Investment Fees in Your 90s: When They Matter More

How Fees Change in Character at 90

The conventional argument against high investment fees is that they compound adversely over time: a 1% annual fee that reduces portfolio growth by 1% per year has a much larger effect over 30 years than over 5. At 90, the compounding argument is less powerful because the time horizon is shorter.

However, fees still matter at 90, for a different reason. In your 90s, the portfolio is typically being depleted rather than grown. RMDs, care expenses, and living costs draw down the balance each year. In this context, fees are not a drag on growth: they are a direct deduction from the assets available for care and inheritance. A 1% advisory fee on a 500,000 dollar portfolio is 5,000 dollars per year leaving the account for an advisor rather than for care or heirs.

The question to ask is: what is the advisor providing for this fee, and is it worth 5,000 dollars per year to this specific situation? For some people, active professional management of a complex estate provides genuine value. For others, a portfolio of low-cost index funds with automatic RMD distributions requires no ongoing active management and can be managed for far less.

What Fees Are Reasonable at 90

For a simple portfolio, the only fees that should be present are fund expense ratios. Low-cost index funds and ETFs have expense ratios of 0.03% to 0.10% annually. A money market fund for the cash reserve may charge 0.01% to 0.20%. These are reasonable and unavoidable for holding any investment.

An advisory fee of 0.50% to 1.00% of assets per year is appropriate if the advisor provides active portfolio management, tax planning, estate coordination, and regular reviews. If the advisor's primary function is maintaining a simple allocation and answering occasional questions, a lower-cost option (a custodian's automated advisory service at 0.15% to 0.30%, or no advisor at all) may be more appropriate.

Annuity products with high internal charges (mortality and expense charges of 1.00% or more plus rider fees) are rarely appropriate at 90. The insurance benefit has largely been provided by longevity already; the ongoing fees are primarily compensation to the issuer and the selling agent. If an existing annuity with high charges is in force, a qualified advisor can evaluate whether it is still serving its purpose.

Making the Fee Decision

The fee decision at 90 is fundamentally about value. A professional advisor who actively monitors for fraud, coordinates with the estate attorney, reviews RMD calculations, and provides quarterly reviews is providing real value that justifies their fee for many families. An advisor who simply holds index funds and sends quarterly statements may not be worth 1% per year on a depleting account.

For families where a trusted family member has the knowledge and time to manage the portfolio, custodian services (automatic RMDs, low-cost funds, bill pay, trusted contact) can provide most of what an advisor would offer at a fraction of the cost. The family member's time is a real cost, however, and should be factored into the comparison.

For families without a capable trustworthy family member, a professional fiduciary or a flat-fee-only financial planner who reviews the situation annually may be a better choice than a percentage-of-assets advisor. The fee structure matters: a flat annual fee of 2,000 to 5,000 dollars for a comprehensive annual review is often more appropriate than a 1% ongoing management fee on a 500,000 dollar account.

Frequently Asked Questions