Do You Use A Financial Advisor?

[bUU]

Silver lining: My spouse finally is beginning to realize it.

 

[daylatedollarshort]

Any recurring expense, even a small one, matters a lot to retirement portfolios. $10 a month invested at 5% instead of going towards extra cable channels for thirty years, would mean an extra $8.4K in the retirement portfolio.

The problem with investment fees is that they are usually much larger and more insidious than a line item on a cable bill.

If you are spending $1.25K a year in fees on a 60 year portfolio, how many hours would it take you to learn to do your own investing? 50 or even 100 hours to figure out how to buy CDs, I bonds, TIPS and index funds? Even at 100 hours you could be making the equivalent of $4,641 per hour over the lifetime of your portfolio.

 

[travelover]

............
The problem with investment fees is that they are usually much larger and more insidious than line a item on a cable bill.

And worse, fees didn't even used to be a line item. They just sort of got sucked off the top.

 

[obgyn65]

The answer the OP's question, my financial advisor is with Edward Jones but I would like someone who could also advise me about taxes, not CDs or munis only.

 

[HighRoller]

Do You Use A Financial Advisor?

In the past I would have said no... Today I'd still say no, but I'd qualify that by saying "not one that I pay for".

 

[brewer12345]

The answer the OP's question, my financial advisor is with Edward Jones but I would like someone who could also advise me about taxes, not CDs or munis only.

You are a wealthy dude, a doctor, and you listen closely to what your advisor tells you. You are every planner/advisor's wet dream. Find a fee only planner that is a CFP or CFA that can do it all.

 

[obgyn65]

Not as wealthy as many, many others here, which is fine with me.

Nonetheless, I have been looking for a good CFP, no luck so far.

You are a wealthy dude, a doctor, and you listen closely to what your advisor tells you. You are every planner/advisor's wet dream. Find a fee only planner that is a CFP or CFA that can do it all.

 

[FinanceDude]

$250K avg annual portfolio X 60 working and retirement years X .05 annual fee = $75,000 lifetime adviser fees.

$500K avg annual portfolio X 60 years working and retirement years X .05 annual fee = $150K lifetime adviser fees.

$1M avg annual portfolio X 60 years working and retirement years X .05 annual fee = $300K lifetime adviser fees.

You can buy a lot of investing books for that kind of money. And ask questions here for free. Or buy a rental house for cash and get income every month with the money not spent on adviser fees.

$1.25K in average annual adviser fees, with another $1.25K added every year, invested for 60 years @ 5% interest = $464,078.63 according to the monkey chimp online compound interest calculator.

60 years with an advisor, are you nuts?

 

[ERD50]

I'm a bit disappointed today, after meeting with our financial adviser yesterday. He is basing everything on 1 year, 3 year, and 5 year returns, saying that fees don't matter. I'll listen politely, but at the end of all this, that's $2k wasted, I think. ...

You shouldn't be disappointed, you should be thankful. He has given you a very solid backing for DIY being > FA for most people. Move on with a DIY plan, and save that $2K (and probably more in expenses).

-ERD50

 

[bUU]

And to be fair, this wasn't unexpected. It was a calculated risk, in the interest of spousal-confidence, and the spouse saw the inconsistency between the adviser's advice and what would be best for us, so arguably "mission accomplished".

 

[urn2bfree]

Friday I was talking to a friend who just met with a Financial Advisor, and he related one of my favorite bits of Doublespeak that they use:
He told him that while the charge is 1% of Assets Under Management, the fee goes down as the portfolio grows.

This is such a misleading load of cr@p. Yes the PERCENTAGE they skim off becomes smaller, but the fee keeps going UP! Saying it like they do is part of the basically dishonest nature of all the AUM chargers out there, as far as I am concerned and that have been pushing this baloney so long they do not even realize how misleading and dishonest they are being.

 

[rjohnla]

No, never have (no brag but MBA Int'l Fin.) point is after graduated spent some years thinking about what I learned - theories - not relevant in the real world. Advisors (almost all) give the same advise: diversified portfolio / long-term. That's based on the Machlowitz theory from the 40's which requires you to disregard factors that exist in real world. Most individual investors as a result buy high / sell low. Today mutual funds are borrowing money to buy more stocks for individual investors - cash near all time low. Insiders are selling into it, at the near high, as usual. Financial advisors are making money though.

 

[gerntz]

Not as wealthy as many, many others here, which is fine with me.

Nonetheless, I have been looking for a good CFP, no luck so far.

I've not used them, but friends in Cincy say Foster & Motley are good CFP's. If not convenient, perhaps they can direct you.

 

[naggz]

I think if a person is interested in personal finance, and they enjoy learning, researching, and are discipline, then they can do a good job managing their own portfolio.

On the other hand, if one doesn't find it interesting, and they don't have great discipline, then a financial advisor may be very worthwhile, especially if it means saving and investing (even with higher fees), versus not saving/investing at all.

 

[TOOLMAN]

The Mass Affluent are More Self-Directed Investors. Now at 44% for NW > 1M, according to;
http://www.millionairecorner.com/article/mass-affluent-are-more-self-directed-investors

 

[FinanceDude]

This is such a misleading load of cr@p. Yes the PERCENTAGE they skim off becomes smaller, but the fee keeps going UP!

So, the investors should want their portfolio to go DOWN, so the advisor makes less?

 

[urn2bfree]

So, the investors should want their portfolio to go DOWN, so the advisor makes less?

Aha! Good. That is perfect! Good point to Make people aware of the silly and misleading lies such advisors try to peddle.Your answer is a great example of exactly the same sort of misleading reply one might hear from someone in a sales pitch as they try to pull this particular brand of AUM wool over people's eyes.

What ANY INVESTOR should expect is that the advisor be honest and straight forward about whether costs are increasing or decreasing and not try to hide higher fees by saying things like "the fees go DOWN as the portfolio grows." Statements like that are flat out lies. Nobody pays for things in percentages, we pay in absolute dollars. The amount of absolute dollars (otherwise known as money) such advisors charge does not go down. Instead they should say...the more you make.. The more money I am going to take from you even though I won't actually be doing much more work, if any at all.
Even better would be finding an advisor who actually charges for what they do like other professionals That would be the true fiduciary who is looking out for your financial interests as they are supposed to.. Instead we find these slick hucksters who just skim off more and more money per hour of work even though they are doing the exact same amount of work. These AUM fakers try to hide their little 3 card Monte scam in misleading pitches about sliding fee scales. My friend who is smart and still sort of fell for the lie is proof that this scam is still fooling plenty of people.

 

[FinanceDude]

Even better would be finding an advisor who actually charges for what they do like other professionals

Like the attorney who charged my client $300 to write a letter to the court about an estate? Yeah, there's a lot of work having your paralegal draft a letter that you sign for $300. I think I need to go to law school...........

That would be the true fiduciary who is looking out for your financial interests as they are supposed to.. Instead we find these slick hucksters who just skim off more and more money per hour of work even though they are doing the exact same amount of work. These AUM fakers try to hide their little 3 card Monte scam in misleading pitches about sliding fee scales. My friend who is smart and still sort of fell for the lie is proof that this scam is still fooling plenty of people.

Tell us how you really feel!

 

[Bestwifeever]

Like the attorney who charged my client $300 to write a letter to the court about an estate? Yeah, there's a lot of work having your paralegal draft a letter that you sign for $300. I think I need to go to law school...........

Tell us how you really feel!

Yeah, that lawyer probably didn't spend any extra time talking to your client or reviewing any files or the will or figuring out where to direct the letter. Charlatan!

You're still young enough to go to law school--why not give it a try?

 

[FinanceDude]

Yeah, that lawyer probably didn't spend any extra time talking to your client or reviewing any files or the will or figuring out where to direct the letter. Charlatan!

You're still young enough to go to law school--why not give it a try?

So, instead of breaking it, I should start defending others who break it? Cool.........

On a more somber note, an elderly client of mine was charged over $12,000 for a revocable living trust without health care directives or any advanced planning. She was passed around to 3 different attorneys in the process, which took over 2 years. I do not think that is acceptable..........

 

[urn2bfree]

At least the lawyer has a set fee for generating a letter...It may be exorbitant. Heck a Financial Advisor who charges a flat hourly fee could be rip-off too if he charges exorbitant hourly fees. BUT the fee is the fee...the lawyer does not say-I charge $300 an hour for a will if your estate is a million, but if it is 2 million my rate goes up to $350 an hour. And over 2 million I charge $375/hour. and over 3 million $385 an hour.,e tc. etc... That is the difference....and since when are lawyers the best example of honest and straightforward professionals anyway?

 

[Northwoods Mary]

I'm surprised you found a lawyer willing to take on a project for a $300 fee....unless there is other ongoing work involved.

But on topic... We started by talking to a very nice young man from Edward Jones who wanted 3% off the the top, up front, for doing us the favor of managing our money, unless we had at least $1,000,000 we wanted to put in the same basket, in which case the up front fee would have been reduced. There would still be ongoing expenses as well, but this was less clear from our talks. We passed.

We then went to Fidelity where a very nice and knowledgeable young lady has helped us consolidate into IRAs, with a lot of hand holding and some tax, etc. advice. We are still not considered "actively managed" in terms of paying a percent for more specific investment advice, but we are in funds with higher fees (just under 1%) than if we were in Index Funds, chose our own stocks, or went into lower cost funds. We also are a bit worried their "2020" fund is pretty heavy in bonds. Right now it's way underperforming the stock market, but bonds are also likely to take a hit once interest rates rise. So while we like Fidelity, we are thinking we should get smarter about investing and look out for ourselves more than at present.

 

[travelover]

........ We also are a bit worried their "2020" fund is pretty heavy in bonds. Right now it's way underperforming the stock market,........

You really can't compare returns from a fund made up of stocks and bonds to "the stock market", especially over the short term. It is about return for a given amount of risk.

 

[urn2bfree]

a very nice young man from Edward Jones who wanted 3% off the the top, up front, for doing us the favor of managing our money, unless we had at least $1,000,000 we wanted to put in the same basket, in which case the up front fee would have been reduced. .

We really have to stop repeating this kind of talk, because it perpetuates their nonsense. I assume he meant the UP FRONT FEE PERCENTAGE would be reduced, not the fee. Is that right?. If you had $999,000 he would charge just shy of $30,000 for the favor...but if you had $1,000,001 or higher it was going to be more than $30,000 in up front fee, yes?

 

[ClockWatcher]

The closest I came to using a financial advisor was a stockbroker I dealt with briefly in the early to mid-90’s when I was first learning about investing. He got angry when I asked more questions than he had the patience for. After that, I read a bunch of books, subscribed to Money and Kiplinger’s for a few years, and never looked back. I’m three-quarters invested in index funds. My regrets have more to do with not keeping better control of my spending than any serious investing mistakes.