A 3% annual fee on a $1.5 million inheritance would cost roughly $45,000 a year — and that can rise further if custodial, trading or fund fees are added. A reader described a mixed portfolio managed by their parents’ long‑time adviser and asked whether switching makes sense. With large intergenerational transfers under way and many heirs choosing new advisers, the decision matters for returns, taxes and how the estate is ultimately used.

How big is the cost?

A 3% annual adviser fee on a $1.5 million estate equals $45,000 a year if the fee is charged on the full balance. That arithmetic is simple, but the practical impact depends on what the fee actually buys and how it’s applied.

Some fees cover a wide bundle of services: investment management, financial and tax planning, trust administration and regular meetings. Others pay only for portfolio management. The reader scenario noted a mixed portfolio — some winners, some losers — and questioned whether the fee matched the value delivered.

Fee structure matters. A percentage charge on assets under management scales up as balances grow; a fixed-percentage fee therefore takes a larger absolute dollar amount from a larger estate. That’s why heirs react strongly when they see a small percentage translate into a large annual bill.

Why heirs replace long-time advisers

Survey data show firing parents’ advisers is common: some heirs prioritise different goals, timelines or cost structures from their parents. Parents may have followed conservative plans for lifetime income or capital preservation; heirs sometimes want more growth, liquidity for business or property, or lower costs.

Relationships and emotion also play a part. When the adviser’s primary relationship was with a deceased parent, heirs can view the adviser as representing past choices rather than their own interests. Practical concerns about performance and fees often sit alongside those emotional factors.

What to check before pulling the plug

Changing an adviser is straightforward in theory and messy in practice. Before making a move, do a measured review.

  • Confirm the fee basis. Is the 3% charged on total assets under management or on a subset? Are there custodial, trading or fund fees on top of that? Ask the adviser for a written fee schedule so you can compare total cost versus service.
  • Evaluate net performance. Look at returns after fees over several years and compare them to relevant benchmarks and passive alternatives. If net returns consistently trail simple, low-cost options, the fee is harder to justify.
  • List delivered services. Does the adviser handle cash flow, tax management, estate or trust administration, regular reporting and access to specialist managers? Higher fees can be acceptable if they cover work you would otherwise pay separately.
  • Consider operational cost if you switch. If you replace the adviser, who will take over trust paperwork, tax coordination and regular family reporting? Those tasks don’t vanish — they move to you or another professional and may carry new fees.
  • Check fiduciary status and legal duties. Ask whether the adviser is a fiduciary bound to act in your interest. Establish who legally controls accounts during probate or trust administration and whether authorisations need updating.
  • Get a second opinion. If you’re unsure, obtain a written review or a fee-performance comparison from a certified planner or independent adviser so you can make a documented decision.

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On $1.5 million, a 3% fee equals about $45,000 a year — so before you fire the adviser, confirm exactly how the fee is charged, check net performance against low‑cost alternatives, and be clear who will handle tax, trust and estate administration if you switch.

This article was created with AI assistance.