Final Meeting With My Finacial Advisor.

[saluki9]

Quote:

Originally Posted by scrinch Why do you consider it "commoditization" to work to a reasonable performance standard? The plumber comes back and fixes the toilet if it starts leaking within a reasonable period of time. For free. I admit that it would be difficult to define the performance standard for a FA, but the concept of doing so is not ridiculous. Aligning the motivations of the buyer and seller makes sense (but perhaps not enough dollars?).

First, FD is correct in that an NASD licensed rep is not allowed to enter any arangement where you share in the profits of the client. In most cases that would be even worse for the client because the advisor knows that unless he "shoots the lights out" he's not getting paid. So they will be temped to take more risk than is appropriate.

SEC registered advisors ARE allowed to do this which is how hedge funds are allowed their "2 and 20" fleecing arrangement.

[Nords]

Quote:

Originally Posted by FinanceDude Maybe the plumber can give me a 25% discount if the toilet he installed fails in the nect 3 years?? I am for that 100%............ I guess you can commoditize anything...........

OK, let's torture this analogy for a while.

Doesn't it seem odd that financial advisors don't offer a warranty?

If the plumber blames my leaky toilet on high pressure or excess water minerals or my Cheese-Doodle diet, then I'd get a new plumber. Plumbers are supposed to be aware of those problems and to install toilets equipped to deal with them. Yet when our portfolio is leaking, all we hear is "What a great opportunity to buy a bigger toilet!" or "Buy a safer toilet!" or "Past results are no guarantee of future performance!"

Personally I'd take the opportunity to search for a better plumber. And I'd want my %^&ing money back from the other plumber along with an apology for incompetence, too...

[brewer12345]

Quote:

Originally Posted by Nords OK, let's torture this analogy for a while. Doesn't it seem odd that financial advisors don't offer a warranty? If the plumber blames my leaky toilet on high pressure or excess water minerals or my Cheese-Doodle diet, then I'd get a new plumber. Plumbers are supposed to be aware of those problems and to install toilets equipped to deal with them. Yet when our portfolio is leaking, all we hear is "What a great opportunity to buy a bigger toilet!" or "Buy a safer toilet!" or "Past results are no guarantee of future performance!" Personally I'd take the opportunity to search for a better plumber. And I'd want my %^&ing money back from the other plumber along with an apology for incompetence, too...

What is the plumber's revenue as a % of the wholesale cost of the toilet? What is the FAs revenue as a % of AUM?

[frayne]

Having read just the initial post I can say this only fortifies the things that Bogle relates about most money grubbers financial advisors. All I can say is run away and do it yourself. Invest in index funds and take the middle man who is lining his pockets as well as his firm's coffers with the funds of good honest and trusting people.

Years ago when I was trying to get a better understanding of the financial world I would go into a broker, banker, EDJ office, etc. in my best Saturday clothes and tell them I have this much money to invest and what in their opinions should I invest in. After hearing their suggestions as to the products they were pushing I would start asking about 12b1 fees, turnover, beta, expense ratios, etc. It was amazing the 180° turn they did when they found out I was not a neophyte.

I am not saying they are all dishonest but in my humble opinion, most would take advantage of an individual as that is what they are in a large part taught to do. Ask one question about fiduciary responsibility and watch them sweat. The financial industry is ripe for abuse of the unknowing individual. And that my friends is the unvarnished turth.

[Nords]

Quote:

Originally Posted by frayne The financial industry is ripe for abuse of the unknowing individual. And that my friends is the unvarnished turth.

Granted, although they don't have a monopoly on that industry...

[bbbamI]

Last month, I went to our FA and had a list of questions regarding our finances. He said in his notes that he made when we last met (in March 2006) that hubby and I were fine with our investment directions (which we were). He got in a bit of a twist with my concerns and asked me what prompted me to question my investments. I replied, well gosh, times do change and I have been trying to educate myself and feel that we could do better. He asked me where I got my info....I said books, mags, internet, etc. He asked me if I read Scott Burns and I said that indeed I did. He said Scott was a journalist and didn't paint the whole picture.

I'm not trying to belittle my FA. This is just the way the meeting went.

Sooo, we put one of the investments with Fidelity and will see how that goes. I feel like I'm in the middle of a learning curve and constantly question myself. It makes me tired.

[Meadbh]

MyDream,

I think there is a way to buy Vanguard funds in Canada; I read something about it on the Financial Webring Forum. Do go over there; lots of Canadian content, some of it quite sophisticated. One of the posters is Jonathan Chevreau.

It sounds like you might still need some professional expertise. Take your time and do some research before aligning yourself with another financial services firm. For low MERs, do check out Philips Hager & North in Vancouver. You can check out the details of many funds, including returns and MER, on the Morningstar website.

[My Dream]

Well, in going over the replies to my thread it seems as though it is starting to be a FA bashing that was not my intent. I was simply telling you how I have been progressing since my retirement several months ago. I believe that everyone should be compensated for there work, I just felt that my Advisor spent too much time making excuses rather than following through on his goal to help me retire.

I had to sift through pages of this thread to truly see who was responding to my original post and to those I thank.

Now back to the original post. Another good advice that my neighbor did give me is to invest with TD Waterhouse, which I did 4 years ago. I think they have very completive rates and I'm going to use them as a comparison.

Quote:

Originally Posted by mickeyd Reading books, as opposed to newsletters and magazines, is a superior way to become an informed investor. Of course, reading a book requires a certain amount of commitment and perseverance in that you have to acquire the book (purchase or library), read it, understand it and perhaps read it again. This list from diehards.org is one of the better lists that you can refer to. All of the publications will assist any of us in our quest to become a much more informed investor. http://www.diehards.org/readbooks.htm

I going to take your advice which others have also given, but I don't think I can finish the book I'm presently reading since it's just not keeping me interested.

Quote:

Originally Posted by Retire Soon MD, if you received an average 1% return, you actually lost money when inflation is factored in. I would recommend reading this book by John bogle, the father of indexing: "Common Sense on Mutual Funds." When you get done, you'll know more than your IG advisor.

I finally figured that out when I read the book, Stop Working - Here's How You Can, Derek Foster

Quote:

Originally Posted by kcowan My Dream I suggest you go to Morningstar. You can learn a lot about funds there. Look for funds that have an MER of under 1%. You want to start simple. Get some index funds that mirror the markets you want to participate in. Because you are in Canada, you will want some C$ exposure. The funds there are biased toward banking and resources. So you might diversify with a US index covering other sectors. The you want international exposure. You will need a discount brokerage account to buy no load funds. TDW offer eFunds that carry low costs and perform well. Good luck. And welcome to the DIY gang. A Financial Planner might help you set up a realistic budget and do some DRIP investing. Get one who charges by the hour and cannot sell you any products. Some of the advice here (e.g. diehards) does not apply well to your situation. Try Financial Webring. I'm already invested in TD Canadian Equity, which is my neighbors advice and TDW is what I'm presently using. Quote: Originally Posted by Meadbh My Dream, I think there is a way to buy Vanguard funds in Canada; I read something about it on the Financial Webring Forum. Do go over there; lots of Canadian content, some of it quite sophisticated. One of the posters is Jonathan Chevreau. It sounds like you might still need some professional expertise. Take your time and do some research before aligning yourself with another financial services firm. For low MERs, do check out Philips Hager & North in Vancouver. You can check out the details of many funds, including returns and MER, on the Morningstar website.

I'm not sure what Vanguard Funds are but I'll have to look into it.

I'm going to try to do this on my own, but will listen and value any good advice that I can get.



I'm going to try to do this on my own but value what ever good advice I can have.


My next step is to transfer the funds from IG to TD Waterhouse, I was told by TD Waterhouse that if I choice to transfer in kind, than I have to pay, up to $2000. in fees by TD Waterhouse for the paperwork. If I chose to close out the funds at IG then I stand to pay taxes on 10 years of interest, but save on the $2000. in paperwork that TD would have to do.

I'll keep you posted and look forward to more good advice.

[Leonidas]

Quote:

Originally Posted by My Dream I going to take your advice which others have also given, but I don't think I can finish the book I'm presently reading since it's just not keeping me interested...I'm going to try to do this on my own, but will listen and value any good advice that I can get.

It's hard to get excited about reading some of this stuff, but you have to do it if you want to make informed decisions. And not get stuck with the same horrible returns that IG gave. I reiterate what I said earlier - you have to be an informed consumer of investment products or you risk being taken again.

[Brat]

Quote:

Originally Posted by Leonidas ......you have to be an informed consumer of investment products or you risk being taken again.

Absolutely!

My Dream, don't chase high returns. Oh, maybe take a small portion of your investments to bet on what YOU think will be a champion pony, otherwise look for horses that finish in the money regularly.

A well managed balanced fund will let you concentrate on your profession and still have a good nest-egg when you retire.

[Bikerdude]

Quote:

Originally Posted by My Dream I just felt that my Advisor spent too much time making excuses rather than following through on his goal to help me retire.

I think what the good people here have been trying to explain is that your retirement is NOT your FA's goal. It's yours. His goal is to make money off of you and if by chance you happen to make money too, well, so much the better.

If you make an attempt to learn, and after a concerted effort decide that it is too much for you I would suggest you talk to a fee only FA and have him set up a plan for you. This is a very cost effective way to achieve your retirement goal without taking the reins yourself.

The people on this board for the most part love to do their own thing and manage their own retirement. Not everyone does or even wants to and that is why the Financial Advice giving business is so big and profitable.

[frayne]

Well put bikerdude.

[saluki9]

Quote:

Originally Posted by Bikerdude I think what the good people here have been trying to explain is that your retirement is NOT your FA's goal. It's yours. His goal is to make money off of you and if by chance you happen to make money too, well, so much the better.

Just amazing that you can read the mind of an entire industry. I'm not even considered a FA (because I don't solicit clients, I just work on their accounts once they are clients) I can't tell you the number of nights I have lost sleep worrying for my clients.

Some people are just amazing.

[bosco]

Quote:

Originally Posted by Meadbh MyDream, I think there is a way to buy Vanguard funds in Canada; I read something about it on the Financial Webring Forum. Do go over there; lots of Canadian content, some of it quite sophisticated. One of the posters is Jonathan Chevreau.

don't think you can buy the funds but you can buy the ETFs through a Canadian brokerage account. My plan when I finally get around to having dw convert her RRSP out of IG is to buy ETFs. The foreign content rules have been removed, so it shouldn't be a problem.

[deserat]

I'll add another book - The Lazy Man's Guide to Investing - it's a quick read and goes over several portfolios and their returns - it is a quick way to educate yourself and start to invest for yourself.

I had an interesting experience when young with (arrghhh the name escapes me - but it was the group that 'preyed' on the military - sold whole life and highly loaded funds) oh, it's called First Command now. Pther interesting experience were whan I was pitched a variable annuity when I was in my 20's as well as had a Financial Advisor invest me in a very expensive mutual fund that....which paid her quite handsomely - luckily I had Fidelity at the time to compare - that other mutual fund got dumped quickly and frankly I lost a bit of money. So, I guess I'm saying, many of us had made the mistakes, however, we've learned the old adage that noone will look after your money better than You!

Good Luck and welcome to the journey.

[Bikerdude]

Quote:

Originally Posted by saluki9 Just amazing that you can read the mind of an entire industry.

I have don't have a issue with a FA that gives advice without a conflict of interest. However, you have to admit your industry is rife with dishonest opportunists and for the most part deserves the reputation it has garnered.

I just wish the Financial industry would police itself so that people such as you would be respected for what you do. But if you believe that’s going to happen I have a variable annuity backed by the full faith of ENRON that I would like to sell you.

[rockyj]

My Dream - One source that I've found very useful is Paul Merriman's book "Live it up without outliving your money". Much similar information is available for free online via articles on Merriman's www.fundadvice.com website - particularly the article "the ultimate buy and hold strategy" - http://www.fundadvice.com/fehtml/bhs...108/0108a.html
which walks through several portfolios with various levels of asset allocation to illustrate the historical effects of diversification and asset allocation on both performance and volatility. The article shows specific model porfolios using several no-load fund families that are easily available to do-it-yourselfers (not sure about availabilty in Canada), but it would be easy to extrapolate to those funds that are available to you.

Another little book in a similar vein that may be of interest is "how to make money in the stock market: buy 2,500 different stocks for $1000; pay no commision" by Gordon L. Eade. It's a small self-published paperback - an easy read but not very well edited - that basically describes the benefits of a diversified, buy-an-hold index fund appoach. It also has a few model portfolios along the lines of the Merriman article.

Merriman is a financial advisor (sounds like fee based and uses DFA funds for larger accounts) but he clearly explains the virtues of keeping costs low and using index funds for asset allocation.

Sorry if I've overlooked these already mentioned in this thread - I'm a latecomer here but didn't see either mentioned yet as scanned through the earlier replies.

[Nords]

Quote:

Originally Posted by deserat I had an interesting experience when young with (arrghhh the name escapes me - but it was the group that 'preyed' on the military - sold whole life and highly loaded funds) oh, it's called First Command now.

USPA&IRA.

United Services Planning Association, Inc & Independent Research Agency for Life Insurance, Inc.

Now that won't wake up you (or your spouse) in the middle of the night.

[WM]

My Dream,

Good for you to get out of a bad investment, and I agree with the poster who said parcelling out the blame is beside the point.

We were in the same boat as deserat, with the group now known as 1st command (USPA&IRA) and put money into an expensive fund for years. I think they must have the same chart to show you as IG about the returns you're getting. We wised up eventually and stopped putting money in, then finally took everything out and moved it all into index funds. I never calcuated our final rate of return on the loaded fund, but I know it was poor, even during the internet boom. Since switching over to indexes, our returns are much, much better, and we're not doing anything sophisticated. And, those expensive investment "plans" that 1st command was selling were designated ILLEGAL by congress a couple years ago. They were that bad.

We felt pretty foolish for getting into them and staying so long, but it was the best thing we knew to do at the time, so I don't beat myself up about it.

Quote:

Originally Posted by My Dream My next step is to transfer the funds from IG to TD Waterhouse, I was told by TD Waterhouse that if I choice to transfer in kind, than I have to pay, up to $2000. in fees by TD Waterhouse for the paperwork. If I chose to close out the funds at IG then I stand to pay taxes on 10 years of interest, but save on the $2000. in paperwork that TD would have to do.

Have you calcuated your tax hit? Our returns were so low that closing out and paying the taxes was an easy choice just to be rid of them.

[FinanceDude]

Quote:

Originally Posted by Bikerdude I have don't have a issue with a FA that gives advice without a conflict of interest. However, you have to admit your industry is rife with dishonest opportunists and for the most part deserves the reputation it has garnered. I just wish the Financial industry would police itself so that people such as you would be respected for what you do. But if you believe that’s going to happen I have a variable annuity backed by the full faith of ENRON that I would like to sell you.

Yet another blanket statement from someone with no knowledge of the industry........