Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
Old 04-23-2016, 09:04 PM   #141
Dryer sheet aficionado
 
Join Date: Nov 2015
Posts: 27
Quote:
Originally Posted by medved View Post
This may be of interest to anyone who is interested in thoughts about whether an advisor can add value: https://pressroom.vanguard.com/conte..._3.10.2014.pdf
A pretty unconvincing breakdown to me. Fully half of the claimed value of professional financial advice is said to be due to "behavioral coaching", by which they mostly mean suppressing clients' ignorant inclination to buy high and sell low. But they must not be very good at that coaching if clients have to keep paying for it annually. Most of the rest of the claimed value comes from one-time set-up things.
__________________

__________________
Skeptic is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 04-23-2016, 09:15 PM   #142
Recycles dryer sheets
 
Join Date: Apr 2016
Posts: 192
Quote:
Originally Posted by Skeptic View Post
A pretty unconvincing breakdown to me. Fully half of the claimed value of professional financial advice is said to be due to "behavioral coaching", by which they mostly mean suppressing clients' ignorant inclination to buy high and sell low. But they must not be very good at that coaching if clients have to keep paying for it annually. Most of the rest of the claimed value comes from one-time set-up things.
This seems to be an example of confirmation bias. People tend to interpret information in a way that confirms their preconceptions.
__________________

__________________
medved is offline   Reply With Quote
Old 04-23-2016, 09:20 PM   #143
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
pb4uski's Avatar
 
Join Date: Nov 2010
Location: Vermont & Sarasota, FL
Posts: 16,498
Not really... you'll find plenty of threads that encourage folks to develop a written investment policy statement and then stay the course with their statement and be disciplined when markets get skittish.
__________________
If something cannot endure laughter.... it cannot endure.
Patience is the art of concealing your impatience.
Slow and steady wins the race.
pb4uski is online now   Reply With Quote
Old 04-23-2016, 09:20 PM   #144
Thinks s/he gets paid by the post
target2019's Avatar
 
Join Date: Dec 2008
Posts: 3,710
Vanguard study is quantifying possible value adding. Not saying it is always true. Since they have paid advisors, it's appropriate that there be guidelines and studies.
__________________
target2019 is offline   Reply With Quote
Financial Advisor / Wealth Management
Old 04-24-2016, 06:55 AM   #145
Recycles dryer sheets
Taxman59's Avatar
 
Join Date: Sep 2014
Posts: 485
Financial Advisor / Wealth Management

In general, I think that paying a % of assets is foolish, and I worked for a private family office that managed $ for a single family. My salary and bonus depended on the AUM. (I didn't do the investment management, I was on the tax and planning side. ) I saw clients with $100k+ in assets use the resources of our office to a level that was abusive, and clients with $10mm+ get their tax returns prepared and didn't want much more. Those with the smarts tended to keep a portion of their assets outside of our office and kept their fee down.

In my situation, I have a friend with whom I have worked for nearly 30 years. He has two fee structures, commission based and %of AUM. I have referred many people to him since he has always had the client's interest at heart. The "proof" I offer is his income. I prepared his tax return (no profit in it for me, just helping a friend) for years, and we talk often about our situations. At one point, he was nearly fired because his fee income was "too low". He pointed out that he had a very high AUM, and it was growing very fast with almost no loss of accounts whereas others had high fee income and an incredible turnover ratio. The office changed its philosophy to put the client's interest first (this was almost 25 years ago) and recognize that the income for the firm will come eventually. This is why I have recommended them to others over the years, and haven't had any complaints.

Not all FAs are good by any stretch of the imagination, but also not all are self centered either. This forum is heavily populated with DIY which is fine. My DW needs the help that my friend will provide, so when I am gone, she will likely use the AUM model to let her sleep better.


Have the day you deserve, and let Karma sort it out.

Sent from my iPad using Early Retirement Forum
__________________
Taxman59 is offline   Reply With Quote
Old 04-24-2016, 07:22 AM   #146
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
RunningBum's Avatar
 
Join Date: Jun 2007
Posts: 5,202
Quote:
Originally Posted by medved View Post
This seems to be an example of confirmation bias. People tend to interpret information in a way that confirms their preconceptions.
It sounds like a marketing pitch for their services, which is exactly what it is. They assume you are doing things wrong and show how they can fix it. But since I'm already rebalancing, for example, there is 35 bps that doesn't apply. Another 45 bps for already using low cost funds. And so on.

Still, I'm going to read this again more closely and try to honestly evaluate whether I am doing everything "right".
__________________
RunningBum is offline   Reply With Quote
Old 04-24-2016, 08:03 AM   #147
Recycles dryer sheets
 
Join Date: Oct 2011
Posts: 406
Quote:
Originally Posted by youbet View Post
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.
I'm not a fan of % fee based advisors even a little but there is a lot of truth to the fact that they might be right for a lot of people.

My brother uses an FA that charges a fee. For years I've nudged him that he's getting pounded in terms of fees as a % of his returns. But he likes the knowledge of knowing someone professional is handling this.

During the big market swoon last August, we happened to be together and he let me listen on speaker to what his guy had to say about the situation. He didn't say anything I didn't get from reading RealClearMarkets for 30 mins that morning.

The trick, however, is that I like this stuff and read RCM everyday regardless of what's going on. I have over the years become highly financially educated and comfortable with my (mostly passive) decisions because I enjoy the topic. My brother would rather spend his leisure time reading about how to fix up an old car.

I wouldn't trust a car where I fixed the brakes myself. That's how he feels about his portfolio.
__________________
Luck is when Preparation meets Opportunity.
Closet_Gamer is offline   Reply With Quote
Old 04-24-2016, 01:08 PM   #148
Thinks s/he gets paid by the post
 
Join Date: May 2008
Posts: 2,264
A friend of mine inherited some money from his relative who had her money managed by an FA (% fee based with requirement of 500K or more - Morgan Stanley affiliated). He decided to have his inheritance (plus his rollover IRA) managed by the same guy. When my friend had his accountant do the taxes, the tax account was surprised that the fees on my friend's new account was very low (no loads, and no fees except for the tax deductible annual fee) and asked for the contact information of his FA - She wanted to invest with him. (According to my friend, the tax accountant told him that an FA like this is very rare.) I guess my friend lucked out especially because he has no idea how to invest. He said although it wasn't as much, he still made money last year via his FA. He is very happy about it.
__________________
tmm99 is offline   Reply With Quote
Old 04-25-2016, 08:42 PM   #149
Recycles dryer sheets
 
Join Date: Sep 2015
Location: Austin
Posts: 82
I need someone to manage my HSA, Roth (vanguard), and fiance's Roth (vanguard).

Any suggestions?
__________________
dsp0725 is offline   Reply With Quote
Old 04-25-2016, 09:24 PM   #150
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
pb4uski's Avatar
 
Join Date: Nov 2010
Location: Vermont & Sarasota, FL
Posts: 16,498
Look in the mirror. That's the guy. Nobody cares more about your money than him.
__________________
If something cannot endure laughter.... it cannot endure.
Patience is the art of concealing your impatience.
Slow and steady wins the race.
pb4uski is online now   Reply With Quote
Old 04-25-2016, 09:30 PM   #151
Recycles dryer sheets
 
Join Date: Sep 2015
Location: Austin
Posts: 82
Quote:
Originally Posted by pb4uski View Post
Look in the mirror. That's the guy. Nobody cares more about your money than him.
I agree with you, but I don't have the time to figure out the most effective investments.

I have my Roth, 401k, and soon HSA. Just need someone to manage it. I'd rather hire a professional that is trustworthy.
__________________
dsp0725 is offline   Reply With Quote
Old 04-25-2016, 09:35 PM   #152
Thinks s/he gets paid by the post
Souschef's Avatar
 
Join Date: Dec 2015
Location: Santa Paula
Posts: 1,201
Quote:
Originally Posted by dsp0725 View Post
I agree with you, but I don't have the time to figure out the most effective investments.

I have my Roth, 401k, and soon HSA. Just need someone to manage it. I'd rather hire a professional that is trustworthy.
Based on some of the posts on this thread, that is an oxymoron like giant shrimp or military intelligence
__________________
Retired Jan 2009 Have not looked back.
AA 50/45/5 considering SS and pensions a SP annuity
WR 2% SI 2SS & 2 Pensions
Souschef is online now   Reply With Quote
Old 04-25-2016, 09:39 PM   #153
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
REWahoo's Avatar
 
Join Date: Jun 2002
Location: Texas Hill Country
Posts: 42,156
Quote:
Originally Posted by dsp0725 View Post
I'd rather hire a professional that is trustworthy.
Catch 22: In order to know your professional is trustworthy, you'll need to understand the basics of investing and monitor his/her performance against appropriate benchmarks. To do that you'll have to determine what those benchmarks are, and by the time you've learned that you'll have the knowledge you need to manage your own investments.

Since you'll be doing the work anyhow, why pay for a professional - who you may not learn is trustworthy until after they've underperformed?
__________________
Numbers is hard

When I hit 70, it hit back

Retired in 2005 at age 58, no pension
REWahoo is offline   Reply With Quote
Old 04-25-2016, 09:44 PM   #154
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
pb4uski's Avatar
 
Join Date: Nov 2010
Location: Vermont & Sarasota, FL
Posts: 16,498
Quote:
Originally Posted by dsp0725 View Post
I agree with you, but I don't have the time to figure out the most effective investments.

I have my Roth, 401k, and soon HSA. Just need someone to manage it. I'd rather hire a professional that is trustworthy.
IMO it is harder and more time consuming to find a trustworthy FA (and monitor them to make sure that they remain trustworthy) than it is to select the right investments. Since you have no taxable accounts you don't need to worry about tax efficient placement... you can just buy a target date fund or Wellesley or Wellington or a balanced fund depending on your risk appetite. Easy peasy.
__________________
If something cannot endure laughter.... it cannot endure.
Patience is the art of concealing your impatience.
Slow and steady wins the race.
pb4uski is online now   Reply With Quote
Old 04-26-2016, 08:16 AM   #155
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
travelover's Avatar
 
Join Date: Mar 2007
Posts: 9,908
Quote:
Originally Posted by REWahoo View Post
Catch 22: In order to know your professional is trustworthy, you'll need to understand the basics of investing and monitor his/her performance against appropriate benchmarks. To do that you'll have to determine what those benchmarks are, and by the time you've learned that you'll have the knowledge you need to manage your own investments.

Since you'll be doing the work anyhow, why pay for a professional - who you may not learn is trustworthy until after they've under performed?
This is the crux of it for me. Of course, another option is to just pay the FA and trust them knowing they are "professionals" who have your best interest at heart and know way more about investing that you ever will.
__________________
Yes, I have achieved work / life balance.
travelover is online now   Reply With Quote
Old 04-26-2016, 10:09 AM   #156
Recycles dryer sheets
 
Join Date: Jul 2013
Posts: 202
I also have never used a FA but apparently you have a great deal of comfort with this one. The issue seems to be the amount charged and your prior DIY performance in a volatile market. What would really concern me is paying 0.6% on the fixed income part of the portfolio because of existing low interest rates. Assuming this portion of your assets is focused primarily on tax free muni bond funds (or even taxable bond funds), would it be possible to negotiate a lower rate on this part of your portfolio. If such funds are paying 2-3% then his/her fee is 20-30% of your return. Perhaps you stay at 0.6% for equities but lower substantially the fee on your fixed rate portion. I understand that this can be done by splitting your account into separate accounts each having a different fee ratio. Not a perfect answer but their is justification for the reduction.
__________________
phil1ben is offline   Reply With Quote
Old 04-26-2016, 10:56 AM   #157
Thinks s/he gets paid by the post
 
Join Date: Dec 2009
Location: Alberta/Ontario/ Arizona
Posts: 3,160
Quote:
Originally Posted by tmm99 View Post
If I had 12.5 million, I would be using an advisor too.
Really? I don't. I figure if you have enough time and interest to post regularly here you have enough time and interest to do it yourself. Not to mention being "frugal"
__________________
Danmar is offline   Reply With Quote
Old 04-26-2016, 11:21 AM   #158
Thinks s/he gets paid by the post
nash031's Avatar
 
Join Date: Jun 2013
Location: Coronado
Posts: 1,490
Quote:
Originally Posted by ERD50 View Post
I
#82 --

OK, 'fleecing' them (but that wasn't an assumption, it was to be shown after taking some time) - and an immediate caveat that it doesn't apply to all.
Ha! You mentioned my "fleecing" quote. Not meant to bash FAs as a whole at all, as you detected.

Specifically, my mom's FA charges her 1% AUM upfront, but also gets "kickbacks" from some of the funds he has her in, which come from the proceeds of those funds; has her in funds with front end loads up to 6.5%; has her in other funds with ERs well in excess of 1%.

All of that, and he has underperformed the S&P 500 Index in every year they've been using him.

It's all disclosed in the fancy 60-page reports he produces for her every quarter, but it's obvious she either doesn't review them or doesn't understand them.

I reviewed records and reports for four quarters and presented them to her, but she told me, "Well, he does well for us." Despite all temptations to continue the discussion, I recognized she was comfortable with losing tens of thousands of dollars every year for whatever reason, and I've left it alone recognizing that there's pride involved here as well, and few mothers are ever going to listen to sons in such sensitive matters because the perception is that the elder (should) know(s) better.

Interestingly, she told me this weekend via text that she thinks I should trust my investments to people who do this all day every day because when she tried self-managing, she had a co-worker with an MBA tell her when to buy and sell in her 401K, but even that was too stressful for her. And that guy had an MBA, by the way!

My wife said, "I have an MBA, but that doesn't make me an investment whiz."

Clearly, I was adopted.
__________________
"So we beat to our own drummer in the sun;
We ask for nobody's permission to run.
I just wanna live in a world like that;
Now I'm gonna live in a world like that!" - World Like That, O.A.R.
nash031 is offline   Reply With Quote
Old 04-26-2016, 11:32 AM   #159
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Chuckanut's Avatar
 
Join Date: Aug 2011
Location: West of the Mississippi
Posts: 6,337
Quote:
Originally Posted by nash031 View Post
I reviewed records and reports for four quarters and presented them to her, but she told me, "Well, he does well for us."
I suspect that what people mean when they say such things is"

"He/she does better than I can do, since I don't want to do it."

It's a bad idea to try and force a square peg into a round hole. The results are almost always disappointing.
__________________
The worst decisions are usually made in times of anger and impatience.
Chuckanut is online now   Reply With Quote
Old 04-26-2016, 11:36 AM   #160
Thinks s/he gets paid by the post
 
Join Date: May 2008
Posts: 2,264
Quote:
Originally Posted by Danmar View Post
Really? I don't. I figure if you have enough time and interest to post regularly here you have enough time and interest to do it yourself. Not to mention being "frugal"

Yeah, really. I said I would hire an advisor if I had 12.5 million is because I don't need that much money and I have no heir to want to leave money to so I'd rather pay 1% or whatever fee and spend my time doing other fun things than spending time DIYing my finance FOR SURE. I will definitely review what the FA is doing but I will definitely not spending as much time as I am now.


Sent from my iPhone using Early Retirement Forum
__________________

__________________
tmm99 is offline   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
advisor or no advisor frank FIRE and Money 10 04-29-2014 07:58 AM
Retirement wealth management : Annuities & Mutual Funds walkinwood FIRE and Money 2 08-11-2009 10:40 AM
wesabe: web 2.0 financial money management community site free4now FIRE and Money 6 11-20-2006 03:32 PM
Should Financial Management Be Boring? yakers FIRE and Money 4 03-20-2006 05:10 PM

 

 
All times are GMT -6. The time now is 02:34 PM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2017, vBulletin Solutions, Inc.