Experts Back Financial Advisors for 20-Somethings Despite 1% Fees and AI Pressure
Updated
Updated · Business Insider · Aug 27
Experts Back Financial Advisors for 20-Somethings Despite 1% Fees and AI Pressure
3 articles · Updated · Business Insider · Aug 27
Summary
Young adults can benefit from financial advisors even decades before retirement, experts said, citing help with discipline, diversification and planning for near-term goals such as a home purchase, marriage or children.
John Montgomery said self-directed investors often hurt returns by chasing rallies and panic-selling in downturns, estimating the average brokerage investor can lose more than 1.5% a year through poor timing.
Chris Chen and Ben McMillan said advisors now add value through tax-loss harvesting, risk management and sorting through a crowded market of products such as thematic ETFs, with competition from roboadvisors and index funds lifting service quality.
Costs remain the main drawback: NerdWallet puts average asset-based fees around 1%, while flat annual charges range from $2,500 to $9,200; experts said clients should watch for commission conflicts and consider hourly or fee-only advice.