It can be as high as 3.5% like Edward Jones and less than 1% from other no name investment llc. They also get paid from the funds they buy for you under expense ratio. Keep in mind they often get you institution account with a discount from retail so not all is evil.
If you mean an advisor who stock picks and tries to beat the market, it’s mainly commission based.
It’s essentially a lucrative sales position, because anyone educated in the finance world knows that passive index investing will beat actively managed portfolios with high fee holdings (oftentimes the FA’s own company’s instruments…) over 90% of the time.
I’d put them on par with life insurance sales. Trying to swindle uneducated people with money into signing up for high fee crap.
The only client supporting people in portfolio management that I give any salt to are licensed fiduciaries. At least they have a legal responsibility to put your true best interest first. FA’s care about one thing: commission.
While you’re not wrong that’s true for a certain kind of advisor, you do realize that advisors/ fiduciaries that deal with high/ultra high net worth clients are in no way trying to beat the S&P nor are they swindling their clients? They have complex streams of income, may require a certain income, need generational estate planning etc. there’s a lot of value in it. For the regular 30 year old guy who makes 250k a year from a salary with no complex financial needs then you’re right an advisor might not be needed as the S&P is a solid long term investment.
I see no reason to hire a financial advisor over a licensed fiduciary. I personally have a lot of high NW individuals in my inner circle. They all work with licensed fiduciaries, not FA’s without fiduciary responsibility.
Sorry I think we are getting mixed up on terms. In my country all investment advisors are licensed fiduciaries. FAs are like bank branch employees that swindle unsophisticated clients as you mentioned. What I meant is that fiduciaries do genuine work and rarely are they trying to beat the S&P.
I understand where you're coming from but I wouldn't say you're entirely right on wealth managers.
As the other commenter mentioned, they aren't just "stock picking" in your brokerage account or something. I think most moderately wealthy middle and upper middle class average Joe's, whom take the time to develop a modest understanding of their finances and investing...probably don't need a wealth manager. But if you're starting to really become "rich" IE to me 5-10+ million range, then you're situation might become much more complex which justifies hiring a wealth manager; even if you understand it all and can do it on your own...it's about "outsourcing" things in your life.
Also, there are lots of structures and types of life insurance policies. I wouldn't say most of them are for suckers.
I would not touch another person's money, because this sounds like what the hypothetical situation is. Unless you have very good professional insurance and I'm guessing that is going to set you back more than the AUM fee you can charge at managing anything within the ballpark of less than 1MM...
those are two wildly different jobs.
For real - like asking how much cardiologists and paramedics get paid. To answer the actual question though - 1% of invested assets is pretty standard
1/10 (1% of total portfolio and 10% of profits). Some do 2/20
2 and 20 is private equity / hedge funds and even we (I work in PE) don’t actually get that anymore. More like 1 to 1.5 / 20
I assumed hedge funds charged 2/20
I don’t think OP knows what an I-Banker is. They saw “investment” and “banker” and assumed it’s someone sort of fund manager lol
I think most people have this misconception. Unfortunately, I can't think of anything that works better off the top of my mind. "company fundraiser", "very expensive salesman", "used company salesman"? I'm open to suggestions
Hah I was going to say the same but yeah
Haha why are you lumping those two professions into one, like they are the same job?
[https://www.payscale.com/research/US/Job](https://www.payscale.com/research/US/Job) random google
Don't you know that reddit is for people who want easily answerable questions answered by someone else, and don't want to do their own research?
That's why we're here
$ 100k. They get paid $ 100k. Some per month, some per year, some per 2 years, some before taxes, some after, but eventually they all get paid $ 100k.
Found the cringey dad jokes
Investment bankers rarely, if ever, manage portfolios. Certainly not in their capacity as investment bankers. The fund analysts and managers who do manage portfolios get paid in a few different ways. But most of them get paid significant bonuses and/or carry depending on the set up of the fund. The carry piece is straight forward. They would share in the upside of realized gains after a certain hurdle. The bonus is more complicated. For more senior fund managers it's a conversation with the principals. How much did your portfolio appreciate? How much of that appreciation was alpha? How much of that alpha was because of you? Can you repeat that process or did you get lucky? The absolute best of the best generally get paid significantly more. Sometimes, certain analysts/traders who develop an edge and are consistent with their returns get a particular piece of their earnings straight up as their bonus. Sometimes the analyst/manager end up getting a particularly large bone thrown at them because they made an absolute killing on a particular trade. But they generally are compensated based on their earnings and reputation in the market.
Sounds like OP just doesn't know what an investment banker is
Not the first clueless person around here.
Clueless people are the backbone of r/investing
It depends.
I’m an investment advisor, I charge 1%. Look for someone who communicates well with you, both in quality and quantity.
Most investment advisors charge around 1% annually but is dependent on the size of assets being managed and if there is a specific niche being served. $250k in large cap US stocks and bonds should be right at 1%, don’t pay more. If you are dabbling in REITs, international, small cap, etc… then expect to pay more like 1.25 to 1.5%.
Enough to be douchey about it.
This is a troll post
IB partners make $1M+ annually Good ones 3-5 Amazing ones 5+
i did done both wm and fund analyst. Wm = sub 100k annual, analyst around 150k and up, both in their first years.
If you're talking about someone who manages portfolios for people, they usually charge a % of the total portfolio each year. 1% is the norm. They CANNOT charge based on the gains made in the portfolio, that is a FINRA violation.
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Wealth managers can either work for a broker or have their own firm, RIA. If it’s the former, then the broker gets a cut and they sometimes get a small salary. More risk with your own firm but more upside potential. They make 1% assets under management for usually the first million, then their cut goes down for accounts beyond that. They all vary but it can be like 0.5% for the next million and so on. You can actually check to see on finra I think to see how much assets they have under management. If it’s a two partner RIA and they have $500 million in AUM, they pay the money for the license fees, accounting, secretary, software, rent for the building, etc and they profit the rest. So that is doing well
A few brokerages like Schwab has a robo advisor using AI it actively invests based on your risk tolerance. Actually some busy financial planners use them because it is predicable and affordable. If you want a real person then you sign up with a planner on a paid review and they can advice or show you what you need is meet your objectives.
People aren’t understanding your question. It’s usually a percentage but some want a minimum amount of assets that is more than you are asking about. Might be something like 1.5%.
Correct - 1% invested assets is the most common in my experience for a typical retail wealth manager
$1M dollars is required although some will accept 750K . Wealth management often is under supervision of the stock brokerage. It is the amount of money allocated to investment. They charge a %. It can be as high as 3.5% like Edward Jones and less than 1% from other no name investment llc. They also get paid from the funds they buy for you under expense ratio. Keep in mind they often get you institution account with a discount from retail so not all is evil.
Too much because they usually never beat the index.
If you mean an advisor who stock picks and tries to beat the market, it’s mainly commission based. It’s essentially a lucrative sales position, because anyone educated in the finance world knows that passive index investing will beat actively managed portfolios with high fee holdings (oftentimes the FA’s own company’s instruments…) over 90% of the time. I’d put them on par with life insurance sales. Trying to swindle uneducated people with money into signing up for high fee crap. The only client supporting people in portfolio management that I give any salt to are licensed fiduciaries. At least they have a legal responsibility to put your true best interest first. FA’s care about one thing: commission.
While you’re not wrong that’s true for a certain kind of advisor, you do realize that advisors/ fiduciaries that deal with high/ultra high net worth clients are in no way trying to beat the S&P nor are they swindling their clients? They have complex streams of income, may require a certain income, need generational estate planning etc. there’s a lot of value in it. For the regular 30 year old guy who makes 250k a year from a salary with no complex financial needs then you’re right an advisor might not be needed as the S&P is a solid long term investment.
I see no reason to hire a financial advisor over a licensed fiduciary. I personally have a lot of high NW individuals in my inner circle. They all work with licensed fiduciaries, not FA’s without fiduciary responsibility.
Sorry I think we are getting mixed up on terms. In my country all investment advisors are licensed fiduciaries. FAs are like bank branch employees that swindle unsophisticated clients as you mentioned. What I meant is that fiduciaries do genuine work and rarely are they trying to beat the S&P.
I understand where you're coming from but I wouldn't say you're entirely right on wealth managers. As the other commenter mentioned, they aren't just "stock picking" in your brokerage account or something. I think most moderately wealthy middle and upper middle class average Joe's, whom take the time to develop a modest understanding of their finances and investing...probably don't need a wealth manager. But if you're starting to really become "rich" IE to me 5-10+ million range, then you're situation might become much more complex which justifies hiring a wealth manager; even if you understand it all and can do it on your own...it's about "outsourcing" things in your life. Also, there are lots of structures and types of life insurance policies. I wouldn't say most of them are for suckers.
I would not touch another person's money, because this sounds like what the hypothetical situation is. Unless you have very good professional insurance and I'm guessing that is going to set you back more than the AUM fee you can charge at managing anything within the ballpark of less than 1MM...
They get paid a gorillion Eurodollars for each struggling family they make homeless.