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Free Financial Planning?
Old 04-28-2006, 11:38 AM   #1
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Free Financial Planning?

Both my parents and in-laws use financial planners. One uses American Express (now Ameriprise), and the other uses UBS. The interesting thing is that they both swear that they don't pay anything for this. What do you think? Is it possible that they are avoiding the typical fees, or are they just avoiding knowledge of the fees?
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Re: Free Financial Planning?
Old 04-28-2006, 11:42 AM   #2
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Re: Free Financial Planning?

Two of the worst. "Wrap fees" are what they pay. Gotta pay for that advertising somehow...they changed the name because of all the fines they paid for misconduct under the old name.
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Re: Free Financial Planning?
Old 04-28-2006, 11:46 AM   #3
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Re: Free Financial Planning?

There is no free ride so they are paying for the service somewhere. My guess would be in skimming a percentage off the accounts each month or quarter in a way that is not obvious. Look at the statements for any kind of fee or deduction from the account. If if is not reported I would worry.
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Re: Free Financial Planning?
Old 04-28-2006, 11:48 AM   #4
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Re: Free Financial Planning?

That's what I thought, but I specifically mentioned wrap fees, and they seem awfully sure that they're not paying them. I don't feel comfortable asking to look at their statements myself.
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Re: Free Financial Planning?
Old 04-28-2006, 11:52 AM   #5
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Re: Free Financial Planning?

Quote:
Originally Posted by bongo2
That's what I thought, but I specifically mentioned wrap fees, and they seem awfully sure that they're not paying them.*
Here's a few other tricks:
- Load funds.
- Buying large blocks of fund shares but pocketing the difference in breakpoint commissions.
- Charging an extra ER to buy a "fund of funds".
- "B" shares paying lifetime trail commissions.
- Commissions on selling insurance policies.
- Commissions on selling annuities.
- Selling only "preferred vendor" funds with soft-dollar kickbacks.
- Churning.

IMO a "free" financial advisor is even worse than the guy who tells you up front that he's a money-grubbing weasel.
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Re: Free Financial Planning?
Old 04-28-2006, 09:56 PM   #6
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Re: Free Financial Planning?

I recently moved a chunk of money to Vanguard which moved my account to Voyager class (starship). They contacted me offering free financial planning which I am taking advantage of. Supposedly, they charge $1000 for this service if you have less than $250k. I already scheduled a conference call.
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Re: Free Financial Planning?
Old 04-28-2006, 10:06 PM   #7
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Re: Free Financial Planning?

There are front-end and back-end loads. I've tried to purge the details from my mind, so I'm fuzzy on how the back-end loads work, but it doesn't bite until you sell. Something about grabbing ankles.

And of course there are high expense ratios.
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Re: Free Financial Planning?
Old 04-28-2006, 10:30 PM   #8
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Re: Free Financial Planning?

Quote:
Originally Posted by vagabond
I recently moved a chunk of money to Vanguard which moved my account to Voyager class (starship). They contacted me offering free financial planning which I am taking advantage of. Supposedly, they charge $1000 for this service if you have less than $250k. I already scheduled a conference call.
Let us know if they reccomend a large cap growth fund.
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Re: Free Financial Planning?
Old 04-28-2006, 10:53 PM   #9
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Re: Free Financial Planning?

Quote:
Originally Posted by BigMoneyJim
There are front-end and back-end loads. I've tried to purge the details from my mind, so I'm fuzzy on how the back-end loads work, but it doesn't bite until you sell. S
I was fuzzy too until I started paying attention recently when I retired. The back end funds (B funds) charge you a percentage if you sell within a few years after you buy them. That percentage declines until after about 5 years they convert to "A" funds and you no longer get a charge if you sell. I was pleased that I had some B funds since I assumed that as long as I didn't sell within the 5 year window I avoid the charges. But I studied the fee structures and discovered that the B fund internal fees are higher than the corresponding A funds - thus you pay your load during the 5 years you are waiting for them to convert. A load is a load.
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Re: Free Financial Planning?
Old 04-30-2006, 12:01 PM   #10
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Re: Free Financial Planning?

Quote:
I specifically mentioned wrap fees, and they seem awfully sure that they're not paying them.
Ask yourself or the folks, "How do the reps of UBS and Ameriprise pay for the food that they must provide for their family? How do they afford that BMW in the driveway? How they afford* to pay for that fancy corner office in that glass-enclosed new office building?"

Of course they charge for their service. Of course their clients are paying a pretty penny for their "advice". Of course they are over-paying for the advice that they are receiving.

Free Advice: Have them ask the reps for an exact "dollar amount" of the amount that they have paid in 2005 in fees, wrap fees, commissions,* concessions, and any other monitary compensation or benefit to include paid trips, vacations or other non-monitary compensation. Then ask for how much they have paid in 2006 so far.* If the answer is " I don't know" or "Zero" ask them : "How do you get money to pay your bills?"
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Re: Free Financial Planning?
Old 04-30-2006, 11:11 PM   #11
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Re: Free Financial Planning?

Quote:
Originally Posted by bongo2
Both my parents and in-laws use financial planners.* One uses American Express (now Ameriprise), and the other uses UBS.* The interesting thing is that they both swear that they don't pay anything for this.* What do you think?* Is it possible that they are avoiding the typical fees, or are they just avoiding knowledge of the fees?
Bongo, not sure about UBS but I'm postive your in-laws or parents are paying something for using Ameriprise. They get their money through numerous ways.

1) Charge an annual wrap fee percentage paid quarterly on the value of their non-VUL/annuity portfolio.
2) Charge a front-end load or charge a back-end load on the mutual funds.
3) Sell you an annuity and/or a VUL.
4) Plus they'll pay the annual mutual fund fees which Ameriprise gets a cut from.

Ameriprise has a history of conflicts of interest on practically everything they offer. You can read about this at http://www.ameriprisesuck.com.
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Re: Free Financial Planning?
Old 05-01-2006, 09:19 AM   #12
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Re: Free Financial Planning?

UBS has their own line of mutual funds too. Nice high expense ratios and good, honest high sales loads. The UBS reps probably steer them into their own UBS funds (and get a bigger cut).

Naw, your parents and in-laws aren't paying any fees.

They don't have to write a check each year to their financial sales rep, therefore they think they aren't paying any fees.
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