Should we stay

[Rick_Head]

If you are old enough:

"There are 8 million stories in the Naked City, this has been one of them".

[Texas Proud]

If you wish to spend money on a FA, go right ahead....

I do not think that most people here are against anybody who thinks they need one from getting one... it is just that the average FA is really not that great and the cost can be very high...

For most places, the first thing a FA is is a salesman... like any salesman they are told what to push and what to keep from the client unless asked specifically....

I look at the cost of a FA.... if you have $1 mill and the total fees are 1.5% (not uncommon), that is $15,000 per year to them.... if you can get that down to .5% or even .2% that drops it to $5,000 or even $2,000....


So, say it is $10K per year... I calculate that is $150,000 extra fee paid to that FA over only 12 years with a 4% return.... with a higher return it is even worse... (just shy of $300K at 20 years)....


If you believe that spending that kind of money is worth it, then spend it... but be cognizant of the real cost of that FA... do not just gloss over it....

PS... if you have more in assets... that fee goes up.....

[travelover]

To the OP, glad you are happy. I'll gladly spend the hour a year it takes me to re-balance for the $20,000 it saves me. And I'll buy my own birthday card.

[utrecht]

Its hard for me to believe that an obviously intelligent person who can put together such a well thought out post, still would rather spend $10,000s rather than take the hour or two it takes to research what funds to invest their money into and then move their money to a low cost broker like Vanguard or Fidelity.

With the size of OP's portfolio, Vanguard will tell her what to invest her money into for free. There are plenty of people here who gladly give FREE advice on where to invest her money. They have been investing for decades (probably longer than her new advisor). They have also been living successfully off of their portfolios for many years (something very few financial advisors can say).

I just dont get it. I guess because OP doesnt see the fees and lost money due to high expense ratios coming out of her portfolio, she doesnt notice it? I bet if she had to write a check every quarter for the fees, it would come to a screeching halt.

[nun]

This is a frustrating thread.

To the OP. Just call Vanguard and they will hold your hand through the whole process of moving the money from your current company. Vanguard will then go over your situation and come up with a sensible low cost way to manage your money for income. Also, as you've found, there are plenty of people here that will offer advice too.

[rodi]

Glad you are free of the first FA's clutches.

Do talk to Vanguard for comparison.

Some questions for potential FA's.
- How often do you make trades?
- Do you take tax considerations into account when making trades. (Trades in IRAs don't hurt you tax wise... churning in taxable accounts can have big negative tax consequences.)
- What is the fee structure? Is it based on Assets under Management (AUM)?
- Do the funds have loads? Is there a surrender fee?
- How do the funds compare against index benchmarks. (Look at 1yr, 5yr, 10yr.)

Vanguard will come up with a plan for you for free with an account value of your size. Schwab will also do this. As will Fidelity.

I use Schwab - they offer a FA for free that you can tap with questions, etc... I used her services for verifying my ER plans. My sister uses her for more guidance on investments. She charges the same (nothing) for both of us.

[braumeister]

Quote:

Originally Posted by utrecht Its hard for me to believe

Certainly hard to understand.

And yet, none of this should have been new to her:

Quote:

I'm new posting although I've been reading for almost a year.

Quote:

When he retired he realized he had made more more in the 401K than the retirement account with the advisor

[pb4uski]

Quote:

Originally Posted by NBS54 .....This is going to amaze most of you but we have have an appointment to see another financial advisor tomorrow at the local bank which we use. I knew when I posted that this group as a whole doesn't like financial advisors. They have done very well for us. I can't give you detailed year by year returns but I can tell you we have received some great advise and we have made some great returns.....

This section of your post caught my eye. If you don't have detailed year by year returns then how do you know that you have made "great" returns?

Returns are relative... the only way you can assess whether they are "great" or not is by comparing them to relevant benchmark returns for a similar AA portfolio... preferable total return for 1, 3, 5 and 10 year periods. You may have a period where your total return was 12% and think that is "great" but if the benchmark total return was 14% then 12% is not great at all.

Like others, I think you are best off going with Vanguard... they will hold your hand and with very little study you will have more understanding of your investments and importantly, save a lot of money that would otherwise be paid directly or indirectly (via high ERs part of which is paid to your FA).

[utrecht]

This thread reminds me of something that frustrates me to no end in life. People asking for advice and then doing whatever they want anyway. They really don't want advice, they want you to validate the decision they have already made.

As a veteran police detective this happened to me all the time. Younger officers would call and ask what to do with their case. I would tell them and then they would do something almost exactly opposite. They really didnt want my advice. They wanted to take a short cut or the easy way out and wanted me to tell them it was OK.

Family members constantly ask me for financial advice or advice on how to budget their money. I have begun refusing to give advice because not once has anyone done what I advised them to do. They really just want to know how to get rich quick.

My wife's parents have all of their non 401k money with Ameriprise. They are like 73 and 60 and still working. They asked me for advice at least 5 different times. I gave them my advice each time and even assisted them with moving their money to Vanguard when they finally decided to make the move. I opened the account online with them. I helped them transfer some of the money that was in fixed income but didnt need to be. They are VERY uneducated when it comes to finances.

A month later I found out they moved the money back to Ameriprise. No doubt after their "adviser" told them they were wrong. Hes not an adviser. These arent "advisers". They are salesmen.

[robertf57]

OP

On a lark this year, I took and easily passed the series 65 FINRA examination (the test for registered investment advisors and their representatives). I can therefore tell you from personal experience that the bar to become a FA is incredibly low. I have no problem with people seeking advice when needed or desired. If you need a little hand holding, work with Vanguard. If you need more hand holding, see a fee only financial planner once a year.

just my not so humble opinion..

[pb4uski]

^^^^ good advice

[MRG]

Quote:

Originally Posted by robertf57 OP On a lark this year, I took and easily passed the series 65 FINRA examination (the test for registered investment advisors and their representatives). I can therefore tell you from personal experience that the bar to become a FA is incredibly low. I have no problem with people seeking advice when needed or desired. If you need a little hand holding, work with Vanguard. If you need more hand holding, see a fee only financial planner once a year. just my not so humble opinion..

Great point, Megacorp used to have over a thousand folks with series 6,7,65 licences. These were folks who had a high school education and spoke well, oh yea no felons! Kid that worked for me came up through that career path, said after prep the test wasn't too difficult and he(self admitted) was clueless about investing.

Reading some Jones training documents it appeared to me these folks:

1. Took a few weeks self training to pass the exam.
2. Then 16-20 week training courses on manipulation er.. sales.

So based on the kid that worked for me I suppose the manipulation training gets you investment savvy.

[ERD50]

Quote:

Originally Posted by utrecht This thread reminds me of something that frustrates me to no end in life. People asking for advice and then doing whatever they want anyway. They really don't want advice, they want you to validate the decision they have already made. ...

+1

Human nature is fascinating, just fascinating.

-ERD50

[Texas Proud]

Yes, the FA that are at banks etc. are there to sell products of the banks...

FA of Ameriprise are there to sell products of Ameriprise.....

Heck, even FA of Vanguard are there to sell products of Vanguard...


Some know what they are doing.... most do not...


The questions I would ask a FA is why are they putting me in any investment.... IOW, what does this investment have that another does not... OH, and how much is this costing me...


As I mentioned, I know someone who says they are an 'independent' FA and from the info I get he nets close to $100K... but he is so in debt it is not funny... he is slick... he is personable.... he can sell you life insurance and annuity products and make them seem like you would be a fool to not have them...

If I were the OP, and I did not know as much as I do.... I would listen to the advice to use one of the major firms that provides free FA advice to a portfolio of 'my' size.... Vanguard, Fidelity, etc... I would also make sure that I knew the total fee structure of the whole portfolio... IOW, I want to know how much of my money was being spent on the workings of the firm.... if they cannot give me that info, I would move on....

[Katiek]

Quote:

Originally Posted by rodi Glad you are free of the first FA's clutches. Do talk to Vanguard for comparison. Some questions for potential FA's. - How often do you make trades? - Do you take tax considerations into account when making trades. (Trades in IRAs don't hurt you tax wise... churning in taxable accounts can have big negative tax consequences.) - What is the fee structure? Is it based on Assets under Management (AUM)? - Do the funds have loads? Is there a surrender fee? - How do the funds compare against index benchmarks. (Look at 1yr, 5yr, 10yr.) Vanguard will come up with a plan for you for free with an account value of your size. Schwab will also do this. As will Fidelity.

If you feel you need the assistance of an FA, these are very good questions to ask. An advisor associated with a bank is going to recommend those products, and those products typically have high fees. Make sure you understand what the fees are for your initial investment, and if you leave the investment. Get these disclosures in writing.

Also ask what standard the FA is bound to - are they a fiduciary who is legally obligated to put your interests first?

[Whisper66]

NBS54 - Thanks for opening this discussion and providing the followup status posts. Even those of us that haven't contributed to this particular discussion gain knowledge and ideas from reading your thoughts and the advice provided by those in this forum. Good luck wherever you end up in this process.

BTW - I understand the feeling that one needs a FA. Thought when I retired that I would go that way to lower my risk and stress level. I really didn't like spending time on investing and worrying about it and thought a FA would "of course" do better than simple index investing that I would do. But, unfortunately the data doesn't support that as a general rule of thumb. If you have a FA that consistently beats the indexes, he is unusual. Like many here, I've gotten very comfortable taking a minimal amount of time and effort to manage my own investments and pocket the fees I would have paid a FA. This comfort mainly came from the excellent experience level found in this board and the excellent library that the Bogelheads web site has.

Again, wish you the best whatever you end up doing.

[chris2008]

Dear OP,
I understand that you feel too intimidated right now to make total changes and trust in those you talked to.
However, take this as a wake up call and start to educate yourself so that you can better understand the performance and recommendations of the FA. Ask regularly for performance reviews, compare to index so that you can see if you are getting enough for your fees.

[Taxman59]

I am a long term investor (35+years ) and I still have most of our money with a FA. We are charged the outrageous fee of $29.95 per trade and the asset fee of 0% per year. Not all advisors charge high fees, and not all push high fee products. I can manage our investments quite easily, but DW has no idea of what to do with the $. By using someone I trust, I am putting in place a process for her to make smart decisions in my absence. I applaud the OP for seeing the problem and looking for a better fit. If Vanguard or Fidelity work, great. If the new FA is the best fit, great. The OP now knows to watch their money with whomever they move to.

Sent from my SCH-I545 using Early Retirement Forum mobile app

[utrecht]

Quote:

Originally Posted by Taxman59 I am a long term investor (35+years ) and I still have most of our money with a FA. We are charged the outrageous fee of $29.95 per trade and the asset fee of 0% per year. Not all advisors charge high fees, and not all push high fee products. I can manage our investments quite easily, but DW has no idea of what to do with the $. By using someone I trust, I am putting in place a process for her to make smart decisions in my absence. I applaud the OP for seeing the problem and looking for a better fit. If Vanguard or Fidelity work, great. If the new FA is the best fit, great. The OP now knows to watch their money with whomever they move to. Sent from my SCH-I545 using Early Retirement Forum mobile app

How do they get paid then? If an adviser "only" charges 1% (which is pretty outrageous compared to what you can do yourself), then to make $100,000 per year he has to have $10 million under his management. I doubt that every adviser has anywhere near $10 million under management so they have to charge even more thru commissions and fees collected by putting you in load mutual funds to make a good living.

You could easily set up a trust that allows you to manage your money on your own as long as you are alive but the money goes under professional management when you die so that your wife doesn't have to worry about it. But its your money so whatever.

[brett]

Apart from the cost/benefit issue would you still have the same degree of confidence and trust in your advisor? If the answer is NO, then you have to make a change.

We made a change prior to retirement. It was difficult and took a good nine-twelve months to find the right person/firm for us.

What surprised me? I asked a number of my colleagues and friends if they had an advisor, if so were they happy with the results, the advice, and the individual. I would say that the vast majority were not happy for one reason or another not necessarily based primarily on returns.

Fours years later we are happy with our choice and very happy with the outcomes.