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Old 03-28-2013, 09:58 AM   #41
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Read Bogle, Bernstein, Schultheis and many others and it's pretty clear.
Pretty clear about what? This board is a very small sample size of people who ARE engaged heavily in their financial lives, do you really think that represents the majority of America? Yes, if people actually READ books from Bogle and others, and more importantly IMPLEMENTED those ideas, they would be better off, with or without an FA.........
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    I don't have to be a rocket scientist to know that paying someone 1% per year (or more) is going to reduce my net returns dramatically. Especially if I want an indexed passive lazy portfolio, and there's tons of evidence showing active management won't do better.
Some FAs charge 1%, some do not. You can't generalize that all do.......
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    How is managing a $2M portfolio 10-times more costly than managing a $200K portfolio with the same AA?
It's not, and most if not all fee-based advisors charge accordingly. My $2 million plus clients are all under 40bp.........
  • Quote:
    That said, we all know there are FP/FAs who are value added justifying their fees.
  • I find it hard to believe you said that, considering your above statements.........
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Old 03-28-2013, 10:15 AM   #42
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Pretty clear about what? This board is a very small sample size of people who ARE engaged heavily in their financial lives, do you really think that represents the majority of America?
Completely agree. A vast majority of the people I worked with couldn't begin to invest intelligently for themselves (mostly in 401k's), even some very well educated professionals. Many (to my surprise) would share their investment moves openly, actual 50 yo person 'I moved all my 401k funds to XX Foreign Growth because it provides the highest returns' (yikes), only to reveal a couple years later they'd lost their shirts and sold off/moved to the latest highest return fund (double yikes) - over and over. Went from telling us all (constantly) 'I'm retiring in two years,' to 'I don't know if I'll ever be able to retire.' Sad, and predictable...

We had a degreed career accountant (you'd think they could pick up investing) who has been paying Mass Mutual 1% a year for more than 20 years (still is AFAIK) for subpar returns. He expects to retire when he is 70...we're still in touch.
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Originally Posted by FD
Yes, if people actually READ books from Bogle and others, and more importantly IMPLEMENTED those ideas, they would be better off, with or without an FA.........
That was my central point. If you can guide people here, why not do it?
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Originally Posted by FD
Some FAs charge 1%, some do not. You can't generalize that all do.......
I wasn't, but are you telling me 1% of assets isn't common, or that there aren't FAs that charge even more? So what is typical?
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It's not, and most if not all fee-based advisors charge accordingly. My $2 million plus clients are all under 40bp.........
That's outstanding, but not typical from what I've read, but I acknowledge you're in a better position to know. So enlighten us on what is typical?
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Originally Posted by FD
I find it hard to believe you said that, considering your above statements.........
Why? I simply contend that the odds are against a novice finding a value added FP/FA, not that there aren't any.

Back to the unfortunate adage, 'by the time you know enough to pick a good FA, you don't need one.' Not true? It stands to reason a savvy investor would be able to pick a value added FA, and a novice could be easily fooled into picking an FA who was 'nice, polite and always available.' No one admits their FA isn't providing value, until they very clearly don't...
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Old 03-28-2013, 10:29 AM   #43
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That's outstanding, but not typical from what I've read, but I acknowledge you're in a better position to know. So enlighten us on what is typical?
I don't speak for all, but this is what I have heard in conversations at my FPA meetings..........Some are higher than this, the rates below are for a 100% equity portfolio)

$100,000 - $250,000: 1%
$250,001 - $500,000: .75%
$500,001- $1,000,000: .60
$1,000,000 - $2,000,000: .50
$2,000,000+ : .45 and sometime lower.

We charge the bond portion of the portfolio at a lower rate than the equity portion........



Quote:
Why? I simply contend that the odds are against a novice finding a value added FP/FA, not that there aren't any. Back to the unfortunate adage, 'by the time you know enough to pick a good FA, you don't need one.' Not true? It stands to reason a savvy investor would be able to pick a value added FA, and a novice could be easily fooled into picking an FA who was nice, polite and available.
I have a fair number of clients that are savvy investors. Three of them have MBAs from the University of Chicago in finance! Why do they have me as an FA? Because, according to them, their are their "own worst enemy"...........
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Old 03-28-2013, 10:36 AM   #44
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FD: Thanks for your insights (really).

In retrospect, I probably went overboard in several posts, and I think in terms of this membership when I know the mainstream population is largely otherwise. I guess I should say - folks should read Bogle, Bernstein, lazy portfolios and consider DIY as fees can reduce returns significantly. But if they are still unwilling for whatever reason, by all means get some professional help choosing carefully. Blatant, avoidable mistakes aren't uncommon and can certainly cost more than any FP fees.

And as I mentioned, I have known "DIY" investors who were way over their heads (a little information can be dangerous) acting on CNBC news, hot tips, etc. - and were indeed "their own worst enemies."
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Old 03-28-2013, 10:48 AM   #45
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No matter how savvy or highly educated, some individuals simply lack the temperament, judgment and/or self-control to be good investors. For those who lack these skills, FA's can earn at least a part of their fees through babysitting, hand-holding and talking off the ledge during market downturns.
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Old 03-28-2013, 10:59 AM   #46
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No matter how savvy or highly educated, some individuals simply lack the temperament, judgment and/or self-control to be good investors. For those who lack these skills, FA's can earn at least a part of their fees through babysitting, hand-holding and talking off the ledge during market downturns.
You're right. I guess I have trouble a) remembering this audience is different, and b) figuring out who could DIY successfully, and not. So I shouldn't try...
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Old 03-28-2013, 11:41 AM   #47
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No matter how savvy or highly educated, some individuals simply lack the temperament, judgment and/or self-control to be good investors. For those who lack these skills, FA's can earn at least a part of their fees through babysitting, hand-holding and talking off the ledge during market downturns.
Yes, this is my DH, who I described earlier in this thread.
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Old 03-28-2013, 12:53 PM   #48
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FD: Thanks for your insights (really).

In retrospect, I probably went overboard in several posts, and I think in terms of this membership when I know the mainstream population is largely otherwise. I guess I should say - folks should read Bogle, Bernstein, lazy portfolios and consider DIY as fees can reduce returns significantly. But if they are still unwilling for whatever reason, by all means get some professional help choosing carefully. Blatant, avoidable mistakes aren't uncommon and can certainly cost more than any FP fees.

And as I mentioned, I have known "DIY" investors who were way over their heads (a little information can be dangerous) acting on CNBC news, hot tips, etc. - and were indeed "their own worst enemies."
The life of an FA is not as glamorous as one might think............. Most people are woefully uneducated in basic financial matters. And the scary part is there are a lot of CPAs that are about as clueless.......... I had on CPA rail on me for 10 minutes because his client did not get a 1099 for her investment account, and continued ranting as I calmly explained about 20 times that she was invested in double tax exempt muinicipal bonds..........
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