Final Meeting With My Finacial Advisor.

[Bikerdude]

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]

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]

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]

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/bhstrategies/0108/0108a.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]

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.

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]

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........

 

[Bikerdude]

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

I retired (after 25 yrs) from the Financial Industry.

 

[FinanceDude]

I retired (after 25 yrs) from the Financial Industry.

So why post the way you do?? : :

 

[My Dream]

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.

What are ETF's

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

If I were an informed consumer than I would attempt to invest on my own.

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

I have to obtain the knowledge to do that first.

I'll add another book - The Lazy Man's Guide to Investing -

There's been so many books recommended that I'm going to have to figure out which one to read next. Thanks

 

[FinanceDude]

What are ETF's
/

Exchange traded funds.............a way to invest or benchmark different sectors or broad indexes. Very low ER, but you will have transaction fees, so try to find a low-cost provide of that............

 

[cute fuzzy bunny]

To be fair to the financial adviser (and dependent on the timing of these moves) many peoples portfolios experienced a strong run up in the late 90's and then a fairly lousy 2 year period that ended up leaving a lot of portfolios with neutral returns. Then the next four years were pretty good.

So the poor returns may have had less to do with the financial advisers steerage and more to do with the way the market was moving.

That having been said, in a situation where your real returns are marked in the low single digits on average, giving 1-2% of that money away to someone who cant see the future any better than you can is a losers bet.

You dont need to read a book, learn the lingo, or even decipher the phrase "dollar cost averaging". Go to vanguard or fidelity or whoever floats your boat, take their 3-5 question "risk tolerance" survey, and buy a target retirement/lifestrategy fund that suits your age and risk tolerance. Then throw any extra money you get into it when you get it.

Heck, they'll even do the survey over the phone and send you the forms already filled out, providing you're investing more than chump change.

As far as the books, if you do an advanced search here for "book report" and check the 'title only' box... you'll find that at least a half dozen of the books have been read, summarized and discussed ad nauseum. But if I was going to pick two I'd read "the millionaire next door" and "the four pillars of investing". Unless you're an academic, plan to put both books down every 30-45 minutes to think things over and possibly find yourself yelling at the book to stop pounding you with data and just give you the conclusions. They're written by Doctorate types who want to ply you with endless studies and analysis before stating their points. I ended up reading the chapter summaries and then reading the chapter.

 

[mickeyd]

I retired (after 25 yrs) from the Financial Industry.


So why post the way you do??

FD, why do you continue to challenge people that choose to post on this forum? You may try lightening up your criticism and challenges to posters that you do not happen to agree with 100% and accept the fact that not all posters are in line with your thinking. Maybe that's a good thing.

Everyone's opinion is of value here, even if it is not the same as that of FD and they should not have to pass any test that you think is necessary.

 

[FinanceDude]

FD, why do you continue to challenge people that choose to post on this forum? You may try lightening up your criticism and challenges to posters that you do not happen to agree with 100% and accept the fact that not all posters are in line with your thinking. Maybe that's a good thing.

Everyone's opinion is of value here, even if it is not the same as that of FD and they should not have to pass any test that you think is necessary.

Didn't know I was giving out any tests............. I value the opinion of you and many others on here...........will try to "lighten up" as you say............

 

[My Dream]

What are ETF's
/

Exchange traded funds.............a way to invest or benchmark different sectors or broad indexes. Very low ER, but you will have transaction fees, so try to find a low-cost provide of that............

Thanks FD

So the poor returns may have had less to do with the financial advisers steerage and more to do with the way the market was moving.

To be fair what I did is for the last 4 years with IG rather than invest with them, I left what I presently had over the previous 6 years and let it ride. With the new money I had saved, I gambled and took the advice of my neighbor and invested in 4 mutual funds which he had invested in himself. I kept the same 4 funds the the returns where approximately 2 to 5% higher than I was gettiing with the money I had invested with IG, during the last for years. So I compared my investments with IG.s of my money.

Everyone's opinion is of value here, even if it is not the same as that of FD.

I also appreciate as well as value everyone's ...........well most people's opinion on this forum. I'm just having a real problem adjusting to and could do without..... the sometimes surprising sarcasm and insults that believe it or not do appear.

 

[Leonidas]

If I were an informed consumer than I would attempt to invest on my own.

No, that's not exactly the case.

You are an investor anytime you have money at risk in an investment, and there are always choices to be made. You can decide how hands-on you want to be, but most people don't have the time, desire, experience, knowledge, or energy to invest in single issues. Mutual funds are great for people like that, or for those with some more developed knowledge/interest/time they may opt to buy some Exchange Traded Funds. But there are people, like you, for whom that route is too involved and then a financial adviser is an option. Yet even there you are faced with options and decisions. If the FA starts telling you "I'm putting 40% in the ABC growth fund and 40% in XYZ Muni fund and keeping 20% in a Money Market so we have options to make purchases later" you need to understand what the heck the guy is talking about.

You also need to have an idea how much risk you are taking and be able to compare the returns you are getting with similarly risky investments. If everybody else in the average mutual fund was pulling down 8.5% and you were making 1% - there is a problem, because you've been taken advantage of.

When I said you need to be an informed consumer of investment products I specifically said you don't need to have the same degree of knowledge as a financial planner. What I meant was that you need to know the very basics. Like what a mutual fund is, how it works, what you are making, what they charge you for the privilige of owning it and how to know if what you're making and paying is reasonable or a ripoff.

Buying investment products has choices just like any other set of consumer choices you make every day. If you need to clothe yourself you might be the kind of person who buys the materials and pattern and goes home and sews it yourself. That's the equivalent of the investor who picks individual stocks/bonds to create a portfolio of investments. You could go to a department store and pick something from off the rack that fits you and is reasonably priced. That's the equivalent of a mutual fund buyer. Or you might prefer to go to a clothing store and work with a commissioned salesperson who will help you with purchasing a blue, two-piece european-cut suit suitable to wear to the office. You get measured and fitted, chose from a selection of different suits that only need some tailoring to fit you well. I'm sure somewhere in the process of buying a suit you would do some comparisons and make a decision that while you really like the Italian designer suit, the price is just not worth what you're getting in exchange. That's the kind of investor you need to be and I think you want to be. You are willing to pay a little more for quality advice, convenience and merchandise, but you want value for your money. That would also be an informed consumer.

What you did was like going to the custom suit store and walking up to the first salesperson you saw and saying "I need a nice suit by next Tuesday. I don't have time to look at colors and I wouldn't know a designer garment from something made in a Guangxi sweat shop by blind tailors. But I want it to fit, be reasonably priced, look nice and be durable. Oh, and I don't have a lot of time to hang around for fitting so here's my credit card and I'll see you next Tuesday." That store is full of good suits and a few ugly ones, the prices range from great to "money is no object", and the salesmen range from someone who has 40 years experience and impeccable taste, to the owner's nephew who can't keep a job anyplace else and thinks jeans with holes are da bomb when it comes to fine apparel. What do you wind up with next Tuesday? I don't know, it's all a matter of luck because you were definitely not an informed and careful consumer. You might have a suit that everyone compliments that only costs you $12, or you may wind up paying $6,000 for something that looks suitable for the Pimps and Hooker's Ball with one sleeve six inches longer and a zipper that keeps falling down.

Modified to remove humorous picture - but my sense of humor is warped and I didn't want to offend

 

[Brat]

Leonidas... Great parable!!

 

[REWahoo]

Leonidas, thanks for deleting the photo. I was confused as to exactly which one was the FA.

 

[Leonidas]

Leonidas, thanks for deleting the photo. I was confused as to exactly which one was the FA.

Too funny - I hadn't thought of it that way.

Your comment brought to the front of my mind something I've been pondering about the whole FA business. I'm not bashing folks in the business, but I can't help but think that at some of the big places there aren't some similarities between that business and the new car business. In that I mean that the sales guy/FA is a trained front for a giant machine that loves to make customers happy...but...it's all about the profit.

Your comment on the picture reminded me of a comment I read in a book about the new car business that said the one person who gets worked over by the business worse than the customer is the sales person. He/She is forced to work a selling system that maximizes profits for the dealeship while minimizing those annoying little costs like sale commissions. In effect, the sales person could be the most honest and decent person around, but he's working in a system that is doing it's damndest to squeeze money out of every deal.

 

[Meadbh]

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

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

Unfortunately, the same is true of healthcare! And I don't agree with it......
Meadbh, MD

 

[Gumby]

S..

 

[My Dream]

What you did was like going to the custom suit store and walking up to the first salesperson you saw and saying "I need a nice suit by next Tuesday. I don't have time to look at colors and I wouldn't know a designer garment from something made in a Guangxi sweat shop by blind tailors. But I want it to fit, be reasonably priced, look nice and be durable. Oh, and I don't have a lot of time to hang around for fitting so here's my credit card and I'll see you next Tuesday." That store is full of good suits and a few ugly ones, the prices range from great to "money is no object", and the salesmen range from someone who has 40 years experience and impeccable taste, to the owner's nephew who can't keep a job anyplace else and thinks jeans with holes are da bomb when it comes to fine apparel. What do you wind up with next Tuesday? I don't know, it's all a matter of luck because you were definitely not an informed and careful consumer. You might have a suit that everyone compliments that only costs you $12, or you may wind up paying $6,000 for something that looks suitable for the Pimps and Hooker's Ball with one sleeve six inches longer and a zipper that keeps falling down.

Leonidas Thanks for the detailed and easy to follow explanation. That was great and I will agree with everything except the paragraph above. Although it was close, I did more than just tell them what I wanted with a credit card and left. I gave them my measurements and constant feedback saying, I'm not happy since they don't fit the measurements I gave you.
In reality, We gave my FA our exact goals, and not only followed through on what was expected of us finacially, we more than exceded it. And when I told FA that I wasn't happy,and even went as far as to say that I was putting FA on "porbation, nothing and I mean nothing changed.

On a different note, my wife received a call yesterday during dinner from a lawyer saying he was requested to call us from our FA since he stated we wanted a will. After completing the call my DW looked over to me in dissapointment, saying, I don't thing our FA really hears what we're saying. We told him 4 times during the last meeting that we didn't want life insurance, and that we already had a will.

In my case I just think that we should have choice a FA more wisely since my DW and I felt that it was in poor taste for FA to say at our final meeting, that "I made a lot of money off of both of you, and I mean a lot, and I'll be honest, I'm sorry to see you guys want to go to another institution". Can you imagine how we felt.