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Old 01-27-2015, 10:08 AM   #61
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After reading this forum for 10+ years I would have bet it was remembering to send a birthday card...

(Poor Sarah. She's the forum equivalent of Rodney Dangerfield.)
Haha! And you know what's funny? We never send birthday cards. Or holiday cards. Or gifts or anything of that sort.

I should have known that the SB girl was hosing me when she sent us a Tiffany box with a fancy wine glass in it. Live and learn, live and learn.

...mob boss...I could totally pull that off. With my southern accent....
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Old 01-27-2015, 10:26 AM   #62
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Midpack you are so right that some folks shouldn't (with their current knowledge) DIY. Three of my former co-w*rkers lost most of their 6 figure profit sharing and ESOP by trying DIY without the required knowledge.

One visited back here shortly after I ERed, the only financial question he asked was did I get what megacorp said those accounts might be worth if he'd hung around. I smiled and said more. The guy, lbym to the max, admitted he blew his due to lack of knowledge. Smart guy, but he let his emotions run his past investments.

IMHO it's your money, who am I to say whats right or wrong for you. The poster that said an 8.9% return last year with an FA, nice job! I DIYed and didn't do any better. YMMV.


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Old 01-27-2015, 11:01 AM   #63
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we left our financial advisor a few months ago. For a while I was pissed at myself for not spending more time understanding investing and her fees. I was also pissed at her for taking advantage of our ignorance and lack of oversite.

I SHOULD have invested the time to understand both. As many have said, it isn't that hard. But in retrospect I have mellowed a bit.
1) we were in decent funds and our investment have grown. Not what they COULD have if we hadn't paid the load and high expense fees but they grew.
2) we had other priorities with work and raising three boys. HAving our FA allowed us to concentrate on those activities.

Now in retrospect we "paid" a bunch for that lesson and service but it had some value to us at the time.

Now as we enter retirement, we have done the research and have invested the time to take it back.
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Old 01-27-2015, 11:12 AM   #64
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Just for the record, I appreciate those forum members who take the time to imagine a world where decent, valued, and non-slimy financial service professionals exist.

I am grateful to each of you for leaving me a small space for me to feel welcome when these threads come to their obvious and all too often vitriolic conclusions.


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Pretty easy to do for a FA with your values and attitude. If all FA were similarly oriented, the FA conversation would be different.
Guess we just to have to "anoint" you (and the other like kind CFPs who post here) as the exception to validate the rule ;-)
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Old 01-27-2015, 02:11 PM   #65
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To my mind, there is a huge difference between the fee only guy I consult with now and again (after life events) and the dude who tried to "help" us with my husband's TSP. Just as there is between a piano player at a Sunday school function and one in a house of ill repute. The later has better tast in clothes -- or some I am told.
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Old 01-27-2015, 02:29 PM   #66
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we left our financial advisor a few months ago. For a while I was pissed at myself for not spending more time understanding investing and her fees. I was also pissed at her for taking advantage of our ignorance and lack of oversite.
Unfortunately, the business model for the typical wrap FA is to take advantage of the clients ignorance. We have all made mistakes and many have made the payments for our FAs BMW. Don't kick yourself. You just paid a tuition bill for the personal financial literacy course and you got a good grade.
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Old 01-27-2015, 02:50 PM   #67
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Watching made me cringe.

IMO ~ we live in an incredibly LAZY day in age. How hard is it to do 30 minutes of googling, a week or so worth of reading, and grabbing a pen and putting it to paper to develop a strategy.

Its really sad to see many people in 6 and 7 figure income/nw ranges seeking the advice of FA when all the info they will ever need is spelled out for you in black and white and you don't even have to search for it.
I wouldn't attribute it all to laziness although for sure that is the case for many.

I suspect some of the reasons for that is that basic financial education for kids is pretty much nonexistent in schools with all too few exceptions. Parents generally don't teach their kids about finances because they don't know much themselves - witness the huge numbers in deep financial doo-doo.

On top of all that look at all the financial misinformation out there - the ones that try to learn anything are so overwhelmed that they have no idea as to who or what to believe and what criteria to apply.

So I can see someone getting so frustrated with it all that they pick a name out of the yellow pages and just go there.
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Old 01-27-2015, 04:50 PM   #68
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The title of this thread is maximally inflammatory, and it distorts what the interviewed FA actually said. I wonder how many people who are so offended by this even listened to the interview?

My apologies if you both listened, and know that he said 2 % makes sense for a $100,00 account, not for all accounts in general, or particularly for larger accounts.

I think it is just really fun to get worked up, regardless of whether or not it makes any sense. If I were going to list seriously bad situations, I think an FA asking $2000 to set up and manage a $100,000 account would be fairly low on my list.

Just start with any daily newspaper. Most of us will get bored long before we reach the FA who is the goat of this thread.

Ha
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Old 01-28-2015, 07:41 AM   #69
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I think it is just really fun to get worked up, regardless of whether or not it makes any sense. If I were going to list seriously bad situations, I think an FA asking $2000 to set up and manage a $100,000 account would be fairly low on my list.

Just start with any daily newspaper. Most of us will get bored long before we reach the FA who is the goat of this thread.

Ha
Well the is the "FIRE and Money" section so the topics of outrage conversation are necessarily limited.
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Old 01-28-2015, 09:42 AM   #70
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I'm still looking for a goat, fun critters. Great to take care of poison ivy. They love the stuff.

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Old 01-28-2015, 09:46 AM   #71
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I'm still looking for a goat, fun critters. Great to take care of poison ivy. They love the stuff.

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Now this is a real winner for a thread hijack.
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Old 01-28-2015, 09:57 AM   #72
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Originally Posted by haha View Post
The title of this thread is maximally inflammatory, and it distorts what the interviewed FA actually said. I wonder how many people who are so offended by this even listened to the interview?

My apologies if you both listened, and know that he said 2 % makes sense for a $100,00 account, not for all accounts in general, or particularly for larger accounts.

I think it is just really fun to get worked up, regardless of whether or not it makes any sense. If I were going to list seriously bad situations, I think an FA asking $2000 to set up and manage a $100,000 account would be fairly low on my list.

Just start with any daily newspaper. Most of us will get bored long before we reach the FA who is the goat of this thread.

Ha
But this is Forum Woebegon, where everyone is above average...
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Old 01-28-2015, 09:58 AM   #73
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Originally Posted by jabbahop View Post
we left our financial advisor a few months ago. For a while I was pissed at myself for not spending more time understanding investing and her fees. I was also pissed at her for taking advantage of our ignorance and lack of oversite.

I SHOULD have invested the time to understand both. As many have said, it isn't that hard. But in retrospect I have mellowed a bit.
1) we were in decent funds and our investment have grown. Not what they COULD have if we hadn't paid the load and high expense fees but they grew.
2) we had other priorities with work and raising three boys. HAving our FA allowed us to concentrate on those activities.

Now in retrospect we "paid" a bunch for that lesson and service but it had some value to us at the time.

Now as we enter retirement, we have done the research and have invested the time to take it back.
+1 DW and I had the same experience. Our FA was OKish but we would have been a fair bit better off had we studies a bit early on and gone with index funds. On the plus side we knew enough to save a lot from early on, switched to DIY in our fifties, and retired way ahead of most.
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Old 01-28-2015, 10:46 AM   #74
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I think "To IA or not to IA" is dependent on services and pricing.

I am pretty confident that IAs who claim they can find "better" "market beating" investment opportunities without corresponding increased risk and use that to justify a higher % wrap fee are always either liars -or- self-deluded. I really think there are plenty of the latter. Passing the series-65 (a pretty basic test) is no insurance against the very common trap of thinking YOU are the genius who can beat the system...and if you get lucky for a few years it can be hard to discern that from skill.

That said, even if you are a fairly sophisticated non-pro, there are benefits you can probably gain from paying someone who thinks about this topic all of the time. My personal belief is you are most likely to get this on a strictly "I will pay you $X for an analysis and recommendations and you will not be my broker/dealer or referring me to one". Even good people can be swayed by commissions and will tend to rationalize a bias toward things that pay them.

In my own experience using this approach, advisers have improved my perspective on things like:
- Tax avoidance in taxable investment accounts
- Selection of retirement accounts, when to fund with pre and post tax income (e.g. Roth vs. 401K)
- College savings strategies
- Tips on where to park cash. My FAs pointing out to me that I could get 1%+ on FDIC savings using an ebank paid for his fee entirely in 1 year.
- Education on the ins and outs of annuities and applicability to my financial circumstances.
- Thoughts on macro-timing (my term) - in other words the possibly validity of adjusting portfolio asset allocation based on medium (1-3 year) term expectations based on PE ratios and interest rates.
- Ways to improve my diversification beyond some popular funds getting a smidge closer to the efficient frontier for my risk tolerance
- Some thoughts about what "risk" really means and how I might think about it differently given my specific situation.

Contrary to some, I actually don't think an IA is very useful for budgeting and forecasting. I think that's too important to hand off to someone else, and most IA tools are pretty "investment centric". You have to intimately understand the relationship between spending, enduring risk and meeting your own personal goals if it is going to impact your day to day behavior and I don't think you can get that unless you own it and revisit it at least quarterly better monthly. In my mind that means making your own spreadsheet or finding budgeting/forecasting software that emphasizes spending and spending decisions, and that lets you control and see and play with all of the assumptions. This then equips you to TELL the IA what you plan to spend and how much risk you are prepared to assume.
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Old 01-28-2015, 11:22 AM   #75
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........
In my own experience using this approach, advisers have improved my perspective on things like:
- Tax avoidance in taxable investment accounts
- Selection of retirement accounts, when to fund with pre and post tax income (e.g. Roth vs. 401K)
- College savings strategies
- Tips on where to park cash. My FAs pointing out to me that I could get 1%+ on FDIC savings using an ebank paid for his fee entirely in 1 year.
- Education on the ins and outs of annuities and applicability to my financial circumstances.
- Thoughts on macro-timing (my term) - in other words the possibly validity of adjusting portfolio asset allocation based on medium (1-3 year) term expectations based on PE ratios and interest rates.
- Ways to improve my diversification beyond some popular funds getting a smidge closer to the efficient frontier for my risk tolerance
- Some thoughts about what "risk" really means and how I might think about it differently given my specific situation........
I've learned a lot about these topics here and at the Bogleheads forum ........for free.
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Old 01-28-2015, 12:03 PM   #76
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I've learned a lot about these topics here and at the Bogleheads forum ........for free.
The knowledge is free, most is, if you take the time to study up. While in my opinion nobody should be financially illiterate, not everybody can or should know everything on the topic of investing that an adviser might learn.

But he didn't "teach" me, I knew most of this stuff (the ebanking was new info...or actually something I knew of in the back of my mind that he kicked to the front).

He did the work of assessing my portfolio and behaviors, and came up with a specific list of changes I could make with qualitative and quantitative explanations of why he thought that would be good, to be more optimal in the context of my exact situation. That was useful work. He also gave me a second opinion (in addition to my own).

With some portfolios, pointing out small tweaks that someone with a different day job might overlook can EASILY more than pay for a few hours of a professional's billing rate.
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Old 01-28-2015, 12:11 PM   #77
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The knowledge is free, most is, if you take the time to study up. While in my opinion nobody should be financially illiterate, not everybody can or should know everything on the topic of investing that an adviser might learn.

But he didn't "teach" me, I knew most of this stuff (the ebanking was new info...or actually something I knew of in the back of my mind that he kicked to the front).

He did the work of assessing my portfolio and behaviors, and came up with a specific list of changes I could make with qualitative and quantitative explanations of why he thought that would be good, to be more optimal in the context of my exact situation. That was useful work. He also gave me a second opinion (in addition to my own).

With some portfolios, pointing out small tweaks that someone with a different day job might overlook can EASILY more than pay for a few hours of a professional's billing rate.
Correct me if I'm wrong, but I think you are talking about paying an hourly fee for advice/plan and an occasional 'check-up'. I do think a case can be made for that, but I think most of these comments are pointed towards the 1% (or more) of assets, charged annually, and likely puts the client into high fee funds.

-ERD50
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Old 01-28-2015, 12:19 PM   #78
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Correct me if I'm wrong, but I think you are talking about paying an hourly fee for advice/plan and an occasional 'check-up'. I do think a case can be made for that, but I think most of these comments are pointed towards the 1% (or more) of assets, charged annually, and likely puts the client into high fee funds.

-ERD50
Yes. I mentioned that in my probably too long post a few back. I will never do the 1% thing.

My point was just that I think there is a model where this profession called "Investment Adviser" makes sense. It's not that guy asking for 2%.
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Old 01-28-2015, 12:56 PM   #79
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I've learned a lot about these topics here and at the Bogleheads forum ........for free.
True. But there's no doubt a person with limited time could get the info a lot more efficiently from a FA who had the client's info in front of them and could quickly boil things down for them. I do think this kind of service could well be worth paying for a few hours of a professional's time.
The advantage of coming to this site (and Bogleheads, Kitces, etc) is:
1) It's a lot more fun (in my opinion)
2) It is free
3) I learn about things outside my present situation, and I can help DD and friends by offering ideas.
4) I am nearly positive that there's no conflict of interest.
5) Beaver cheese info!

One problem with an FA for folks who already spend time here, at Bogleheads, etc: How can I be sure the info will actually be better than what I already know, that it will be worth paying for? Many AUM "advisors" know little beyond sales tactics and what they do know about investing seems largely to be wrong. The items GregfromTexas cites are not going to be something these "FA's" know anything about. And if I pay $2000 for some help, I want to get more than vague platitudes-- I want to see some modeling of my exact situation with the dependencies, assumptions, and sensitivities fully explained. I don't think I can just walk into a local storefront and expect that kind of help.
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Old 01-28-2015, 01:51 PM   #80
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.........
The advantage of coming to this site (and Bogleheads, Kitces, etc) is:
1) It's a lot more fun (in my opinion)
2) It is free
3) I learn about things outside my present situation, and I can help DD and friends by offering ideas.
4) I am nearly positive that there's no conflict of interest.
5) Beaver cheese info!......
Yea, that #4 is a biggy for me.
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