Independent Financial Advisor in NJ

[ERD50]

I do find it interesting, every time this topic comes up. The number of folks that have little to no experience with a planner, seem to have an opinion...

What does that mean?

I'd be interested also. What does that mean?

So as to not be too obtuse or open ended - I can also say that I have never stuck all my money in a single 'hot stock'. Does that mean I have no credibility to suggest to someone that it would be a bad idea?

I never jumped from the 100th floor of.... oh, you get the idea.

-ERD50

 

[ERD50]

"How did you determine that this advisor gave you 'Value for your money'?

No question that it is an important subject, but that has nothing to do with whether this advisor is good/bad/indifferent."


ERD, all inclusive, but would say the simple monetary measure is against the S&P and BRK.A.

Well, we've been in an 'up' market the past year. So that leaves so many questions. How did you do after expenses? If better, that would indicate you are probably being more aggressive than the 'market' on average. So how will you do in a downturn? Are you relying on this advisor to time the market to get you in/out at the right time? If so, why doesn't he start his own mutual fund, as most of them can't do it?

-ERD50

 

[serie1926]

What does that mean?

Was I not clear?

ERD50, if you're seriously interested in learning about Bill and his team, please drop me a note offline.

 

[Midpack]

Was I not clear?

I wouldn't have asked if it was clear to me...I can think of at least two interpretations.

 

[ERD50]

Was I not clear?

ERD50, if you're seriously interested in learning about Bill and his team, please drop me a note offline.

This is an open forum, we come here to learn/share - no one is going to learn from our PMs. I think it is far more enlightening to openly discuss the general process of determining if an advisor is worth their salt.

For example, if 'Bill' has some secret sauce, how would an individual determine this? Maybe 'Joe' is better? Or worse? Are any of them better than a straight & simple DIY? How can we determine this?

The only thing that seems clear to me is you've been evasive with regards to those issues. Why is that?

-ERD50

 

[tulak]

For example, if 'Bill' has some secret sauce, how would an individual determine this? Maybe 'Joe' is better? Or worse? Are any of them better than a straight & simple DIY? How can we determine this?

Bill Schultheis wrote the Coffeehouse Investor. Basically a book how on how to build a portfolio of index funds. Soundmark is his company where they offer fee-only financial advice. I suspect it's low cost, much like Rick Ferri, but I've never looked at their services.

Compared to what else is out there, you could do a lot worse. It's a place I'd recommend if you have no interest in DIY. At least they'll build you a portfolio of low-cost index funds and handle the rebalancing for you.

Here's his bio:
www.coffeehouseinvestor.com/about-bill/

Disclaimer: I don't know Bill or have any financial dealings with his company. I did read his book though!

 

[FinanceDude]

I suspect you will not believe any empirical evidence I give, but let's try.

Let's assume that bad advisors are employed by the following companies:
Edward Jones
Merrill Lynch
Morgan Stanley
Prudential
JPMorgan
Any bank
Any insurance company
Any actively-managed mutual fund company

So all I have to do is figure out the fraction of advisors employed by the above out of all advisors.
That led me to pull all SEC ADV forms and examine them. I found that more than half of all advisors were bad.

And you define "bad" as what exactly? And, yes, I will believe you if you provide evidence of what is "bad", which is subjective by nature.......

BTW, I work for NONE of the companies mentioned above.........

 

[FinanceDude]

What does that mean?

I think he means that most people on here are quite opinionated as to how bad advisors are, but most of them have never had one.......

 

[MichaelB]

I think he means that most people on here are quite opinionated as to how bad advisors are, but most of them have never had one.......

Dude, that applies to everything. If people limited their opinions only to things where they have knowledge and experience the world would come to an end.

 

[Midpack]

I think he means that most people on here are quite opinionated as to how bad advisors are, but most of them have never had one.......

If you disagree, make your case.

I'll bet you know more FP/FAs than you'd like who give others a bad name, and I am sure it's frustrating. Yes?

• Read Bogle, Bernstein, Schultheis and many others and it's pretty clear.
• 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.
• How is managing a $2M portfolio 10-times more costly than managing a $200K portfolio with the same AA?
• Many DIY investors were first burned by an FP/FA, the stories are not hard to find.
• Many DIY investors have done very well for themselves, enjoying above average net returns knowing they're foregoing the top 20%.
• Just as I don't have to smoke for 20 years to abstain from smoking for health reasons, I don't have to take 20 years with an FP to know better.
• That said, we all know there are FP/FAs who are value added justifying their fees. Unfortunately they are hard to find, thanks to all the people who can't/won't educate themselves.

Just for starters...

 

[obgyn65]

I have one advisor at Edward Jones. She has always been very nice, very polite, and always available. Maybe EJ has offices in NJ?

Dear ERs,
Has anyone used or know an honest and unbiased Financial Planner/Advisor in NJ which they would like to recommend? I'm in the process of rebalancing my portfolio and would like to build a long term relationship with some Financial Planner who I can trust and rely on. I would like to meet someone personally and go over my portfolio now and in future. I looked at Low Fee Investment Manager, Low Cost Investment Advisor | Portfolio Solutions but they're far away. Has anyone used them? Any recommendation?

 

[serie1926]

I think he means that most people on here are quite opinionated as to how bad advisors are, but most of them have never had one.......

FD, thank you!

 

[ERD50]

I have one advisor at Edward Jones. She has always been very nice, very polite, and always available.

Is there any correlation between 'nice, polite, available' and 'competency in financial matters'?

-ERD50

 

[FinanceDude]

Is there any correlation between 'nice, polite, available' and 'competency in financial matters'?
-ERD50

None.........

 

[obgyn65]

My financial advisor is very competent, IMO, yes. Does not mean that we should generalize, this is correct.

Is there any correlation between 'nice, polite, available' and 'competency in financial matters'?

-ERD50

 

[FinanceDude]

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.........

• 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.......

• 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.........

• 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.........

 

[Midpack]

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.

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?

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?

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?

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...

 

[FinanceDude]

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........

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"...........

 

[Midpack]

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."

 

[REWahoo]

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.

 

[Midpack]

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...

 

[Bestwifeever]

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.

 

[FinanceDude]

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..........