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Hiring an Adviser
Old 08-30-2007, 11:43 AM   #41
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Hiring an Adviser

The MOST important factor when selecting an adviser is to use a fee only adviser. IE One that makes all of his money off you from his direct fees and not sales commissions.

Most "Financial Planners" are just fancy salespeople trying to sell you the "Investment" vehicle that will get them the highest commission/long term return.

You need a fee only adviser so that are free of conflict of interest and can look only to your best interests.

The same goes for Brokers. Don't use them. Just buy Vanguard Index funds and beat 90% of all broker's, stock pickers all the time.
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Old 08-30-2007, 12:07 PM   #42
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The same goes for Brokers. Don't use them. Just buy Vanguard Index funds and beat 90% of all broker's, stock pickers all the time.
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Old 08-30-2007, 12:54 PM   #43
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FWIW, I'd feel happier posting my question on this forum and seeing what input I'd get for free. There are a lot of very knowledgeable people here and few FAs that provide regular input.
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Reality about Advisors
Old 08-31-2007, 12:27 AM   #44
Confused about dryer sheets
 
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Reality about Advisors

I used to be an advisor myself and I have hired one. Why? Not because I can't create an excellent portfolio and rebalance it annually. Not because I can't keep up on all the major, relevant, asset classes. The reason is simply this: when you manage your own money the propensity to due irrational things is very high. There are studies by Fidelity and Lord Abbot which show that the average investor in their large cap mutual funds realize only a small fraction of the funds long term return. Why? Because the average investor buys high and sells low. Emotion runs their investment activity.

This behavior has nothing to do with the type of investment, it is about people. I suspect the averages for index investors who are DIY are not much different.

Being aware of these pitfalls I think I could escape them - I'm pretty disciplined. But even so, I've chosen an advisory relationship to prevent me from the "idiot factor". If the advisor saves me from 1 or 2 stupid moves every 10 years than he will have earned his fee right there.

How confident are you that you will beat your own emotions consistently for 20 or 30 years? Most people will not, and would be well served by a quality advisor. Finding one however is another question...
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