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Old 03-17-2012, 08:56 PM   #21
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... but it does cost me money every month for her to take care of my interests.
I'll bet it does, but that sounds more like "worry insurance" than "investment education".

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If you want to explore a financial advisor I highly recommend a visit to an Edward Jones office for a sit down... it won't cost you one thin dime for some good advise, no sales pitch and it may open your financial world alot more than these folks expounding how they save money.
Your EJ experience has been shared by very few other posters on this board.

In fact, the advice you get from this board is probably worth what's paid for it at least as much as the advice gleaned from a guy who's working for his commissions...
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Old 03-17-2012, 09:42 PM   #22
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I don't think anyone can advise you about what to do. I personally have had a very very good financial adviser for several years, but it does cost me money every month for her to take care of my interests. If you want to explore a financial advisor I highly recommend a visit to an Edward Jones office for a sit down... it won't cost you one thin dime for some good advise, no sales pitch and it may open your financial world alot more than these folks expounding how they save money. We don't all want to spend time worrying.
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The technical term for this is "bad advice".
+1 samclem

shooter, I am a bit confused. A few excerpts from your earlier posts:

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When I ascribed to this forum I told them I use an FA and they almost all said to get rid of "her/him". I STRONGLY DISAGREE! .... I pay less than .75% annually on my total portfolio and I don't have to worry about watching the damn market, she reallocates my investments based on my risk factors, growth factors, and is always available to talk to me.
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The market finally reacted to Congress and Prez regarding the deficit! I say YEH!!! Going in with guns blazing for some bargains, how 'bout ya'll? The water is fine, but it may get a lil warmer before it cools!
I thought you didn't watch the market. Your gal did all this for you?

Seems odd that 3 of your 4 posts are pro FA, and 2 out of 4 posts mention the company name specifically. Or maybe that is not odd?

One more question: How do you know you have a 'very very good financial adviser'? Seems to me that can only be determined by measuring against some benchmark with an AA appropriate for your situation. Many of us have found that once you do that, and see that the benchmark can be purchased for far less than .75%, and only takes an annual re-balance to keep on track, that the decision is in favor of just managing the benchmark yourself. Have you measured against a benchmark?

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Old 03-18-2012, 06:54 AM   #23
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By now I have heard enough to believe that you should be out shopping for a new advisor if you want one, or picking out a brokerage firm (Vanguard, Fidelity or Schwab - can't go wrong with any of them). If you still want an advisor, I would suggest that you set up brokerage accounts to handle the assets and just pay the advisor for their advice
I am agreeing with you. Technically, though, the accounts we are dealing with now are DWs, and I can only suggest to her. She's been happy with the results as she was helping her mother during Alzheimers, but admits she was unaware of how the adviser was reimbursed. The decision will ultimately be hers. Reportedly he kept her mom's accounts earning 5 to 6 percent, but doesn't know if that return was before or after fees were removed. We did open a joint account (the 'brokerage' is PNC bank, BTW) in addition to her beneficiary IRA (currently in a money market until the inheritance is settled) but have put no funds in that joint account yet. I don't think we will.

When I retire in 2013, though, I have a very good idea how I will handle my retirement funds. Probably not an adviser, but if I do choose one it will be a fee only RIA with fiduciary responsibility in a passive account of low ER index funds.

Nice to know an old dog can still learn new tricks. Thanks for all the help, everyone.
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Old 03-19-2012, 01:36 PM   #24
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Update: After speaking with the PNC FI on the phone, I learned he charges a 1% fee for equity acoounts he actively manages. He stated he receives no commissions. Fee is paid quarterly. We will accrue no charges on money being transferred into retirement accounts. We'll meet again when the majority of the estate settles to decide if we want to cash out equities, or continue holding the stock accounts as they are. I'll have time to learn more before then.

Thanks again for all the information.
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Old 03-19-2012, 01:38 PM   #25
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. I'll bet it does, but that sounds more like "worry insurance" than "investment education".
I understand your point. For the next few months the " worry insurance" is acceptable - for now *grin*
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Old 03-19-2012, 01:41 PM   #26
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If you want to explore a financial advisor I highly recommend a visit to an Edward Jones office for a sit down... it won't cost you one thin dime for some good advise, no sales pitch and it may open your financial world alot more than these folks expounding how they save money. We don't all want to spend time worrying.
Ed Jones? Seriously? Most Ed Jones reps have NO background in personal finance. And for most of them, if they don't sell the majority of their clients into American Funds, they get fired.........
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Old 03-19-2012, 01:43 PM   #27
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He stated he receives no commissions.
Unfortunately, he is lying to you about that.
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Old 03-19-2012, 02:21 PM   #28
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It occurred to me he wasn't being specific about all his sources of revenue - when we meet and discuss the accounts and get into expense ratios, I'll probe the matter deeper. I expect he was referring to direct commissions from the investor, and mentally not including commissions from PNC or the company providing the product. There should be an indication of those in the ratios, if I understand it correctly.

We'll see what we see, but I suspect you are right. He wasn't fully disclosing without actually lying, and I didn't push on the topic. I will later. If I'm not happy, the money will go elsewhere.
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Old 03-19-2012, 02:44 PM   #29
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Update: After speaking with the PNC FI on the phone, I learned he charges a 1% fee for equity acoounts he actively manages. He stated he receives no commissions. Fee is paid quarterly. We will accrue no charges on money being transferred into retirement accounts. We'll meet again when the majority of the estate settles to decide if we want to cash out equities, or continue holding the stock accounts as they are. I'll have time to learn more before then.

Thanks again for all the information.
I'm sorry I did not read all prior posts, but read the prospectus in terms of the 12b-1 fees if any. Sometimes the fees are "hidden" in there.
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Old 03-19-2012, 02:54 PM   #30
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FinanceDude

It occurred to me he wasn't being specific about all his sources of revenue - when we meet and discuss the accounts and get into expense ratios, I'll probe the matter deeper. I expect he was referring to direct commissions from the investor, and mentally not including commissions from PNC or the company providing the product. There should be an indication of those in the ratios, if I understand it correctly.

We'll see what we see, but I suspect you are right. He wasn't fully disclosing without actually lying, and I didn't push on the topic. I will later. If I'm not happy, the money will go elsewhere.
Unfortunately you have an all too typical set up. The 1% your "adviser" takes should be compounding in your account. Fire this guy and move your money over to Vanguard, Fidelity or Schwab etc. Roll over the IRAs etc and let the money sit in a money market account until you have developed a plan and an asset allocation. To get that worked out ask questions on here, at Bogleheads.org and if you think it's necessary pay an adviser a fee to help you out.
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Old 03-19-2012, 03:25 PM   #31
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. I'm sorry I did not read all prior posts, but read the prospectus in terms of the 12b-1 fees if any. Sometimes the fees are "hidden" in there.
I'm making that kind of assumption myself.

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. Unfortunately you have an all too typical set up. The 1% your "adviser" takes should be compounding in your account. Fire this guy and move your money over to Vanguard, Fidelity or Schwab etc. Roll over the IRAs etc and let the money sit in a money market account until you have developed a plan and an asset allocation. To get that worked out ask questions on here, at Bogleheads.org and if you think it's necessary pay an adviser a fee to help you out.
That's what I'm thinking about. It will probably take quite a few months for the estate to settle.
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Old 03-19-2012, 03:45 PM   #32
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I'm making that kind of assumption myself.



That's what I'm thinking about. It will probably take quite a few months for the estate to settle.
You are taking the first steps to financial independence. It isn't just having money, it's also knowing how to manage it and being confident and knowledgeable enough to set your own path.
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Old 03-19-2012, 04:05 PM   #33
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My Xbroker had a good line when I asked him about his commissions.

"you don't pay me anything the fund company pays me" Hmmmmm, I wonder where the fund company gets the money?
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Old 03-19-2012, 04:44 PM   #34
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Update: After speaking with the PNC FI on the phone, I learned he charges a 1% fee for equity acoounts he actively manages.
So, what does he charge for managing a "buy and hold" account?

Be sure to get invoiced and write a check for the quarterly fee so you can be sure to feel the pain! It will be much too painless if he just takes his fee out of the account.
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Old 03-20-2012, 04:31 AM   #35
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You are taking the first steps to financial independence. It isn't just having money, it's also knowing how to manage it and being confident and knowledgeable enough to set your own path.
Thanks. Saving was the easy part, due to options set in place by my employment. This next part, I don't mind admitting, makes me nervous.

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"you don't pay me anything the fund company pays me" Hmmmmm, I wonder where the fund company gets the money?
Looking at the ER ratings on Blackrock's funds (most of which appear to be around 1.5, though I saw one at .5), I KNOW where the fund gets the money lol.

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So, what does he charge for managing a "buy and hold" account?
I didn't ask (yet) but I bet the same 1%. I'm not as ignorant as when I first met with him, but I'm not letting on yet I've been trying to learn. That question may surprise him.

I keep saying 'thanks', here, and I mean it. A great bunch of people.
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Old 03-21-2012, 11:30 AM   #36
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I'm sorry I did not read all prior posts, but read the prospectus in terms of the 12b-1 fees if any. Sometimes the fees are "hidden" in there.
12b-1 fees are not hidden, they are clearly stated in the prospectus, there's federal regs on that............
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Old 03-21-2012, 11:34 AM   #37
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My Xbroker had a good line when I asked him about his commissions.

"you don't pay me anything the fund company pays me" Hmmmmm, I wonder where the fund company gets the money?
It goes something like this:

Customer buys $10,000 of class A shares of a mutual fund, say Putnam:

5.75% commission the customer pays, or $575

Putnam has a "dealer concession" of .75%, so they keep $75 and give the advisor's company $500 to pay the advisor.

Advisor gets a payout on that money, ranging from 30%-92% depending on whether they pay their own freight, work at a bank, etc.

On A shares, advisor gets .25% a year in 12b-1, or $25 a year.

That's how it works. I have posted this several times in years past but it never hurts to post it from time to time so people know how it works..........
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Old 03-21-2012, 11:36 AM   #38
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Thanks. Saving was the easy part, due to options set in place by my employment. This next part, I don't mind admitting, makes me nervous.



Looking at the ER ratings on Blackrock's funds (most of which appear to be around 1.5, though I saw one at .5), I KNOW where the fund gets the money lol.



I didn't ask (yet) but I bet the same 1%. I'm not as ignorant as when I first met with him, but I'm not letting on yet I've been trying to learn. That question may surprise him.

I keep saying 'thanks', here, and I mean it. A great bunch of people.
They should negotiate on the fee based on how it is managed. Our RIA manages a lot of retirees from a megacorp in our area. On their employee stock, we waive our fee because it just sits there, and they won't sell it. Most advisor firms do this.
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Old 03-21-2012, 12:22 PM   #39
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It goes something like this:

Customer buys $10,000 of class A shares of a mutual fund, say Putnam:

5.75% commission the customer pays, or $575

Putnam has a "dealer concession" of .75%, so they keep $75 and give the advisor's company $500 to pay the advisor.

Advisor gets a payout on that money, ranging from 30%-92% depending on whether they pay their own freight, work at a bank, etc.

On A shares, advisor gets .25% a year in 12b-1, or $25 a year.

That's how it works. I have posted this several times in years past but it never hurts to post it from time to time so people know how it works..........
You mean to say that the fund company used my money to pay the broker? What a shock!


Thanks for the explination. As I've said before, now I know why my Xbroker sent me pictures of his kids each Christmas.
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Old 03-21-2012, 07:26 PM   #40
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Just got the MM prospectus in the mail for the temporary account we set up. An ER of .89, which includes a 12b-1 fee of .25. Sinc e the average total returns on the PINXX account have been 0 for the past two years..

... theat money isn't staying in that account for long.
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