The relationship between investors and their financial advisors is, at its best, a partnership built on trust, transparency, and a shared commitment to long-term goals. Investors depend on advisors to grow their wealth, avoid costly mistakes, and navigate turbulent markets. Yet, in many cases, the terms of that relationship, particularly the true cost of advice, are murky. This is the problem Andrew Parrillo, founder of Parrillo Investors LLC, aims to illuminate.
A career of over 40 years in the investment world as a fiduciary has shaped Parrillo's perspective. After graduating from college and serving in the US Air Force, he moved into finance, overseeing retirement investments for a major trust bank and later advising endowments and family offices as a senior executive at an investment consultancy. In 1995, he launched his advisory firm, working with institutions and managing a multi-manager hedge fund for two decades.
Parrillo's specialty was finding overlooked but skilled investment managers. After retiring from institutional work in 2020, he turned his attention to the challenges faced by individual investors.
He observes that wealth management is a $260 billion business, with the majority of that revenue generated typically through a one percent of assets under management (AUM) fee. "For a $2 million portfolio, that's $20,000 in the first year, an amount that increases as the portfolio appreciates, paid regardless of whether it outperforms a basic index fund," Parrillo says. Over 20 years, that "small" percentage can quietly drain a significant amount of money from an investor's future.
Andrew Parrillo, founder of Parrillo Investors LLC
Parrillo adds that many clients may not necessarily see a clear, net-of-fees comparison to an appropriate benchmark by their account managers. "This lack of transparency can create a dependent relationship, where investors often equate high fees with high value without evidence to support it," Parrillo states.
Clients are often unaware of the advisory fees they pay, the value added after those fees, or the structural advantages their advisor may have in persistently generating returns above market benchmarks. Many express a sense of comfort with their advisors, saying they have made "a lot of money," but lack context for such judgments.
Additionally, many clients possess limited knowledge of financial market history or its potential to preserve the purchasing power of their money. Given this landscape, in 2023, he founded Parrillo Investors to provide one-time, fixed-fee, transparent guidance.
Parrillo advocates for a fixed-fee model that is independent of portfolio size. This approach focuses on determining how much risk a client wants, how much they currently have, and how much they need to take in order to improve the likelihood of achieving their long-term goals.
It raises a valid question: "Why should an advisor earn more as a portfolio grows?" After all, the advisor is being paid to manage risk on the client's behalf. Yet, to preserve the relationship, they may take less risk than is appropriate for the client's actual risk tolerance and long-term objectives.
Many people believe they don't have the time to manage their investment portfolios, but avoiding percentage-based management fees can be financially transformative. "If you're overseeing a $2 million portfolio and paying a 1% management fee, that fee doesn't just cost you 1%. It costs you decades of compounded growth on that 1%. By spending just 12 hours a year managing low-cost index funds yourself, you could effectively earn $5,521 per hour by sidestepping those fees," Parrillo explains.
He adds that over time, this can translate to more than $11.5 million in "hourly wages" from basic DIY investing, assuming a 7% annual return. The math is striking: the final value of the portfolio without fees at a 7% annual return is $7.74 million, while the value with a 1% annual fee drops to $6.56 million, a $1.18 million difference in lost opportunity.
Parrillo calls this the "silent math" most investors never run, yet it can be one of the most impactful financial decisions they make. One can explore the potential long-term cost of advisory fees with the Investment Fee Impact Calculator, a tool designed to help investors quantify how fees may affect portfolio growth.
Besides cost, Parrillo emphasizes risk alignment. Many investors think they understand their risk tolerance, but their actual behavior under stress often tells a different story. Standard questionnaires ask hypothetical questions, like "What would you do if your portfolio fell 20%?" But the answers may not be predictive of a client's resolve.
By leveraging an iterative, data-driven tool grounded in Daniel Kahneman's Nobel Prize-winning prospect theory, investors can objectively evaluate their preferences for risk and return. The tool generates a personalized risk score that quantifies these preferences in dollar terms.
As Parrillo has observed, many younger individuals don't always lean toward high-risk strategies, just as many older investors aren't exclusively focused on caution. "Regularly revisiting your investment approach ensures it stays in sync with your current goals, helping you avoid both excessive conservatism and unnecessary risk. This tends to be more effective than relying on broad, subjective labels like ‘capital preservation,' ‘moderate,' or ‘aggressive,' often used in financial planning," Parrillo notes.
In his book Beat the Wealth Management Hustle, Parrillo presents a practical roadmap for investors. His approach emphasizes building a portfolio that aligns with the investor's lifestyle and fosters long-term discipline, rather than provoking short-term panic.
Meanwhile, for those seeking guidance without the perpetual drag of AUM fees, Parrillo Investors LLC provides one-time, fixed-fee consulting based on individual engagements. Clients retain full custody of their assets and execute a documented, customized plan aligned with their risk profile. Understanding what to reasonably expect from one's investments is essential for informed decision-making.
The takeaway is straightforward. Andrew Parrillo emphasizes that over decades, the compounding drag of percentage-based fees can quietly siphon away a fortune, while misaligned risk can undermine even the best-laid investment plans. By opting for transparent, flat-fee advice and prioritizing a clear understanding of risk, investors can retain more of their returns and make more informed decisions, avoiding the costly mistake of taking on too little risk and missing out on greater potential gains.
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