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A Plan for FA to Convert DIYers
Old 04-05-2013, 03:37 PM   #1
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A Plan for FA to Convert DIYers

Financial advisors/planners/brokers have a big plan to try to convert all of us DIYers. This article presents a scenerio that may or may-not be realistic. Should we be more considerate and not concentrate on all of the time consuming personal finance stuff when we could be spending our limited time left on earth with family? Article assumes that by teamng up with a pro, DIYers could achieve "outperformance bonus."

Expect a call from one soon.

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The discussion that follows will be enlightening. It could be Archie values his time and energy and would prefer to spend it on other things besides finances. He may realize Edith wants more of his attention as much as she wants solid financials. There is a cost to doing things yourself, and sometimes people like Archie realize it is a high price. (If you frame it the right way.)

The couple should list things in life that are most important to them. They will come up with several things besides money. Then you should ask them how much better their lives would be if they could redirect their time and energy toward their health or their relationship with each other, their families, friends, their community, their causes or God? How many of those things could they delegate? None. Money matters, on the other hand, can be delegated. And portfolio management is one of the easiest to hire out.

If they realized the high price of DIY, Archie would no longer need you to beat him at some imaginary, beside-the-point investing game. He partners with you to help him keep control of his life. Your likely outperformance is a nice bonus. Hiring you is no longer a threat to his relevance or his manhood; it is a prudent, smart, empowering, liberating choice that has tremendous value even if the value cannot be precisely quantified.
Converting A Do-It-Yourselfer To A Client
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Old 04-05-2013, 03:46 PM   #2
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I think they miss the point that, in my view, many DIYers *enjoy* being DIYers. In a sense, it is another hobby that is not taking away from other things that they want to do.

My personal analogy in home computers. It be easier for me to but fully equipped, pre-configured computers. But my hobby is building computers, so the time I take to building and configuring it for my own uses is a joyful time and gives me more personal enjoyment than just buying a pre-configured one.

Plus if you are happy with broad market index funds how much time does it really take?
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Old 04-05-2013, 03:50 PM   #3
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I will listen quietly to everything one has to say. Then I will reply, "hold on let me go put in my hearing aid".
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Old 04-05-2013, 04:00 PM   #4
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This "expert" Dan Moisand (author)? I have never heard of him or seen him at any large national conferences I have been to over the past 15 years. More likely a guy trying to cook up some business by writing drivel such as this.........
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Old 04-05-2013, 04:11 PM   #5
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IMHO, the CFP author of the article sounded condescending and full of himself. No way I would use him.
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Old 04-05-2013, 04:20 PM   #6
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That is a really humorous article. First, the DIY person got to FI by being a DIYer; second, we have to do something for brain exercise; third, some families may see too much of you as it is. There is one case when I would consider one of these 'experts', and that is if my mental capabilities deteriorate too much to keep up my checking account. (which could happen).
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Old 04-05-2013, 04:38 PM   #7
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I have never used a financial advisor and probably will not in the near future. However, I do admit that when I get into analyzing topics like tax loss harvesting and maximizing tax efficiency in general, I'm clearly not an expert on it, and I often wonder if I'm missing out on chances to reduce my taxes by not seeking professional advice.

As long as you go to a fee only planner, and you keep the analysis to a reasonable number of billable hours, I don't think you can get hurt. However, I would never agree to give anyone a percentage of my portfolio to manage for me. That seems ludicrious, and is completely inconsistent with all the research that points back to buying index funds with low expense ratios.
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Old 04-05-2013, 04:42 PM   #8
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Originally Posted by mickeyd View Post
Financial advisors/planners/brokers have a big plan to try to convert all of us DIYers. This article presents a scenerio that may or may-not be realistic. Should we be more considerate and not concentrate on all of the time consuming personal finance stuff when we could be spending our limited time left on earth with family? Article assumes that by teamng up with a pro, DIYers could achieve "outperformance bonus."

Expect a call from one soon.

Converting A Do-It-Yourselfer To A Client
*SNERK*

Everybody gets an outperformance bonus! Because no financial advisor/planner/broker is below average! Yah. That and a dollar will get you a pack of beer nuts.

Oh yeah. All that time consuming personal finance stuff. The bulk of my 'time consuming personal finance stuff' is tracking and balancing my checkbook. The investments? There's an annual check of asset allocation, and sometimes, if the spreadsheet says to, there are orders to place online to do the rebalance. 15 minutes annually, plus the initial hour to code, test, and debug the spreadsheet program (so amortize that over my expected remaining lifespan, for another 3 minutes a year).

But... but... taxes! Yeah? Any significant income makes for taxes. SSA, pensions, IRA RMDs. That financial advisor/planner/broker isn't going to do my taxes for me anyway. If I'm lucky he'd forward the brokerage 1099s in a timely manner.

As a very lazy boglehead, I think I may have spent more time on this post than I spent on our non-checkbook, non-IRS finances the past year.
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Old 04-05-2013, 04:43 PM   #9
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I thought this theme was executed much better in the Edward Jones TV ad.
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Old 04-05-2013, 05:07 PM   #10
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I was hoping for free dinners without the sales pitch.

I would also say the assumption is I waste no other time. Which can't be true b/c I wouldn't be here BS'ing.
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Old 04-05-2013, 05:27 PM   #11
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I thought the article was heavy handed against DIY, but that's how sales are conducted. OTOH I caught myself got slapped down (deserved) overselling DIY here last week - thinking about forum members here vs the general population. And I have certainly known DIY investors who were/are their own worst enemies - and would have been better off using an FA.

While I have gotten (very) good results following Bernstein/Bogle for decades, I realize many people a) don't know how to invest even though it doesn't have to be that difficult, b) know how, but don't have the discipline to stay with it (especially when corrections hit, and they will), and/or c) just aren't interested. There's a need for good financial advisors/planners, though they need to be chosen with great care.
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Old 04-05-2013, 05:30 PM   #12
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It's just not that difficult. I don't see the added value that an FA would bring to the table. If you need one, fine. I've got a feeling most people on this board don't.
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Old 04-05-2013, 05:32 PM   #13
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Originally Posted by Midpack View Post
There's a need for good financial advisors/planners, though they need to be chosen with great care.
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.
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Old 04-05-2013, 06:25 PM   #14
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Sam, you are on the mark. I just dumped my FA after one year for this very reason. The fee was 30% of my withdraw. And for what? To rebalance year after year using the same cookie cutter modeling he uses on 300 other clients? Never again, I learned my lesson.
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Old 04-05-2013, 06:35 PM   #15
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I do my own financial planning, but don't need to spend a lot of time on it! I'd be surprised if I spend more than 4 hours on it a month.

Now, if we count the time on this forum...
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Old 04-05-2013, 07:12 PM   #16
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I do my own financial planning, but don't need to spend a lot of time on it! I'd be surprised if I spend more than 4 hours on it a month.

Now, if we count the time on this forum...

I if I included the time spent on the forum as financial planning, than I'd really have a job. :.

But I enjoy issues associated with financial planning.
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Old 04-05-2013, 07:27 PM   #17
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Same here. I started studying investment principles with a passion last February - all my money was in stable accounts and I was happy that way, but DW inherited an IRA, and while the estate was being settled I jumped into the studies. The old FA wanted to keep the account, but I had learned enough to realize I didn't trust his answers - he was hedging. He never completely answered my questions about costs. At the third meeting I advised him the money was being transferred to a Vanguard account. A very unhappy fellow. DW was a little concerned, but a year later she now understands the principles involved and is happy with the results so far. When money from our stable accounts become available after retirement - June 1st - that money will also be be transferred to the V portfolio. With the amount of money in question, V has been very happy to offer suggestions and help planning at no cost.

It's been fun to learn, but once the portfolio is established it should be very boring.
No FA...
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Old 04-05-2013, 09:40 PM   #18
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A very unhappy fellow.
Of course he was.

After all, he lost the corner office, had to dis-enroll his kids from that exclusive academy (now they had to deal with public schools), had to turn in that leased Lexus, wife's botox treatment had to be put on hold, membership @ the CC had to be suspended.

Sure it was tragic for them, but how are you holding up?
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Old 04-05-2013, 10:37 PM   #19
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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

Back in the 80's when stocks were smokin' & even bonds paid 7-9+%/yr, an FA could skim charge 1% and not raise much of an eyebrow. In current era of much lower returns, that 1% (or more in many cases) becomes much more significant portion of overall investment income.
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Old 04-05-2013, 11:18 PM   #20
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Originally Posted by seraphim View Post
I started studying investment principles with a passion last February - all my money was in stable accounts and I was happy that way, but ....

It's been fun to learn, but once the portfolio is established it should be very boring.
No FA...
1. For most, I think there is a learning curve.
2. For some, numbers is hard (and/or boring and/or a cause/source of anxiety/stress). I.e. not fun for everyone (like a Slinky® is ).

Obviously this kind of pitch isn't going to work on the vast majority of FIREes, but more likely, I think, for those contemplating which way to go. Without knowing these things, the uninitiated might be swayed by the argument that it takes a long time of hard work to understand how to do this stuff and continue to do it well yadda yadda yadda....

The noobs & fence-sitters may be the practical targets for such marketing. YMMV.

Tyro
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