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Old 04-18-2016, 12:29 PM   #61
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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 -
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Old 04-18-2016, 01:19 PM   #62
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Originally Posted by RobbieB View Post
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.
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Old 04-18-2016, 05:02 PM   #63
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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.



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Old 04-18-2016, 06:00 PM   #64
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.............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.
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Old 04-18-2016, 06:24 PM   #65
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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!
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Old 04-18-2016, 07:05 PM   #66
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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.
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Old 04-18-2016, 07:20 PM   #67
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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.
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Old 04-18-2016, 07:23 PM   #68
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Originally Posted by M Paquette View Post
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.



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Excellent - though many here will blow it off.
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Old 04-18-2016, 07:30 PM   #69
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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.
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Old 04-18-2016, 07:32 PM   #70
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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."

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Old 04-18-2016, 08:00 PM   #71
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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?
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Old 04-18-2016, 08:08 PM   #72
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Originally Posted by M Paquette View Post
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...


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Originally Posted by travelover View Post
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.



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Quote:
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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
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Old 04-18-2016, 08:15 PM   #73
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Old 04-18-2016, 08:54 PM   #74
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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.
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Old 04-18-2016, 09:26 PM   #75
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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
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Old 04-18-2016, 09:31 PM   #76
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I agree we seem to overcook this debate but another way to put it is like this little analogy. I like to change the oil and filter on my motorcycle. It is very easy and gives me a bit of pride not to mention saving about $50 or more. I have a hard time understanding why everyone doesn't do this. But, the real reason is, some don't have the time, some wouldn't feel comfortable and have more trust in the mechanic to do the right thing than themselves. As someone else said one size does not fit all.

As far as FAs go, yes there are good ones and bad ones like in any field. I do think one of the keys to improving the overall impression/reputation is to require all FAs to accept the fiduciary responsibility.
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Old 04-18-2016, 09:34 PM   #77
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'I don't think that is any more true of financial advisors than it is of lawyers or doctors or accountants or physical therapists'

Seems the FAs have won... being counted in with those who have fiduciary responsibilities. Kudos to them.
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Old 04-18-2016, 09:36 PM   #78
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Oh frayne you beat me to it... and put it much more politely.
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Old 04-18-2016, 09:57 PM   #79
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medved - thanks for the followup post. Glad to hear that the strong feelings expressed have been useful and not turned you off.

I find this board excellent due to the highly knowledgeable members that seem very willing to share their knowledge / opinions to help others There are clearly a couple topics (including use of FAs) that seem to bring out very strong, diverse views whenever they come up. Glad you got some of both sides between what was posted and your private messages.
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Old 04-18-2016, 10:54 PM   #80
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OP,

Have you ever heard about the bet Warren Buffet made against a group of hedge funds? WB bet that a straight up 100% investment in Vanguard's S&P 500 Index Fund, VFINX would beat the average returns of 5 of the best hedge funds in the world over a 10 year period. It's about 8 years into the bet, and VFINX is up by ~65% and the hedge funds, which are managed by the best of the best in the industry, are up only ~22%.

Your FA is like one of those hedge fund managers. He's giving you all kinds of advice about asset allocation and rebalancing and annuities, etc., trying to help you do what, exactly? Beat the market? Grow your investments? On the other hand, you could just put 100% of your money into a broad based stock mutual fund like VFINX or VTSAX, with ERs of .17 & .05, respectively, and call it good. The dividends alone would pay you ~$240K/year, without even touching the principal.

Above in the thread, a couple of posters said that because you've got so much money, you need to have a FA/WM. I disagree. I think that because you've got plenty of money already, you have absolutely no need for a FA, because your portfolio is already way to big to fail.

Why not take the $75K/year that you're currently paying your FA and, instead, give it to a charity you believe in or maybe to a worthy young family member who needs help starting a business or with school expenses?

Just my 2 cents.
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