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Old 04-06-2013, 07:41 AM   #21
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There's a need for good financial advisors/planners, though they need to be chosen with great care.
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That's the rub, isn't it? By the time you know enough to pick a good one, you (almost) know enough to do the job yourself. 1% per year ain't rabbit food--for most of us it's about 25% of what we plan to withdraw during ER/R.
+1 on both. There are a lot of people who need FAs. I have dear friends who use them who would be lost without them. On the other hand, they really don't know enough to insure they pick a good one. If they did, as Samclem says, they could DIY. There should probably be a standard, simply worded disclosure statement that describes whether the broker/FA has a fiduciary duty to you, how they get compensated, and the implications for you, but I don't see much likelihood of that. I'm not sure most people would understand even a simple disclosure statement in any event.
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Old 04-06-2013, 08:06 AM   #22
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While I am a DIY apostle, I concede that there are some people out there who have done well in their careers and are savers that have amassed wealth that don't have the interest that we do in AA, tax-efficient placement of investments, optimizing taxes, etc.

They are just wired different and do need professional help. My BIL is a life insurance agent and has many clients that I think he provides a valuable service for because they would have no coherent plan without him. Similarly, I have a good childhood friend who is a stockbroker and also provides valuable service to his clients, particularly hand-holding during market downturns. My only point is that I think there is a subset of people out there who for whatever reasons don't have the aptitude or inclination to DIY and are better off with help.

P.S. Before everyone piles on, I realize the author of the article was a fee-only planner (at least as he describes himself) which is very different from my BIL and stockbroker friend.
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Old 04-06-2013, 08:49 AM   #23
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The assumption is that DIY is difficult and takes time.....what most FA's do is pretty simple and takes very little effort. Now if you are going to get into trading based on economic analysis, alternative investments, high dividend investments etc etc, that might take time.....but I'd never invest like that myself so I'm not going to pay someone to do it for me.
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Old 04-06-2013, 08:56 AM   #24
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Recently, a few new studies have quantified the benefits of working with a financial planner. According to the paper Alpha, Beta, and Now ... Gamma by David Blanchett and Paul Kaplan of Morningstar, an additional 29% of retirement income, the equivalent of an additional [/b]1.82% a year in return[/b], may be realized by using some specific planning strategies, like employing a dynamic withdrawal methodology or a tax-efficient asset location.
That additional 1.82% a year with an FA could well disappear into the FA's wallet in fees. And a "dynamic withdrawal methodology" is imposed on your IRAs by the IRS when RMD starts at 70.5
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Old 04-06-2013, 09:15 AM   #25
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The assumption is that DIY is difficult and takes time.....what most FA's do is pretty simple and takes very little effort.
Even as effective and simple as most lazy portfolios are, as FinanceDude pointed out in a earlier thread, many people don't have the discipline to implement such a plan, and really go off the rails during corrections. I'd venture that while most people can easily understand the mechanics of AA, passive investing, rebalancing, tax efficiency/placement, etc. - we underappreciate the discipline required to manage a portfolio. Most amateurs can't resist the urge to act, when patience would serve them better.

The mechanics and discipline are both common here, not so in the larger world (I have to be reminded periodically).

I'm a DIY investor to the core, but I have known a lot of people (young, old, smart and stupid) who were completely irrational when managing their own investments. A little information (hot tips, water cooler BS) can be dangerous, but so can too much information (CNBC).

But I still maintain there are more bad FAs than good, so it's a choice that must be made very carefully.
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Old 04-06-2013, 01:08 PM   #26
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Sure it was tragic for them, but how are you holding up?
Actually, doing great. Since September I've watched the market, followed news, and have been fascinated how the market responds. I've watched the equities drop, while the bond holdings kicked in and did their thing limiting volatility...

I believe I've acquired a basic understanding of how things work, and have felt the urge to do things 'wrong' lol; but I think I understand those urges and have no problems avoiding them.

Yes Midpack, even the urge to market time *grin*. I've gotten over it, if you remember the discussion. I was guilty of short term thinking.

I don't anticipate any major problems we can't get through. I've watched a 300+k [funds] portfolio work, and am now comfortable adding another 600+k around June into the market. I've looked into adding a percentage of REIT, mid cap and small cap funds to the basic three fund portfolio, but need to cogitate more on it.

I'm averaging an ER of .10%. And when I think about how much I would have paid in costs for the FA to handle things...

Next I need to tackle the possibility of LTC insurance but that's another topic.
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Old 04-06-2013, 01:59 PM   #27
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Even as effective and simple as most lazy portfolios are, as FinanceDude pointed out in a earlier thread, many people don't have the discipline to implement such a plan, and really go off the rails during corrections. I'd venture that while most people can easily understand the mechanics of AA, passive investing, rebalancing, tax efficiency/placement, etc. - we underappreciate the discipline required to manage a portfolio. Most amateurs can't resist the urge to act, when patience would serve them better.
I agree, some people need an advisor or just don't want to deal with investing their money. But from all I've read and heard I can do what most FAs do with very little time and effort. Also my track record through a couple of big down turns makes me confident that I can handle future market "corrections" without any costly hand holding and I think most people could do the same if they wanted.
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Old 04-08-2013, 12:05 PM   #28
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I agree, some people need an advisor or just don't want to deal with investing their money. But from all I've read and heard I can do what most FAs do with very little time and effort. Also my track record through a couple of big down turns makes me confident that I can handle future market "corrections" without any costly hand holding and I think most people could do the same if they wanted.
Sounds like you're ready to be an FA.............
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