Do You Have the Courage to Simplify Your Clients’ Portfolios?

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Many clients would be well served by a portfolio of two or three low-fee index funds or even one core fund. But I know only one advisor who routinely recommends a simple portfolio for his clients. The monthly statements his clients receive have one fund listed.

That’s it.

When asked how his clients respond, he said, “They love it. They say it’s the first time they’ve understood what they own.” He has mega-billions in AUM.

Why don’t more advisors recommend simple portfolios? I’ve done an informal survey, and the answer is always the same: “How would I justify my fee?”

All the advisors I asked charge based on AUM, so their fee income would be the same regardless of the number of funds their clients hold.