That simple demonstration of arithmetic is enough to turn many doctors into die-hard do-it-yourselfers, but in my experience, most busy physicians would still prefer to hire an expert to assist with their financial planning and investment management. It is certainly reasonable to pay a fair price for good advice. However, that is easier said than done. “You are engaged in a life-and-death struggle with the financial-services industry. Every dollar in fees, expenses, and spreads you pay them comes directly out of your pocket,” said William J. Bernstein, MD, a former neurologist and widely recognized investing author. “If you act on the assumption that every broker, insurance salesman, mutual-fund salesperson, and financial advisor you encounter is a hardened criminal, you will do just fine.”

Your goal should be to pay the least amount possible for good financial planning advice and quality asset management.

Not every financial planner and asset manager is a hardened criminal, of course. There are plenty of good advisers out there, although they are a distinct minority among those who call themselves financial advisers. The first order of business is to make sure the advice is good. There is no price too low for bad advice. Doing a little bit of self-education and getting a second opinion are two helpful techniques for identifying bad advice. It also helps to avoid advisers who are paid on commission. You want a fee-only adviser who gets paid the same no matter what you invest in or what insurance products you buy. However, even among high-quality fee-only advisers, there can be vast differences in pricing. One well-known physician-focused firm starts its asset-management fees at 1.75 percent of assets under management (AUM). Even with a portfolio of $3 million, it still charges 0.9 percent, or $27,000 per year.

It may seem that 1 percent of AUM is the going rate for asset-management services. Many asset managers even throw in financial planning for free when you pay the asset-management fees. However, once you become familiar with asset managers who charge far less, 1 percent may start to seem rather expensive, especially for a large portfolio and especially after you apply the tyranny of compounding to those fees.

I know of several asset-management firms that charge far less than 1 percent. One charges a flat $1,000 per year, and another charges $1,800–$3,600. A third charges a minimum of $3,700 per year, plus 0.37 percent of all assets more than $1 million. A $3 million portfolio doesn’t take any more effort to manage than a $300,000 portfolio, much less 10 times the effort. So it is silly to pay for asset management as a percentage of assets, but that is unfortunately the way most of the industry works. If you choose to go with a manager who charges based on AUM, at least do the math (AUM fee multiplied by the portfolio size) to determine the equivalent flat annual fee. If you’re paying more than $5,000–$10,000 per year, it is probably worth your time to shop around.