Consider a flat fee for financial advice

Q: My husband and I have a retirement plan through our employer. The director is suggesting that we switch to professional management of the mutual funds that we have. This will cost us a fee of 0.5 percent a year. The manager will suggest changes and rebalancing instead of our selecting on our own. The idea is that the professional manager will do a better job and it's worth the fee. What do you think?
E.g., via e-mail

A: A 0.5 percent fee sounds reasonable, says Debby Vinyard, a certified financial planner in Chicago. But you have to decide how much - or how little - you want to be involved in handling your money. And you have to determine whether the professional will do enough work to merit the fee.

It sounds as if your director has suggested paying for investment advice rather than having someone manage the account. Does your retirement plan have an unlimited number of investment choices, which would require more work by the manager? Or do you have a select number of funds offered by your employer? If the latter case is true, an hourly fee sounds like a better idea to Ms. Vinyard, especially if the adviser is only giving advice on to how to invest with the options you have, and then requiring you to implement the changes.

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