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Old 02-08-2011, 11:27 AM   #41
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I never thought about this, but now I know that I should have been way more suspicious of that realtor who sold us our land!
Good point! I recall a relator showing me a property when I was in the market for my first house. I go into the back yard and find a set of train tracks. The relator had sold the property as "close to the train station" but never mentioned the train passed within 50 feet of the back yard. When I pointed out the tracks she said "With all of those trees, you won't even hear it."

So yeah, maybe you should be more suspicious of people who are paid to sell you something regardless of whether it is in your best interest.

Edit to add: Incidentally, the property I ended up buying didn't use a realtor or a have a fee. And no, I didn't trust the seller about anything I could verify.
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Old 02-08-2011, 11:34 AM   #42
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Good point! I recall a realtor showing me a property when I was in the market for my first house. I go into the back yard and find a set of train tracks. The Realtor had sold the property as "close to the train station" but never mentioned the train passed within 50 feet of the back yard. When I pointed out the tracks she said "With all of those trees, you won't even hear it."

So yeah, maybe you should be more suspicious of people who are paid to sell you something regardless of whether it is in your best interest.
In my state, the buyer gets full disclosure in escrow of everything within a mile or more that would affect the value/quality of the property. Things like trains and waste dumps and commercial ventures have to be disclosed.

the buyer has to sign off that they are aware of the area and surroundings.
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Old 02-08-2011, 11:43 AM   #43
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In my state, the buyer gets full disclosure in escrow of everything within a mile or more that would affect the value/quality of the property.
I don't think New Jersey has that law. It sounds like a good one.

But when and how stuff is disclosed is important, too. If the realtor says "I have this property with a train running through the back yard, I can show it to you if you want, but the tracks are really close. Do you want to see it?" The answer is most likely "no". So what they do instead is they walk you through the front door and try and get you invested in the kitchen, and the curb appeal, and whatever else there is that might get you excited. Only when you're on the hook do you hear, "there is just this one small thing you should know."

A relator on salary may take the first approach which is good for the customer but not so good for the company. A relator on 100% commission is going to be hard pressed to survive long doing the same.

Of course it's pretty clear that train tracks running through the yard is a bad thing. It's far more difficult to determine whether a complicated annuity product is. And therefore it is far easier for the seller to play up the kitchen and downplay the train tracks. But I'm sure that rarely happens, I'm just paranoid.
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Old 02-08-2011, 12:02 PM   #44
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I don't think New Jersey has that law. It sounds like a good one.

But when and how stuff is disclosed is important, too. If the realtor says "I have this property with a train running through the back yard, I can show it to you if you want, but the tracks are really close. Do you want to see it?" The answer is most likely "no". So what they do instead is they walk you through the front door and try and get you invested in the kitchen, and the curb appeal, and whatever else there is that might get you excited. Only when you're on the hook do you hear, "there is just this one small thing you should know."

A relator on salary may take the first approach which is good for the customer but not so good for the company. A relator on 100% commission is going to be hard pressed to survive long doing the same.

Of course it's pretty clear that train tracks running through the yard is a bad thing. It's far more difficult to determine whether a complicated annuity product is. And therefore it is far easier for the seller to play up the kitchen and downplay the train tracks. But I'm sure that rarely happens, I'm just paranoid.
In your world, EVERYONE should be on a salary, however, WHO would bring in the revenue to pay those salaries? Let's get rid of ALL salespeople in the USA, outlaw them, and see how long the economy takes to grind to a halt...........
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Old 02-08-2011, 12:08 PM   #45
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In your world, EVERYONE should be on a salary,
No, what I'm saying is that I'm not going to trust someone who gets paid to sell me something. If I can avoid dealing with that person, I will. If I can't, I will try to corroborate whatever I'm being told by an independent source. The amount of effort I dedicate to getting that information is a direct function of the importance of the transactions. If I'm buying sneakers then I'm going to dedicate zero time to avoid falling for a sales job. But if we're talking about my entire financial future, there is almost no amount of time that is too great.

Maybe it's worth knowing, maybe it's not, but I too made a living selling financial advice. Not as a FA but as a sell side analyst. So I understand first hand the conflicts that exist and the effects they have on the kind and quality of advice given to both retail, and in my case, institutional investors. So to the extent you feel like I'm casting aspersions on your career, rest assured, I'm casting them on my own as well.
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Old 02-08-2011, 12:10 PM   #46
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How was he wrong? If he put you in Vanguard funds was he giving value? No he was not..........
I'm not sure how to take this? If it's sarcasm, I don't get it. A lower fee with no load is significant value over the other fund, especially with pretty much equal returns over time. If it's not sarcasm, it's about the best proof of what I said about justifying conflicts of interest that could ever be made.

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I never thought about this, but now I know that I should have been way more suspicious of that realtor who sold us our land!
You should absolutely be suspicious of realtors. Their main interest is in closing the deal. If it costs you an extra $30K because they influence you to buy quickly, that only costs them $900. Not a big deal for them, but huge for you.

As far as your farmer or any other salesman, sure, be suspicious of their sales pitch too. But they likely can't do as much damage to your wallet as a FA or a realtor. Unless those are REALLY expensive steaks.
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Old 02-08-2011, 02:11 PM   #47
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I'm not sure how to take this? If it's sarcasm, I don't get it. A lower fee with no load is significant value over the other fund, especially with pretty much equal returns over time. If it's not sarcasm, it's about the best proof of what I said about justifying conflicts of interest that could ever be made.
Vanguard exists for the DIY. If you want to DIY, do it an Vanguard or somewhere like that. Not everyone needs or wants an FA, but some do. It never ceases to amaze me how little folks on here know about the FA business, but act as if they do...........

So, say I offer customized fee-based Vanguard ETF portfolios for my clients at 50 basis points a year, are you in?
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Old 02-08-2011, 09:25 PM   #48
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Looks like I killed this thread..........
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Old 02-08-2011, 09:27 PM   #49
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Looks like I killed this thread..........
A terrible loss.
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Old 02-08-2011, 09:28 PM   #50
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A terrible loss.
Not really............
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Old 02-08-2011, 10:03 PM   #51
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Vanguard exists for the DIY. If you want to DIY, do it an Vanguard or somewhere like that. Not everyone needs or wants an FA, but some do. It never ceases to amaze me how little folks on here know about the FA business, but act as if they do...........

So, say I offer customized fee-based Vanguard ETF portfolios for my clients at 50 basis points a year, are you in?
I am not sure what the rate might be but why not FA by the hour maybe $400 or so. It can't take but a few hours to figure out where folks are going and perhaps an hour a month beyond that.

Actually if it were me brokers would be all turned into Vanguard or Schwab, no brokers just customer service types. Also would seperate market makers from brokers as they did in the UK before the big bang there.
So you would have salesmen, brokers, jobbers (specialists) and advisors, and you could only be one of them at a time.
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Old 02-09-2011, 07:27 AM   #52
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I am not sure what the rate might be but why not FA by the hour maybe $400 or so.
That was my thought. 50bp annually to put together a list of Vanguard ETFs is over the top expensive. The NPV for someone with a $500K portfolio over 10 years is ~$30,000. More if they add to the portfolio. That's $30K, enough to pay for a year of college tuition or a decent car, for a list of maybe 8 funds - most of which will be selected through boilerplate asset allocation. Yikes.
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Old 02-09-2011, 09:40 AM   #53
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I am not sure what the rate might be but why not FA by the hour maybe $400 or so. It can't take but a few hours to figure out where folks are going and perhaps an hour a month beyond that.

Actually if it were me brokers would be all turned into Vanguard or Schwab, no brokers just customer service types. Also would seperate market makers from brokers as they did in the UK before the big bang there.
So you would have salesmen, brokers, jobbers (specialists) and advisors, and you could only be one of them at a time.
Ok here's what you get for $400.

1) pay off those credit cards and get real about saving for retirement

2) You are spending way way too much

3) You are saving way way too little

4) here's the allocation of funds you should use in equal portions: (Vanguard's Total Stock Market, Vanguard Total Int'l Stock Market, Vanguard Total Bond)

5) Write a will

6) Get all the life/health/liability insurance you need


- Now wasn't that easy.
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Old 02-09-2011, 09:50 AM   #54
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That was my thought. 50bp annually to put together a list of Vanguard ETFs is over the top expensive. The NPV for someone with a $500K portfolio over 10 years is ~$30,000. More if they add to the portfolio. That's $30K, enough to pay for a year of college tuition or a decent car, for a list of maybe 8 funds - most of which will be selected through boilerplate asset allocation. Yikes.
NM..........
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Old 02-09-2011, 09:55 AM   #55
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Ok here's what you get for $400.

1) pay off those credit cards and get real about saving for retirement

2) You are spending way way too much

3) You are saving way way too little

4) here's the allocation of funds you should use in equal portions: (Vanguard's Total Stock Market, Vanguard Total Int'l Stock Market, Vanguard Total Bond)

5) Write a will

6) Get all the life/health/liability insurance you need


- Now wasn't that easy.

Thanks! Now who should I make that $400 check out to?
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Old 02-09-2011, 09:58 AM   #56
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Thanks! Now who should I make that $400 check out to?
MasterBlaster @ paypal.com

And check back regularly to make sure that you are on-track. I'll give existing customers a 10% discount.
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Old 02-09-2011, 09:58 AM   #57
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I never thought about this, but now I know that I should have been way more suspicious of that realtor who sold us our land! And all those other people in my life who benefit when I buy something! Yikes! This conflict of interest thing has some far reaching implications...
In general, this is why spouse and I end up doing so much DIY. It's way too hard to find someone whose interests line up with yours, especially when their competitors are able to make extra money on the side from those conflicting interests and thus can undercut the prices of those who've chosen to rise above the fray.
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Old 02-09-2011, 11:32 AM   #58
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Ok here's what you get for $400.

1) pay off those credit cards and get real about saving for retirement

2) You are spending way way too much

3) You are saving way way too little

4) here's the allocation of funds you should use in equal portions: (Vanguard's Total Stock Market, Vanguard Total Int'l Stock Market, Vanguard Total Bond)

5) Write a will

6) Get all the life/health/liability insurance you need


- Now wasn't that easy.
In 1980 I paid $250 for this service. Also got advice to: save/invest raises, buy a house, levels of insurance and set up a term life policy that was better than that offered by my employer. Set up some investments and later IRAs in mostly American Funds, yes, they have a load but one of the better fund families.
Today I would not even think of such a service and I think I have better advice for myself but at the time I had no interest or knowledge of things financial and they were worth the fee and got me thinking about financial matters systematically.I would still recommend this advisor to folks who had no interest or ability in managing their own finances.
My MIL uses a FA, DW & BIL know how I am involved with investments and have asked me to manage her portfolio, I refuse, I need someone else to blame and I monitor the agents performance which has been pretty good. So actually I do manage her portfolio, only second hand.
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Old 02-09-2011, 12:27 PM   #59
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My MIL uses a FA, DW & BIL know how I am involved with investments and have asked me to manage her portfolio, I refuse, I need someone else to blame and I monitor the agents performance which has been pretty good. So actually I do manage her portfolio, only second hand.
I have refused to manage various people's investments, suggesting that that a FA would add value (to me) to do so. I don't want a call every time the market burps.
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Old 02-09-2011, 01:01 PM   #60
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I have refused to manage various people's investments, suggesting that that a FA would add value (to me) to do so. I don't want a call every time the market burps.
Ah, yes, the "family whipping boy" billet...
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