Financial Advisor / Wealth Management

[frayne]

The emotional aspect of investing is huge and the ability to sit back and do nothing while the market gyrates up and down can not be overstated. In the mean time I'll own the whole market and pay an ER of .05 and sleep good at night regardless of what it does. It ain't rocket science, it's simple math.

 

[ERD50]

The emotional issue is real. ...

OK, but what I'm suggesting is it is better to 'cure' it with education (one time cure, at very no/low cost), than to 'treat' it with a hand-holding FA (at very high, recurring costs).

It just seems like paying to abdicate your own responsibility. To say "I can't avoid selling at the bottom", but I can hire someone to tell me "do not sell at the bottom"? Why not eliminate the middle-man? You are just paying them to tell you to do what you are admitting is the right thing to do in the first place. So just do it!

-ERD50

 

[RobbieB]

I think you guys missed my point.

If it was up to me I would not have bought facebook. Never. Because I hate the Co. Do you remember their little "social experiment" where they found that people fed a negative stream reacted negatively and people fed a positive stream reacted positively? Real rocket science that was eh? They treated people like lab rats.

I own facebook because my adviser thought it was a good financial play. He was right. That play made me a lot of dough that I wouldn't have made all by myself. Because I hate facebook.

 

[ERD50]

I think you guys missed my point.

If it was up to me I would not have bought facebook. Never. Because I hate the Co. Do you remember their little "social experiment" where they found that people fed a negative stream reacted negatively and people fed a positive stream reacted positively? Real rocket science that was eh? They treated people like lab rats.

I own facebook because my adviser thought it was a good financial play. He was right. That play made me a lot of dough that I wouldn't have made all by myself. Because I hate facebook.

Not a good reason to use an FA, not just IMO, but the facts bear this out.

If an FA advised a stock that sank, does that mean FAs are no good?

The facts are, studies show that advisors simply do not consistently beat broad market indexes over time. If you invest in a broad index, you are not taking specific stock risk. No way your FA can be right all the time, and unlikely that he will beat the index over time.

-ERD50

 

[youbet]

OK, but what I'm suggesting is it is better to 'cure' it with education (one time cure, at very no/low cost), than to 'treat' it with a hand-holding FA (at very high, recurring costs).

It just seems like paying to abdicate your own responsibility. To say "I can't avoid selling at the bottom", but I can hire someone to tell me "do not sell at the bottom"? Why not eliminate the middle-man? You are just paying them to tell you to do what you are admitting is the right thing to do in the first place. So just do it!

-ERD50

This is one of those cases where you need to get outside of the box and stop thinking of everyone and their personal situation being you and yours.

YOU might be able to cure an issue with emotional or reactive behavior in regard to handling investments, but not everyone can. How can you even begin to think you can accurately place yourself in the shoes of others?

Sometimes personalities and behaviors are not something an individual can modify. For some, and I know a few, just being able to choose a competent, relatively low cost FA (avoiding shark attacks, etc.) is enough of a challenge.

 

[RobbieB]

That's just one specific reason I like my FA. I also don't pay buy or sell fees.

To each his own I guess, whatever floats your boat.

I'm sure that I could DIY this stuff at less cost and treat it as sort of "another hobby" but I have enough hobbies already and don't want another. So I pay more to have "my guy" keep track of my bag I guess. So far so good. We'll see how it goes down the road.

 

[ERD50]

This is one of those cases where you need to get outside of the box and stop thinking of everyone and their personal situation being you and yours.

YOU might be able to cure an issue with emotional or reactive behavior in regard to handling investments, but not everyone can. How can you even begin to think you can accurately place yourself in the shoes of others?

Sometimes personalities and behaviors and not something an individual can modify. For some, and I know a few, just being able to choose a competent, relatively low cost FA (avoiding shark attacks, etc.) is enough of a challenge.

I agree with you - if someone really cannot modify their behavior, than some sort of FA/guidance is probably the right thing for them. I just get the impression that is really very, very few people, and if they took a little time effort to educate themselves, DIY would work for them. I'm trying to encourage people to educate themselves and try to modify their behavior - I get the impression that some of these posters assume it is difficult/impossible, w/o even trying.

I think an analogy I've made in the past goes like this - Flying cross-country is far, far safer than driving cross-country. Emotions don't change that, it is a fact. But if an individual is going to be an emotional wreck, because they have an irrational fear of flying that they cannot overcome (and therefore won't enjoy this planned trip at all), than driving may be the right choice for them. It's still statistically more dangerous though, and they should accept that.

-ERD50

 

[ERD50]

That's just one specific reason I like my FA. I also don't pay buy or sell fees.

To each his own I guess, whatever floats your boat.

I'm sure that I could DIY this stuff at less cost and treat it as sort of "another hobby" but I have enough hobbies already and don't want another. So I pay more to have "my guy" keep track of my bag I guess. So far so good. We'll see how it goes down the road.

Fine, but it a myth that this takes much time/effort at all. Set an AA and forget it.

-ERD50

 

[youbet]

I just get the impression that is really very, very few people, and if they took a little time effort to educate themselves, DIY would work for them......


I'm trying to encourage people to educate themselves and try to modify their behavior - I get the impression that some of these posters assume it is difficult/impossible

This just doesn't seem like you ERD50. In thread after thread you have emphasized the extreme importance of researching and knowing the facts concerning a subject and not just going with "impressions."

Are you saying you haven't done the research here? You don't know the data concerning the outcome of efforts to change personality traits that impact investing, including personality traits that could lead one to make "wrong" moves due to reactionary tendencies?

Your impressions here makes about as much sense as the folks who are under the impression that "all" chemicals are bad in agriculture.

 

[ERD50]

This just doesn't seem like you ERD50. In thread after thread you have emphasized the extreme importance of researching and knowing the facts concerning a subject and not just going with "impressions."

Are you saying you haven't done the research here? You don't know the data concerning the outcome of efforts to change personality traits that impact investing, including personality traits that could lead one to make "wrong" moves due to reactionary tendencies?

Your impressions here makes about as much sense as the folks who are under the impression that "all" chemicals are bad in agriculture.

I don't know that there is a good source of data on it, emotions are hard to measure objectively, so I'm just expressing my thoughts here, based on the posts I see here. I don't think I ever sad "all" regarding any of this? The chemical discussion is an objective thing, we know that water is a chemical - this discussion isn't even close to that.

I'll add to my previous statement - there is an entire industry, along with 'conventional wisdom', that this is oh so complex, and professional help is needed. So voices here help to provide a counter to that biased view (biased, since those industries profit from the belief, and data does not support their view).

Further, if an individual really does feel they would do better with professional help - why not just pssssst, Wellesley? There you have pros making decisions to buy/hold/re-balance as the market changes, and they have a proven, long term transparent track record. If I were to go seek out a managed account, I would take that over the individual FA that people like me would have access to.

-ERD50

 

[RobbieB]

There are lots of things I feel qualified to do.

Plumbing - water heaters, sinks, toilets, garbage disposers and dishwashers.

I build my own audio amplifiers.

I'm going to paint the inside of my house soon, but I'm going to hire all the flooring afterwards.

The investing I'm going to leave to "my guy", he's done good so far. And he doesn't have the "whole bag" either, just the equity account. The muni bond accounts are elsewhere.

Whatever works and makes you "comfy" is good. So far, so good -

 

[travelover]

There are lots of things I feel qualified to do.

Plumbing - water heaters, sinks, toilets, garbage disposers and dishwashers.

I build my own audio amplifiers.

I'm going to paint the inside of my house soon, but I'm going to hire all the flooring afterwards.

The investing I'm going to leave to "my guy", he's done good so far. And he doesn't have the "whole bag" either, just the equity account. The muni bond accounts are elsewhere.

Whatever works and makes you "comfy" is good. So far, so good -

Glad you are happy.

 

[M Paquette]

DIY investing is NOT for everyone. While technically anyone can learn the methods and strategies for managing their own portfolio, much of the population does not have the fundamental temperament to take on this task. If you look at the population here that does do well with DIY investing, you'll see that they have certain personality traits that lend themselves to being able to follow the proper methods and strategies.

Not everyone has these personality traits.

I'm not talking about high level behavioral traits that can be unlearned, with habituation of more appropriate traits. These are low level properties, fear/flight responses, panic and stress responses that don't reside in the gray and white matter of the brain where 'rewiring' can take place, but deep down in structures like the hypothalamus, residue of ancient survival reflexes. Oh, we can manage to override these from time to time, but they are still present, still busily dumping stress response chemicals into the bloodstream. Folks with more active low level properties like these have trouble making major financial decisions, second guessing themselves as stress and anxiety responses interfere with rational decision making.

Not everyone is a cool, calm rational actor.

Now, it's true that some folks learn to mask out or suppress these ancient responses, and can imitate a rational actor for some time. Eventually, though, that stuff leaks through, the walls crumble, and Really Bad Stuff happens. "He seemed to be such a nice, quiet man, Officer."

Others learn to live with these responses, know and understand their own limitations and capabilities, and act appropriately. They may be artists, musicians, writers, or architects. They might be superb athletes. They know their limitations and capabilities, and choose accordingly.

For folks who know themselves sufficiently well, choosing to have a third party manage their investments may not be a bad choice. For others, the best choice may be to manage their own finances. We HAVE choices. One size does not fit all.



Sent from my iPad using Early Retirement Forum

 

[travelover]

.............For folks who know themselves sufficiently well, choosing to have a third party manage their investments may not be a bad choice. For others, the best choice may be to manage their own finances. We HAVE choices. One size does not fit all.

I totally agree, but at the same time feel that it appropriate to point out that this service can be had for a lot less than has been mentioned here ($72,000 a year in the OP's case). Knowing that, if one feels good about paying it, have at it.

 

[RobbieB]

It's not hard to notice the disdain here for financial advisors. Let's see; Sharks, Thieves (hand in your pocket) do nothings (work 2 hours a year) and by all means we have to save the newbies from themselves. I get it. I don't care. I'm not proposing that anyone hire an advisor, that's just what I do.

But there are others like me out there and a friend of mine is one of them. He not only has an advisor, but he has instructed his advisor to pay him an "allowance" if you will. He is so loose with dough that he would blow through it all in no time whatsoever. In his own words "If I didn't do this I would be broke, but I would have this really nice villa in the south of France"

Have fun!

 

[travelover]

It's not hard to notice the disdain here for financial advisors. Let's see; Sharks, Thieves (hand in your pocket) do nothings (work 2 hours a year) and by all means we have to save the newbies from themselves. I get it. I don't care. I'm not proposing that anyone hire an advisor, that's just what I do.

But there are others like me out there and a friend of mine is one of them. He not only has an advisor, but he has instructed his advisor to pay him an "allowance" if you will. He is so loose with dough that he would blow through it all in no time whatsoever. In his own words "If I didn't do this I would be broke, but I would have this really nice villa in the south of France"

Have fun!

Glad you are happy.

 

[gerntz]

I totally agree, but at the same time feel that it appropriate to point out that this service can be had for a lot less than has been mentioned here ($72,000 a year in the OP's case). Knowing that, if one feels good about paying it, have at it.

These high fees & the ability to get the services they deliver for a lot less hasn't been pointed out already enough times in this thread already that you think it's appropriate to do it again? I disagree.

Also, I don't think the op feels good about those fees or the op wouldn't have started this thread. The op is looking for alternatives that mostly include other than the dominant approach espoused here of DIY. Some value that concept.

 

[gerntz]

DIY investing is NOT for everyone. While technically anyone can learn the methods and strategies for managing their own portfolio, much of the population does not have the fundamental temperament to take on this task. If you look at the population here that does do well with DIY investing, you'll see that they have certain personality traits that lend themselves to being able to follow the proper methods and strategies.

Not everyone has these personality traits.

I'm not talking about high level behavioral traits that can be unlearned, with habituation of more appropriate traits. These are low level properties, fear/flight responses, panic and stress responses that don't reside in the gray and white matter of the brain where 'rewiring' can take place, but deep down in structures like the hypothalamus, residue of ancient survival reflexes. Oh, we can manage to override these from time to time, but they are still present, still busily dumping stress response chemicals into the bloodstream. Folks with more active low level properties like these have trouble making major financial decisions, second guessing themselves as stress and anxiety responses interfere with rational decision making.

Not everyone is a cool, calm rational actor.

Now, it's true that some folks learn to mask out or suppress these ancient responses, and can imitate a rational actor for some time. Eventually, though, that stuff leaks through, the walls crumble, and Really Bad Stuff happens. "He seemed to be such a nice, quiet man, Officer."

Others learn to live with these responses, know and understand their own limitations and capabilities, and act appropriately. They may be artists, musicians, writers, or architects. They might be superb athletes. They know their limitations and capabilities, and choose accordingly.

For folks who know themselves sufficiently well, choosing to have a third party manage their investments may not be a bad choice. For others, the best choice may be to manage their own finances. We HAVE choices. One size does not fit all.



Sent from my iPad using Early Retirement Forum

Excellent - though many here will blow it off.

 

[gerntz]

OK, but what I'm suggesting is it is better to 'cure' it with education (one time cure, at very no/low cost), than to 'treat' it with a hand-holding FA (at very high, recurring costs).

It just seems like paying to abdicate your own responsibility. To say "I can't avoid selling at the bottom", but I can hire someone to tell me "do not sell at the bottom"? Why not eliminate the middle-man? You are just paying them to tell you to do what you are admitting is the right thing to do in the first place. So just do it!

-ERD50

How do you know there's a cure for any particular individual? How is the person not being responsible when the person recognizes there's an issue and deals with it even if it's not your one & only solution?

"Seems like" can be so insufferable. BTW, I know the right thing to do is clean my house & mow my lawn & wash my car, but I pay someone to do them.

 

[LitGal]

My two cents, FAs are great for people who don't mind paying for the service they are receiving, especially those who lack the desire to learn a little about the workings of the market and feel uncomfortable managing their own finances. That is exactly why there is an industry built around it. Personally I take pride in managing the money I have made over a lifetime and wouldn't trust it to anyone else.

+1. And after spending a career as a frugal "school marm," it's fun to learn how to manage the nest egg and watch it grow. I call it "math for fun and profit."

 

[mystang52]

When money was tight, I changed my own car oil, and did many DIY home repairs. For multiple reasons, I now prefer to pay for most home repair projects and car maintenance. But one of the reasons is because I can afford to do so.
I don't see the need to pay a FA 1%, or even .6%. However, OP has significantly more assets than I do. So, one thing is he can afford to pay a FA. His other reasons, while not applicable to me, are valid for him.
If he prefers this route, who am I to challenge it?

 

[ERD50]

DIY investing is NOT for everyone. ... For folks who know themselves sufficiently well, choosing to have a third party manage their investments may not be a bad choice. For others, the best choice may be to manage their own finances. We HAVE choices. One size does not fit all.

I won't re-quote your entire post, since it's been done already, but I will say it was very well written and appropriate and relevant. I tried to cover some of that with my analogy of the 'fear of flying' person. More to follow...

I totally agree, but at the same time feel that it appropriate to point out that this service can be had for a lot less than has been mentioned here ($72,000 a year in the OP's case). Knowing that, if one feels good about paying it, have at it.

Yes, maybe I failed in this, but my intent was to point out that this can be done for far less, and most could DIY - it does not involve rocket science. It might involve something that an individual just does not possess (see MP's post that I partially quoted), but they should at least be exposed to the idea that this is not rocket science.

OK, but what I'm suggesting is it is better to 'cure' it with education (one time cure, at very no/low cost), than to 'treat' it with a hand-holding FA (at very high, recurring costs).

It just seems like paying to abdicate your own responsibility. To say "I can't avoid selling at the bottom", but I can hire someone to tell me "do not sell at the bottom"? Why not eliminate the middle-man? You are just paying them to tell you to do what you are admitting is the right thing to do in the first place. So just do it!

-ERD50

How do you know there's a cure for any particular individual? How is the person not being responsible when the person recognizes there's an issue and deals with it even if it's not your one & only solution?

"Seems like" can be so insufferable. BTW, I know the right thing to do is clean my house & mow my lawn & wash my car, but I pay someone to do them.

Please re-read my post. I suggested (yes, "suggested") that "it is better to 'cure' it with education". I didn't say the cure was universal.

We all make buy/DIY decisions. I feel it is best if those are informed decisions, not decisions made out of exaggerated fears or myths.

-ERD50

 

[harley]

 

[medved]

I find this discussion, and especially the diametrically opposing views, really interesting. Thanks to all for taking the time to weigh in, whether you agree with me or not.

It is especially interesting to me that people feel so strongly about this issue. i will tell you that I have received several private messages from people who read my post and said they favor using a financial advisor but they do not want to post that on this board because the general sentiment is so strongly against FAs. It is just interesting to me that this can be such a hot button issue (when some other issues, that seem much more important to me, are not).

In part, maybe this is just a subset of the larger debate in society between DIY and pay for a service. Some people feel that it is ridiculous to pay a mechanic $650 to replace a timing belt when you can "have some fun and save some money" by doing it yourself. Others say "I have better things to do with my time and I would rather pay an expert."

And while I use a financial advisor (at least for now), I do some things on my own that others would probably not. For example, although I am not a medical doctor, I make some of my own medical decisions because I have expertise in the relevant areas that is greater than doctors in the field typically have. Others might say "I am happy to make my own investment decisions, but there's no way I would make my own medical decisions." So I guess people just have different views as to what they are willing to do themselves and what they want professional help with.

One thing I do reject, however, is the notion that all financial advisors are useless or dishonest or crooks looking to rob their clients, etc. I don't think that is any more true of financial advisors than it is of lawyers or doctors or accountants or physical therapists or preachers. Some are good and try hard to serve their customers/clients, and others don't add value and are just out to make a quick buck.

 

[RobbieB]

My toilet started leaking and the plumber said $500

Pish posh, you can get one for a hundred at home depot

But I don't know how to install it and they are heavy

Don't worry, everything is online, educate yourself

I hurt my back installing it and can't get out of bed.

Take 2 asprin and call me in the morning.

My back was better today and I got out of bed and the house was flooded

I guess you didn't get enough education