Excerpted from 55 and Out, Personal Finance
The Spreadsheet That Replaced My Financial Advisor
· 3 min read
I paid a financial advisor 1% of assets under management for nine years. On a portfolio in the low seven figures, that's a car every year. A nice car.
The day I fired him, I built a spreadsheet. Twelve cells. Account name, balance, target percentage, current percentage, drift, rebalance amount. Pulled prices from a free Google Finance feed. Total build time: about forty minutes.
What it cost: nothing beyond my time. I moved the assets to Fidelity, bought four index funds (US total market, international, bonds, a small REIT slice), and set a calendar reminder for the second Monday of every quarter to look at the drift column.
What it saved in year one: roughly $14,000 in fees. In year two, more, because the portfolio grew. Compounded over the next twenty years at a conservative 6%, the fee savings alone come out to a number large enough that I had to double-check the math.
What surprised me: how little I missed the calls. The quarterly check-ins with my advisor were mostly him explaining why the market did what it did, which I could read in any newsletter. The actual decisions — buy more of what's down, sell a sliver of what's up — take ten minutes a quarter.
What broke: I almost panicked once, in a bad week, and reached for the phone to call him out of habit. The spreadsheet doesn't pick up. I went for a walk instead. By the time I got back, the urge had passed and the market had recovered most of it anyway. That walk might be the most valuable thing the spreadsheet ever did for me.
Would I do it again: yes, sooner. Would I recommend it for everyone: no. If you don't enjoy looking at a spreadsheet, or if your situation is genuinely complex (concentrated stock, business sale, estate work), an hourly fee-only advisor is worth their weight. But the AUM model — paying a percentage forever for a service that's mostly emotional support — is one of the great quiet transfers of wealth in modern life.
The spreadsheet is on its third laptop and still works.