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hiring an advisor
Old 08-22-2007, 08:46 PM   #1
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hiring an advisor

How many people use a financial advisor or planner? Do you think there's any benefit to hiring professional help or should I continue to manage my investments myself?

Also, how do I make sure the person I hire is qualified and will have my best interest in mind when making a recommendation?
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Old 08-22-2007, 09:08 PM   #2
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Also, how do I make sure the person I hire.....will have my best interest in mind when making a recommendation?
Polygraph machine? LOL
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Old 08-22-2007, 09:14 PM   #3
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There was an old polll on this. Poll: Paying for financial advice

Basically only about 3% of the people on this forum paid more than $500 a year to someone. Lots of do-it-yourselfers here.
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Old 08-23-2007, 03:00 AM   #4
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Check their resume and references. Speak with a few of their clients if they will let you. Make sure the financial planner really knows about planning and investing, not just selling you their own services. Also, speak with friends to find out who is using financial planners and get recommendations. Don't just pick from the phone book or use family friends who are new to the business.
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Old 08-23-2007, 03:55 AM   #5
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I am a DIY guy. Although, my mutual fund company provides a financial plan on the cheap. I will get their opinion as a cross-check since it is part of the service and cheap free.

Should you hire a fin planner or DIY?

My thoughts - If one does not understand how to work it, their best bet is to educate them self. One does not have to be a market wizard to use a good reliable portfolio management/investment approach (think MPT and asset allocation). For planning on retirement expenses, there are tons of books and calculators to help you project your income needs. The same applies to managing the retirement income when you retire. One bit of advice would be to not take inordinate risks and be patient.

IMHO - A financially planner is more likely to just siphon off extra money and lead to lower portfolio growth. Don't get the impression that you are going to get the one or two fin plan wizards that exist. You are more likely to get mediocre or poor. Plus, they will exercise some cookie cutter plan and read the basic advice to you from a cheat sheet.


However, if you are unwilling to educate yourself and do not know how to manage it, professional help is likely to make sense. Just be careful picking the planner.

Good luck.
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Old 08-23-2007, 03:59 AM   #6
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I use a FA. I started out by paying for an assessment. It cost me $700 for 1 years worth of advice in addition to the initial assessment. Then I went to a 'commission' plan, where I paid by the transaction. He told me the exact cost per transaction. Since I was not going to churn myself and I was 'savy' enough to take or reject his advice as it benefited me, I kept costs to a minimum. The premium for year 2+_ was probably less than $1000 per year average. Our relationship is starting to change and I am not doing a whole lot of buying and selling. I do meet and discuss my portfolio about 3 times a year (3 or so hours per session). We have agreed to pay a fixed fee for yearly advice of $1000.

Why do I want his advice? While I can do research and do analysis by myself, I have found that I want to do this less and less. Also I am not as 'expert' in fixed income assets and he has been very valuable in helping me set that up. I find that he also is a good sounding board (sort of a 2nd opinion) for ideas and plans I consider. With a net worth of over $2M, I think that $1000 (1/2 of 1 percent if my math is correct) is money well spent. I will look at our relationship each year to see if I am still getting value. When I stop receiving value, I will cut the cord.
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Old 08-23-2007, 08:31 AM   #7
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I use a FA. I started out by paying for an assessment. It cost me $700 for 1 years worth of advice in addition to the initial assessment. Then I went to a 'commission' plan, where I paid by the transaction. He told me the exact cost per transaction. Since I was not going to churn myself and I was 'savy' enough to take or reject his advice as it benefited me, I kept costs to a minimum. The premium for year 2+_ was probably less than $1000 per year average. Our relationship is starting to change and I am not doing a whole lot of buying and selling. I do meet and discuss my portfolio about 3 times a year (3 or so hours per session). We have agreed to pay a fixed fee for yearly advice of $1000.

Why do I want his advice? While I can do research and do analysis by myself, I have found that I want to do this less and less. Also I am not as 'expert' in fixed income assets and he has been very valuable in helping me set that up. I find that he also is a good sounding board (sort of a 2nd opinion) for ideas and plans I consider. With a net worth of over $2M, I think that $1000 (1/2 of 1 percent if my math is correct) is money well spent. I will look at our relationship each year to see if I am still getting value. When I stop receiving value, I will cut the cord.
That's actually 1/10th of 1%, which is very low. You are lucky to find a guy willing to do that, but perhaps it is because you don't need a lot of help. Vanguard would charge .50% on $2 million, so you are getting quite a bargain.
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Old 08-23-2007, 10:27 AM   #8
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Speak with a few of their clients if they will let you.
.
That always sounds good, but I wonder if it is of any real value.

If their clients are largely clueless about financial matters (like most people are, and one reason you might go to an FA), then what do they base their opinion on?

They might be able to tell you the guy/gal was a jerk, condescending, rude, or that they seemed nice, listened attentively, and dressed sharp - but what could they tell you about their qualifications to manage their money with an approriate risk profile, etc, etc, etc? Very little, I suspect.

-ERD50
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Old 08-23-2007, 10:49 AM   #9
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That always sounds good, but I wonder if it is of any real value.

If their clients are largely clueless about financial matters (like most people are, and one reason you might go to an FA), then what do they base their opinion on?

They might be able to tell you the guy/gal was a jerk, condescending, rude, or that they seemed nice, listened attentively, and dressed sharp - but what could they tell you about their qualifications to manage their money with an approriate risk profile, etc, etc, etc? Very little, I suspect.

-ERD50
Not much value, and here's why. He/she will give you the clients that LOVE him the most.........
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Old 08-23-2007, 11:12 AM   #10
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Not much value, and here's why. He/she will give you the clients that LOVE him the most.........
And after his mother, wife and kids, how would be left?
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Old 08-23-2007, 11:27 AM   #11
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Ask them for a list of the typical funds they recommend in various asset classes. This will tell you a lot. What are there favorites?

Don't let them say no to this - we found our previous advsior picked all great funds, but when we moved to Fidelity, they recommended TERRIBLE funds for about 30%. Stuff no one here would ever buy.
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Old 08-23-2007, 12:14 PM   #12
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And after his mother, wife and kids, how would be left?
Funny.........
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Old 08-23-2007, 12:37 PM   #13
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Ask them for a list of the typical funds they recommend in various asset classes. This will tell you a lot. What are there favorites?

Don't let them say no to this - we found our previous advisor picked all great funds, but when we moved to Fidelity, they recommended TERRIBLE funds for about 30%. Stuff no one here would ever buy.
Terrible past performance right?

I have the opposite outlook don't trust an advisor that picks all 5 star funds. You can run the same screen they are and pick what has done well lately, in other words chase performance. But you probably won't like the results.
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Old 08-23-2007, 04:15 PM   #14
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That's actually 1/10th of 1%, which is very low. You are lucky to find a guy willing to do that, but perhaps it is because you don't need a lot of help.
hmmmm now you see why I need help .
Yes, in our discussions, he has said that I don't need a lot of hand holding ... he just brings me suggestions on where to park my money for income ... and gives me an overall review once a year to make sure I am still on track. I keep wondering if I need his assistance... and I find that for the price, it gives me a 2nd opinion and helps me sleep at night. ... thanks for confirmation
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Old 08-23-2007, 04:24 PM   #15
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That always sounds good, but I wonder if it is of any real value.

If their clients are largely clueless about financial matters (like most people are, and one reason you might go to an FA), then what do they base their opinion on?

They might be able to tell you the guy/gal was a jerk, condescending, rude, or that they seemed nice, listened attentively, and dressed sharp - but what could they tell you about their qualifications to manage their money with an approriate risk profile, etc, etc, etc? Very little, I suspect.

-ERD50
Great points. I have friends and relatives that use a particular FA because they like him personally. IMO they sometimes get some questionable advice... but hey the guy is 'really nice'. Interesting way to choose a FA ...
what was that old mo-town song? ... smiling faces ...
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Old 08-23-2007, 07:23 PM   #16
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Is anybody familiar with Evanson Asset management?

The supposedly will manage any size portfolio ($1M minimum) for a flat fee of $2000/year.
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Old 08-24-2007, 04:52 PM   #17
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Is anybody familiar with Evanson Asset management?

The supposedly will manage any size portfolio ($1M minimum) for a flat fee of $2000/year.
I am

They are a good firm. You will get access to DFA funds, get asset allocations, and thats it. No handholding to be found.
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Old 08-24-2007, 06:29 PM   #18
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Originally Posted by Eyerishgold View Post
How many people use a financial advisor or planner? Do you think there's any benefit to hiring professional help or should I continue to manage my investments myself?

Also, how do I make sure the person I hire is qualified and will have my best interest in mind when making a recommendation?
Continue to do it yourself. Continue reading and learning. A "professional" is not interested in your well being but their own.
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Old 08-24-2007, 08:06 PM   #19
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What about fee-only (not fee based) advisors, who are not commissioned and receive no kick-backs? Less than 2% of advisors fall into this category. There is a national organization of fee-based advisors that has a very strict code of ethics. They usually work flat fee or as a percentage of your portfolio (which, if you think about it, makes it in their best interest to give you good advice because they will only increase their income if you do well, not if you trade often or buy commisioned items).

Thoughts about this?
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Old 08-25-2007, 04:49 AM   #20
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What about fee-only (not fee based) advisors, who are not commissioned and receive no kick-backs? Less than 2% of advisors fall into this category. There is a national organization of fee-based advisors that has a very strict code of ethics.
See my post above. Essentially my guy (for me) is a fee-only advisor. Yes, he probably gets a coupla bucks from the commission on each transaction (or maybe not, since he now has converted my account to 'electronic' and I buy and sell by myself at lower commissions than before, (with suggestions from him)). Since I do so few each year (buy and hold and 'eat the interest and dividends), that is a rounding error. For other clients I believe he fee based and others he is 'on commission'. I think this guy is smarter than your average bear and is adding to his client list however he can. If you can find someone who does this for a 'reasonable' fee, then I would go with him. But you have to do your homework and be knowledgeable enough to know if he is 'good' or just a good salesman. Keep reading stuff on this board.

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They usually work flat fee or as a percentage of your portfolio (which, if you think about it, makes it in their best interest to give you good advice because they will only increase their income if you do well, not if you trade often or buy commisioned items).
I am not sure that they look further than the meal set in front of them .
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