fixed fee investment advisor

[Rich_by_the_Bay]

I think you assume ALL folks are like you and others on this board, and that's not true...........

FinanceDude and Saluki are, in my opinion, right on target -- most people, even those who are smart, are wildly off the mark in their financial management skills.

We had houseguests this weekend - he's a retired subspecialist ophthalmologist, age 70. I reckon he and his DW are worth $4-5mm. He smugly commented how he is now managing his own money. I gently inquired as to what funds he likes. His reply: "stock funds." Oh, which ones: "I've got utilities, precious metals, REITs." Hmmm.. is that all? "Yep, with mutual funds you don't need to buy dozens of stocks."

He also owns some intermediate bonds. Thankfully, he has a large pension.

Could use a good financial advisor.

Question for FD and Saluki: if a new client came in and showed you a plan which met the usual wisdom around here, what would your reaction/advice be in general? That is, a good and appropriate mix of fixed and stocks, well diversified globally, and indexed, a decent plan for 4% SWR more or less, no real red flags.

How do you react to that? And since you both check in here so at least have some awareness of this group, what about your colleagues who don't take the time to scan this terrain once in a while-- how do you think they would react?

PS: FinanceDude -- is Ron Sadoff still practicing in MKE?

Turns out he has the equivalent of several company's versions of

 

[saluki9]

Question for FD and Saluki: if a new client came in and showed you a plan which met the usual wisdom around here, what would your reaction/advice be in general? That is, a good and appropriate mix of fixed and stocks, well diversified globally, and indexed, a decent plan for 4% SWR more or less, no real red flags.

How do you react to that? And since you both check in here so at least have some awareness of this group, what about your colleagues who don't take the time to scan this terrain once in a while-- how do you think they would react?

Rich, that isn't that uncommon an occurance, I see it all the time. I'm not in sales, but if it gets to the point that a prospects is meeting with a planner it means they see some value in the process. I do run into people who have done a good job so far of putting things together (FYI almost 100% of them are from an engineering background) and if they meet the criteria you describe we would ask them if they want a planning relationship? In many cases they do becasuse they either want the other services we provide or they want to enjoy their retirement (or focus more on work) and don't want to deal with the day to day stuff. In addition, even the good portfolios could use a little fine tuning. I would also add that even the people who come in having done things well so far are far less overconfident certain that they know all the answers as you would find with many folks on the internet. Most of our assets are indexed so there isn't the conflict coming in that you hit with many clients sworn to active management.

 

[2B]

I think you assume ALL folks are like you and others on this board, and that's not true...........

Heck, about a third of all working Americans who have access to a 401K don't even put money in........... However, the govt now thinks that by giving the employer the power to enroll those folks, that it will magically fix the problem............

I don't assume everyone are financially schooled like most of the members of this forum. I just wish they were.

That gap will provide you with clients until you FIRE.

 

[Nords]

There is pending regulatory rules. Financial planning will soon be regulated much more closely.

Well I, for one, welcome our new government-regulation overlords-- and I'm holding my breath until things get better!

Harry Kasanow is a financial dominatrix advisor in Manoa who essentially acts as the "bad guy". For his fee he'll swoop in, put you on a sensible budget, take all your excess funds away from your hot little hands, and start building your retirement portfolio. If you (or your fun-lovin' family) try to touch it then he'll slap your hands away and talk you down. People pay a lot of money for that.

I asked him to work out a plan with us and our funds, and his response was basically "My way or the highway". Well, I can appreciate that he's tuned into his core customer and doesn't need to try to abuse serve everyone.

Later I spoke with an AXA rep who sent us a ton of worksheets, met with me for 45 minutes to go over them, and then Osborned himself by saying "Well, our current Monte Carlo simulator is $2500 for a financial plan but our software upgrade next January will be able to do more for the same price." Really? Well then, see ya!

OTOH my eternal gratitude goes to the advisor who took my phone call, got the outline of our financial situation, and said "Well, if you have a military pension and keep your withdrawals below 3% for the rest of your life then you'll have no problems. But come see me if you want help with that..."

 

[FinanceDude]

Question for FD and Saluki: if a new client came in and showed you a plan which met the usual wisdom around here, what would your reaction/advice be in general? That is, a good and appropriate mix of fixed and stocks, well diversified globally, and indexed, a decent plan for 4% SWR more or less, no real red flags.

I tell them so, right up front. Generally, there's a reason they're in front of me, and it may have LITTLE to do with what mutual fund portfolio they've been managing themselves for many years. Mostly, they're concerned about what to do now, and wonder if they need advice on an ongoing basis. I do a lot of "gratis" work, but in the end I can't complain. I think something that most folks on here don't realize is that there are a fair number of folks who have done well investing WITHOUT the help of advisors, but have reached a point where the $$$ are too big for their comfort.

I would say education is about 75% of what I do with my clients. I am direct and unafraid in my opinion..........

How do you react to that? And since you both check in here so at least have some awareness of this group, what about your colleagues who don't take the time to scan this terrain once in a while-- how do you think they would react?

PS: FinanceDude -- is Ron Sadoff still practicing in MKE?

I am pretty sure I am one of the ONLY FA's in the USA on this forum....but I use it to learn about LBYM more than investing strategies........

As far as I know, Ron is still practicing in MKE.............

Saluki works the portfolio mgmt side, so I may be the only true fee-based advisor that is ballsy enough to be on here..............

What we know for sure is I'm not prospecting for clients on here............

 

[REWahoo]

What we know for sure is I'm not prospecting for clients on here............

I wouldn't go quite that far, but I would agree you aren't doing so very effectively.
Kinda like trying to set up an ice mfg. operation in Hell...

 

[unclemick]

I wouldn't go quite that far, but I would agree you aren't doing so very effectively.
Kinda like trying to set up an ice mfg. operation in Hell...

When I get to 10mil - we'll talk.

Please don't hold your breath.

heh heh heh - Target Retirement is my latest hearthrob. Pssst - Wellesley is now my ex.

 

[FinanceDude]

I wouldn't go quite that far, but I would agree you aren't doing so very effectively.
Kinda like trying to set up an ice mfg. operation in Hell...

 

[FinanceDude]

When I get to 10mil - we'll talk.

Please don't hold your breath.

heh heh heh - Target Reirement is my latest hearthrob. Pssst - Wellesley is now my ex.

Let me guess, you have a bumper sticker that says:"We're Out Spending Our Kid's Retirement"..............

 

[unclemick]

Let me guess, you have a bumper sticker that says:"We're Out Spending Our Kid's Retirement"..............

Nope - but sure saw a bunch of them on RV's usually - during our 'pull the camper' period in the 1980's.

heh heh heh 8)

 

[Mwsinron]

I wouldn't go quite that far, but I would agree you aren't doing so very effectively.
Kinda like trying to set up an ice mfg. operation in Hell...

About choked on my damn gum

 

[Nords]

there are a fair number of folks who have done well investing WITHOUT the help of advisors, but have reached a point where the $$$ are too big for their comfort.

I'm curious-- what point is that and why are they no longer comfortable? What's the typical situation?

Is it the point of FI where they're about to quit a job, or is it a dollar figure where they cross $500K-$1M net worth, or a life situation when they're starting a family or getting an inheritance?

And what makes them uncomfortable? Have they been doing it too long and they're tired of it, or did one spouse get fired by the other, or are they approaching dementia/senility, or is it just the feeling of "We can't spend it fast enough!!"...?

 

[FinanceDude]

I'm curious-- what point is that and why are they no longer comfortable? What's the typical situation?

Is it the point of FI where they're about to quit a job, or is it a dollar figure where they cross $500K-$1M net worth, or a life situation when they're starting a family or getting an inheritance?

And what makes them uncomfortable? Have they been doing it too long and they're tired of it, or did one spouse get fired by the other, or are they approaching dementia/senility, or is it just the feeling of "We can't spend it fast enough!!"...?

Funny things happen where I am about when the portfolio hits seven figures...........people start freaking out.

Paritcularly those GE folks I keep trying to talk off the ledge...........guess how much of their GE that is 90% of their portfolio they are willing to sell Oh, about 1%................

 

[saluki9]

Funny things happen where I am about when the portfolio hits seven figures...........people start freaking out.

Paritcularly those GE folks I keep trying to talk off the ledge...........guess how much of their GE that is 90% of their portfolio they are willing to sell Oh, about 1%................

I would agree.

Our offices are located in a nice triangle between the HQs of Allstate Insurance, Motorola, and Abbott. There seems to be a moment that strikes senior executives in their mid to late 50s when they wake up screaming HOLY F@c$Ing SHI#, I have 90% of MY NET WORTH IN ONE STOCK!!!!!!


That is usually when they call their attorney or accountant and ask them to reccomend an FA

 

[unclemick]

People read too much investment stuff.

I remember (being a somewhat older phart) hearing fat dumb and happy souls retiring on Ma Bell and SS.

Two back at the old rocket plant one JNJ and the other Home Depot had no plans to diversify - unless the 401k did it in the years they had left before retiring.

Before MPT and all that rot - other than widows and orphans mixes - hitting 'the one' that set your retirement on a higher plane was kinda the Holy Grail.

heh heh heh - my, my how fads can change. Maybe - one of my Norwegian widow stocks will catch fire and get me to Margaritaville yet - of course Kansas City ain't that bad.

 

[FinanceDude]

I would agree.

Our offices are located in a nice triangle between the HQs of Allstate Insurance, Motorola, and Abbott. There seems to be a moment that strikes senior executives in their mid to late 50s when they wake up screaming HOLY F@c$Ing SHI#, I have 90% of MY NET WORTH IN ONE STOCK!!!!!!


That is usually when they call their attorney or accountant and ask them to reccomend an FA

 

[Nords]

People read too much investment stuff.

Or in the case of FD's & Saluki's new clients, they think diversification is an HR program...

Or maybe they want to diversify out of the company stock via Ken Lay's method?

 

[saluki9]

Or in the case of FD's & Saluki's new clients, they think diversification is an HR program...

Or maybe they want to diversify out of the company stock via Ken Lay's method?

More than that Nords, they get brainwashed into thinking somehow that it's disloyal to the company. At older established companies the board and other executives exert real pressure to load up on company stock and not diversify. That want peopl to "eat their own cooking"

 

[Nords]

Thanks, guys, I was wondering what would cause an experienced driver to yank their hands off the wheel and cover their eyes. I'm relieved to see it's nothing that I'd worry about in our future.

That want peopl to "eat their own cooking"

Speaking as a retail investor that's just the way I want it too. Maybe those board members have some spinal osteoblasts after all.

The execs can use their savings from their salaries to diversify their family's IRAs, 529s, & taxable accounts away from their all-company-stock 401(k)s... of course that would imply that they'd actually need to save money from their salaries. Ending up shocked, I say shocked by being 90% in one stock is their own darn greed fault.

To put executive pay packages in perspective, my BIL the CPA has processed exec W-2s with more money deducted for Medicare, let alone SS, than I ever earned during my entire career.

 

[FinanceDude]

The execs can use their savings from their salaries to diversify their family's IRAs, 529s, & taxable accounts away from their all-company-stock 401(k)s... of course that would imply that they'd actually need to save money from their salaries. Ending up shocked, I say shocked by being 90% in one 1 stock is their own darn greed fault.

Trust me, they aren't the LBYM types that are on here. Their company stock is acumulated through options, meaning they don't use their salaries to get their "nest egg".

One CFO told me once: "Why bother with a 401K? After January 15th, I'd be all in for the year"...........

 

[audreyh1]

Let me guess, you have a bumper sticker that says:"We're Out Spending Our Kid's Retirement"..............

Inheritance! All those RVer's are out there spending their kid's inheritance.

Audrey

 

[unclemick]

Inheritance! All those RVer's are out there spending their kid's inheritance.

Audrey

Absolutely correct Audrey - you caught it and I didn't remember right.

heh heh heh - 8)

 

[cute fuzzy bunny]

More than that Nords, they get brainwashed into thinking somehow that it's disloyal to the company. At older established companies the board and other executives exert real pressure to load up on company stock and not diversify. That want peopl to "eat their own cooking"

I think i'd have a hard look at what % of the board/exec's net worth was tied up in the stock, what their basis in the stock is, and intelligently follow suit.

 

[Sarah in SC]

Wow, FD, you caught some serious heat here. Small wonder I don't get in these threads! Not that I'd be caught dead giving investment advice here!

I work in a consulting wealth management practice. We have several ltd partnerships and refer clients to boutique managers. We do not manage portfolios directly. Most of our clients come to us because they do not have the time to properly manage their investments, as they are using their time to make said money. I would say that most have an active interest in their portfolios and follow them closely, but are content to have the managers do the heavy lifting (for 1%, of which we get a portion, paid by the managers).

We, too, do a lot of work for kids, employees, neighbors, etc of clients. They trust our judgement in a lot of different areas like estate planning and taxes. I think most of our clients enjoy their work and do not want to retire early--they like the lifestyle and stature of their positions too much.

My CFP credentials will be a source of great pride to me, and an asset to the firm that employs me. I use the knowledge gained in this course of study every day. I do not think that the CFP alone would qualify me to give investment advice to anyone. I agree with the others in my industry that post here that there is a wide range of expertise in advisors, and a great many charlatans (like amnesia-boy here in Charleston, Al Parrish, who stashed a sketch by Picasso in a software manual, that he bought with pilfered money ). I feel good about the help our firm gives our clients, protecting them from fraud and overpriced investments.

Sarah

 

[2B]

Funny things happen where I am about when the portfolio hits seven figures...........people start freaking out.

Paritcularly those GE folks I keep trying to talk off the ledge...........guess how much of their GE that is 90% of their portfolio they are willing to sell Oh, about 1%................

Our offices are located in a nice triangle between the HQs of Allstate Insurance, Motorola, and Abbott. There seems to be a moment that strikes senior executives in their mid to late 50s when they wake up screaming HOLY F@c$Ing SHI#, I have 90% of MY NET WORTH IN ONE STOCK!!!!!!


That is usually when they call their attorney or accountant and ask them to reccomend an FA

These types don't frequent this forum. I'd be surprised if any longterm participant here has more than about 5% of their assets in any one stock or what any respectable FA would consider an undiversified portfolio.

I've run into the "Coca Cola till I die" types and the same thing can be applied to many companies (Enron ). These types are not the thoughtful investment oriented types that FIRE appeals to. In general, I suspect the bulk of us are less loyal to our companies than to our personal finacial future.

As far as the seven figures goes, we've already demonstated that this forum is covered up with seven figure portfolios.