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Old 01-16-2012, 11:14 AM   #21
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Then I'd simply open an account with Vanguard and either follow the advice on their website or you can get free personal advice form them if you deposit enough money.
So, the advice from Vanguard is better than a fee only CFP because it's free? Interesting...........
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Old 01-16-2012, 01:01 PM   #22
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So, the advice from Vanguard is better than a fee only CFP because it's free? Interesting...........
So the advice from an advisor charging thousands is better than VG because it's only free? Interesting....
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Old 01-16-2012, 01:28 PM   #23
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Here is a thread at bogleheads where someone is also seeking a financial advisor: Bogleheads • View topic - Seeking Plan I can Implement -- what's appropriate fee? or maybe they were looking for someone to wash their clothes which requires about the same skill level.
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Old 01-16-2012, 02:19 PM   #24
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So the advice from an advisor charging thousands is better than VG because it's only free? Interesting....
TJ
How is a hourly fee CFP charging thousands of dollars? Most CFPs I know will look over everything but the most compelx situations for less than $1000. It is always easy to make broad assumptions when you don't have to defend them........
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Old 01-16-2012, 03:24 PM   #25
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So, financial planners control the markets, I never knew that!
They didn't tell you! Sheeeesh!
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Old 01-16-2012, 03:28 PM   #26
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So, financial planners control the markets, I never knew that!
Noone knew it.
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Old 01-16-2012, 09:58 PM   #27
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So, financial planners control the markets, I never knew that! Tell you what, I'll hire you to manage my personal assets, and I want YOU to guarantee I will make money, ok?
Sorta figured my last statement might cause disagreement.

Put simply: If your car breaks down, you pay a dealer to fix it. If your Furnace breaks down, you pay HVAC person to make the repair. Drain problem, you pay a plumber to correct the problem. Roof leaks, pay a roofer to find the leak.
Broken arm, call the doctor to fix. Income taxes, hire a CPA., ..etc.....

If any of the above professionals fail to perform. Do we still pay them?
I do not. Most of us will complain. (usually there is a contract, ie, warranty, guarantee, fiduciary).

Why do we let professional financial planners get off the hook so easily.
We are asking them for their advice and putting at risk our life savings.
If they make a mistake, Do we just walk.......

Again, just my 2 cents.
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Old 01-16-2012, 10:33 PM   #28
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Put simply: If your car breaks down, you pay a dealer to fix it. If your Furnace breaks down, you pay HVAC person to make the repair. Drain problem, you pay a plumber to correct the problem. Roof leaks, pay a roofer to find the leak.
Broken arm, call the doctor to fix. Income taxes, hire a CPA., ..etc.....

If any of the above professionals fail to perform. Do we still pay them?
I do not. Most of us will complain. (usually there is a contract, ie, warranty, guarantee, fiduciary).

Why do we let professional financial planners get off the hook so easily.
We are asking them for their advice and putting at risk our life savings.
If they make a mistake, Do we just walk.......

Again, just my 2 cents.
NONE of those professionals can GUARANTEE the things they fix won't break down. Your doctor can't guarantee you'll never get sick, etc. Hey, do what you want, but the all the guys I know who guaranteed market returns are in jail.........

Just because one gets advice does not mean one should take it, or use it. Is there a guarantee when a CPA does your taxes that the IRS won't audit you? Uh, I don't think so.........
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Old 01-16-2012, 10:40 PM   #29
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Just because one gets advice does not mean one should take it, or use it. ........
Or have to pay for it.
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Old 01-16-2012, 10:59 PM   #30
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NONE of those professionals can GUARANTEE the things they fix won't break down. Your doctor can't guarantee you'll never get sick, etc. Hey, do what you want, but the all the guys I know who guaranteed market returns are in jail.........

Just because one gets advice does not mean one should take it, or use it. Is there a guarantee when a CPA does your taxes that the IRS won't audit you? Uh, I don't think so.........
Would appreciate other's input. When you hire someone, don't you expect satisfaction?

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Old 01-17-2012, 12:19 AM   #31
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So, the advice from Vanguard is better than a fee only CFP because it's free? Interesting...........
Vanguard advice will be no better than a fee only CFP, so I'd go with the least expensive. However, IMHO, an evening's reading of the Boglehead wiki will get you all the knowledge you need to run your own financial affairs. When people use advisors they are mostly paying to be able to blame someone other than themselves when their returns suck.
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Old 01-17-2012, 07:03 AM   #32
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So other than cost and how they are paid, how would one pick a vendor to give one financial advice? The industry certainly has major image problems.
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Old 01-17-2012, 07:50 AM   #33
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Vanguard advice will be no better than a fee only CFP, so I'd go with the least expensive.
Can you prove that? Most CFPs I know have knowledge far beyond all but the most astute investors. Why not go with the least expensive in everything....least expensive estate attorney, least expensive CPA, least expensive surgeon, least expensive dentist, least expensive LASIK doctor.........etc.......

VG has excellent funds at low cost, with above average customer service, but that's about it...........anyone who thinks that VG's salaried CFPs are better because they are "free" is misguided........ CFP's that know their stuff don't make $40,000 a year.......
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Old 01-17-2012, 08:17 AM   #34
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DH has a small inheritance that he left with the existing financial advisor. DH has no interest in investments. The advisor laid out for him in very brief terms with a pretty chart just where the money is, how the investments are rated, and how much the yield has been for ytd, one, five, and ten years, and that was good enough for him.

A lot of people on e-r.org wouldn't be happy with that (me included ); we'd be doing so much research on the investments that we would be just as well off investing them ourselves.

If someone can't see the difference between a financial investor and a surgeon, oh, well.

FinanceDude, you know the industry. What are your suggestions to the OP as to how to choose a good advisor?
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Old 01-17-2012, 08:25 AM   #35
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I came into some money in 1992. I didn't know anything about investing, so I thought why not hire a financial planner. I made an appointment with one that was referred to me by my cpa. I went to see him and he told me he was going to diversify my funds in a certain way and he would charge me .075 for handling my account. I was with him for two years and I was getting no return. I thought I could invest my own money and make nothing and wouldn't have to pay the fee, that's what I did. I think the only one who has your best interests at heart is yourself, so study up and pay attention.
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Old 01-17-2012, 08:28 AM   #36
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[QUOTE][/Can you prove that? Most CFPs I know have knowledge far beyond all but the most astute investors. QUOTE]

but if you don't have a ton of money to invest how much time will they spend on your account?
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Old 01-17-2012, 08:33 AM   #37
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How is a hourly fee CFP charging thousands of dollars? Most CFPs I know will look over everything but the most compelx situations for less than $1000. It is always easy to make broad assumptions when you don't have to defend them........
For an investor who is unsure of himself this is probably a reasonable approach. I did it so it must be reasonable. The year before I retired I paid a one time fee to a local advisor to look over my investments and plans. She validated my basic approach and suggested some tweaks that made sense. But, although I think this approach was worth the investment (for the reassurance it provided), the advice was still biased by conflict of interest (IMHO). The advisor validated my AA, budget and withdrawal plan. But she noted that she did not believe I could do as well with index funds as I could with a carefully designed portfolio of managed funds under the continuing guidance of her or another advisor. She was probably honest in that assessment but I doubt she had any empirical support for it.

Note: in my email engagement message I explained that I wanted a one time analysis of my plan and would specifically not hire the advisor who did that analysis for long term management. I hoped those conditions would lead to a relatively unbiased analysis.

Edit: this post got me thinking about my situation at the time I engaged the fee only advisor and I have to say, she was even better than I remember. At the time, DW and I still had a substantial part of our portfolio in load funds with a commission broker. The fee advisor went into some detail about how we could do much better with low fee, no load funds and noted that "As you know, I feel very strongly that people such as yourself benefit greatly from professional advice." She went on to note that since I had the time for research and was starting to do it, I should take a number of steps including a carefully phased exit from my current managed load funds. Based on what she could see of our history to date, she was right that DW and I were people who needed some professional help. I got it here but many similarly situated people won't. The only area I would disagree with her is on the issue of index funds.
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Old 01-17-2012, 09:14 AM   #38
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Would appreciate other's input. When you hire someone, don't you expect satisfaction?

Sorry I'm entirely with F Dude on this one, see post #10. With all due respect, the questions you suggested posing to an FP in post #9 were a waste of time at best. They don't serve any useful purpose, but I assume you weren't really suggesting anyone ask them, IOW rhetorical questions. If you don't need an FP, that's fine, not everyone does.
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Old 01-17-2012, 10:18 AM   #39
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My husband and I are a few months away from his retirement. We have decided to consult with a financial planner to make sure we have all our ducks in a row. We have limited financial planning knowledge and have a short window to accept or decline my husbands early retirement offer. We chose this planner on recommendation from a retired couple that have been working with and are pleased with him. This first meeting is at no charge to us. My questions for this forum are: what should we ask him to help us decide if he is the planner that will do a good job? What credentials should he have? What fees should we expect for his advice and potentially management of our assets? How do we know if he has our best interests at mind? Anything else that we need to find out?

thanks for any insight, advice
Are you on linked in? If so, go through all contacts and see who is connected to a planner. Interview 2-3 and see what happens.

Ask the following questions

1) What is total compensation advisor will receive for the recomendations made?

I would phrase like above because many products have hidden fees not disclosed, so ask about total compensation, not what the planning fee is, or what the commission is on initial sale.

2) What does advisor see as biggest risks to your situation?

3) What are 3 possible courses of action based on the retirement package, and will advisor draw up a financial scenario for each option? This makes sure you see 3 clear paths to choose from (examples might be cash out pension, annuitize pension or delay pension and work part time). Always look for 3 choices for any given amount of data. If advisor cannot give 3 choices, it might be because they have a limited product line. For each choice, ask "what is total compensation advisor will receive for that recommendation".

4) Mutual funds are sold by prospectus. Ask advisor for prospectus, and take it home. Look up fees which include 12b1 fees and sales charges. If the mutual fund has a 12b1 fee and advisor did NOT disclose that in "total compensation advisor will receive" response, look elsewhere.

5) Where does advisor get information for portfolio construction?
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Old 01-17-2012, 10:23 AM   #40
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Also, be sensitive to the distinction between "fee only" and fee-based" financial planners. Fee only means, as you put it, fee for service. Fee based means that s/he charges you a fee AND can make some money off any financial products you buy from him/her.
CORRECT.

Always as the question

"what is TOTAL COMPENSATION advisor will receive based on advice given". Fee Based planners will need to disclose commissions, trailers, and products more thoroughly if you phrase question correct.

If you change the question, its possible you might not receive all the relevant information on the products.

There is a difference between "expenses you pay" as client, and "compensation advisor receives". If you focus on compensation, you will be able to "follow the money" back to the fees you pay.
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