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Mar 12, 2023

Right-Sized Profit Margins

How much is too much? Is it fair for wealth management firms to make 25% profit margins? Is it fair for mutual fund companies to charge 75 basis points when 80% of them under-perform their benchmark indices? Likewise, is it fair for financial advisors to charge 100 basis points when some just provide elementary financial planning and average service standards, at best?

Many believe the honorability of law and of medicine have lost their luster. In law, what’s more profitable, winning at all costs, or the pursuit of justice? Relative to medicine, what has more financial rewards, treating disease or promoting health? My friends who are doctors and lawyers tell me it’s just not that simple, and to be fair, I know they’re right!

Respectfully, it’s not that simple in wealth management either. However, I know one thing for sure. We all need to stop and ask ourselves if our moral obligations and profit margins are appropriately calibrated?

Paul Sullivan
Founder and Managing Partner
Wealth Management Independence