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Q's you could ask IF you had a financial advisor
Old 11-01-2008, 12:00 PM   #1
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Q's you could ask IF you had a financial advisor

Many folks that post here are their own financial advisor, as am I. I believe that I understand why my numbers are down now, but I also understand that in time (unknown time) my bottom line will be back where it belongs.

These five are rather inane Qs to ask a person that you are paying a 1%-2% fee to manage your stash. What other Qs should an uninformed investor ask to their financial planner?

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You'll see a lot of advertising for bonus CDs, annuities and indexed annuities in particular. Most of these things are safer from a market volatility perspective but come at significant prices people don't understand and wouldn't pay if they were not under duress from the market losses."
http://finance.yahoo.com/banking-bud...ancial-Planner
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Old 11-01-2008, 12:08 PM   #2
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What do you know that I don't already know?

Oh wait - from the article. Gosh, those aren't questions I would ask an FA, since I would never expect the level of devoted service that I give myself free of charge! Oh wait - I do pay myself! By not paying an FA!!!!

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Old 11-01-2008, 12:22 PM   #3
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Oh wait - I do pay myself! By not paying an FA!!!!
Very true, I figure we save almost $6,000 a year in fees and commissions by taking care of our own investments...

The first thing I would ask a FA is "how am I paying you?".
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Old 11-01-2008, 12:43 PM   #4
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I am a DIY'er myself, but thought it would be interesting to ask the five questions of my own financial advisor (me):

1. How have my investments actually performed?
Better than some, but most I would say fall into the "really stinks" category!! Big surpise - - we have had some market difficulties of late. One click to my Vanguard Watch List tells all.

2. How do my investments match my time frame and goals?
Beautifully. In fact, so well that I really couldn't argue with this allocation at all. If the market would just cooperate, we'd all be happier.

3. What adjustments are you making because of this market?
Oh, this one is easy! I rebalanced.

4. How much am I paying for guarantees?
Not one single penny, which is probably about what such guarantees would be worth.

5. How do you plan to keep me updated and answer questions?
Amazingly, I have had no problem in keeping myself updated as to what my own thoughts are about my investments. The internet is a great tool for answering questions.

As for other questions to ask a financial planner, I would ask for basic tax advice and the name of a good CPA for more tax advice. I would ask him if he is fee-based or not, whether he gets money from recommending certain types of investments, and how much ensuing contact by phone would/could be included for the amount he is going to charge me. I would ask what other information he needs from me, and what information I will get from him. I would ask for his credentials, education, and experience. I could go on...
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Old 11-01-2008, 12:45 PM   #5
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Very true, I figure we save almost $6,000 a year in fees and commissions by taking care of our own investments...
Not to mention how much you are saving by avoiding stupid recommendations and gratuitous portfolio churning!

Audrey
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Old 11-01-2008, 01:45 PM   #6
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Q's you could ask IF you had a financial advisor
I'd focus on questions that would be difficult to answer on my own:
1. What did I miss?

2. What am I forgetting?

3. What stupid/misunderstood assumptions have I made?

4. Can you tell me the advantages & drawbacks of all the retirement calculators out there?

5. Can you tell me the advantages & drawbacks of all the financial databases out there, especially the ones that have only been around for 20-30 years?

6. Can you tell me what software does a good job of estimating my quarterly/annual taxes without a lot of detailed data entry, so that I can do more "what if" on mortgage payments, rebalancing, 72(t) withdrawals, and charitable donations?

7. Should I pay off the mortgage or invest the money? I want a two-page summary of all the issues from both a financial and an emotional perspective.

8. Is this the top? Is this the bottom? (Really the same question with different goals.)

9. The market sucks and I'm scared. Can you hold my hand and tell me everything's going to be OK?

And here's one I've heard from the financial advisors: "Holy crap, 90% of my net worth is in company stock, my options are soaking wet, I'm spending all my paycheck on my lifestyle, I've already bought a Ferrari with the bonus that I've just learned I'm not getting, and I might not have a job for much longer. Now what?"
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Old 11-01-2008, 01:55 PM   #7
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1. How much money did you make off of me last year?
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Old 11-01-2008, 03:11 PM   #8
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7. Should I pay off the mortgage or invest the money? I want a two-page summary of all the issues from both a financial and an emotional perspective.
But Nords! We'd be glad to drone on and on about this topic in a few more pay-off-the-morgage-or-not threads for you! Had we only known of your deep thirst for further understanding of the issues...
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Old 11-01-2008, 04:02 PM   #9
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Originally Posted by audreyh1 View Post
What do you know that I don't already know?

Oh wait - from the article. Gosh, those aren't questions I would ask an FA, since I would never expect the level of devoted service that I give myself free of charge! Oh wait - I do pay myself! By not paying an FA!!!!

Audrey

Of course, how could somebody who has guided dozens if not hundreds of people through all the stages of retirement know any more than somebody who has done it ONCE?
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Old 11-01-2008, 04:11 PM   #10
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I'd focus on questions that would be difficult to answer on my own:



6. Can you tell me what software does a good job of estimating my quarterly/annual taxes without a lot of detailed data entry, so that I can do more "what if" on mortgage payments, rebalancing, 72(t) withdrawals, and charitable donations?
This one is easy. Unless you have access to a professional tax package like ProSeries or LaCert (and even if you do) The two best tax calculators are

1. The IRS withholding calculator IRS Withholding Calculator You can just leave the paycheck info blank and it will give you a very good tax estimate.

2. For working stiffs I suggest www.paycheckcity.com
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Old 11-01-2008, 04:11 PM   #11
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Where do your clients keep their yachts?

DD
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Old 11-01-2008, 04:22 PM   #12
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Of course, how could somebody who has guided dozens if not hundreds of people through all the stages of retirement know any more than somebody who has done it ONCE?
Hey - if you can actually find an FA who has done the above at least once without ripping off his clients big time.

That's my basic problem with FAs. It's a position rife with conflicts of interest stacked against the client. I'm sure there are many FAs out there who are wonderful. If you can find one, you are blessed indeed. Unfortunately, the anecdotal evidence strongly suggests that they are way outnumbered by those who are incompetent or downright dishonest.

You have to know so much to avoid a "bad apple" FA or supervise a marginal one, that once you know that much, you also know enough to manage your own money.

Sorry - that may be outrageously bigoted, but that's exactly how I feel about the situation.

Audrey
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Old 11-01-2008, 04:23 PM   #13
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Where do your clients keep their yachts?

DD
Lake Msingo outside of Maryville, MO - it's a very small lake - for very small yacht's.

This thread is a hoot - yesterday got another missive from Vanguard about my 'free financial plan' and advisor available to me cause I have enough there/and they love me for being a long time customer.

Soooo - I need to pick the best questions from this thread. On second thought perhaps not - they might think I'm serious.

heh heh heh - and we all know better than that! .
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Old 11-01-2008, 04:52 PM   #14
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Wait! Wait! Here's some good ones:

What would your recommend for my asset allocation?

What funds or stocks should I invest in? and in which accounts? What's the expected yield? What's the expected expense ratio before your fee?

How much can I withdraw from my portfolio? What's your recommendation for how I withdraw? What can I look forward to in terms of withdrawals in future years?

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That was kinda of fun. Waiting to see what others come up with.

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Old 11-01-2008, 05:06 PM   #15
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1) How did you spend all the money I paid you?
2) When you sell someone a VA inside an IRA, how do you sleep at night?
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Old 11-01-2008, 05:53 PM   #16
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Any advisor who answers the question "is the the top ... or bottom?" with anything other than "I don't know!" should be fired ... he is professing to know the future, which most of us don't.
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Old 11-02-2008, 12:28 AM   #17
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But Nords! We'd be glad to drone on and on about this topic in a few more pay-off-the-morgage-or-not threads for you! Had we only known of your deep thirst for further understanding of the issues...
Oh no no no, that question's merely a screening tool to sort the real FAs from the wannabes...

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This one is easy. Unless you have access to a professional tax package like ProSeries or LaCert (and even if you do) The two best tax calculators are
1. The IRS withholding calculator IRS Withholding Calculator You can just leave the paycheck info blank and it will give you a very good tax estimate.
2. For working stiffs I suggest www.paycheckcity.com
Excellent, thanks. One more reason not to seek out a(nother) FA!

As for those putative FAs who've guided hundreds through all stages of retirement planning... they have to be a mile wide and an inch deep for all their clients, while we only have to be an inch wide and a mile deep on our individual situations. And with the money most of them are charging for advice applied with a very broad brush, you'd think that would include a warranty.
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Old 11-02-2008, 07:20 AM   #18
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I have a great advisor who charges by the hour, doesn't want to manage money for others, and is helpful in discussing the nuances/confirming many of my own decisions. I see him once a year after sending him a spreadsheet with my current allocations. This costs about $300. If you have substantial assets, you need someone to discuss estate tax issues/solutions. This guy has many happy clients.......
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Old 11-02-2008, 11:05 AM   #19
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Excellent, thanks. One more reason not to seek out a(nother) FA!

As for those putative FAs who've guided hundreds through all stages of retirement planning... they have to be a mile wide and an inch deep for all their clients, while we only have to be an inch wide and a mile deep on our individual situations. And with the money most of them are charging for advice applied with a very broad brush, you'd think that would include a warranty.
I don't agree. Would you say that an attorney who during her career had worked on dozens of cases wouldn't be able to know the details of yours. What about an accountant? Most of them (who do compliance work) will do over a hundred returns during a tax season, would they not be able to know the details of their clients?
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Old 11-02-2008, 11:08 AM   #20
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Hey - if you can actually find an FA who has done the above at least once without ripping off his clients big time.

That's my basic problem with FAs. It's a position rife with conflicts of interest stacked against the client. I'm sure there are many FAs out there who are wonderful. If you can find one, you are blessed indeed. Unfortunately, the anecdotal evidence strongly suggests that they are way outnumbered by those who are incompetent or downright dishonest.

You have to know so much to avoid a "bad apple" FA or supervise a marginal one, that once you know that much, you also know enough to manage your own money.

Sorry - that may be outrageously bigoted, but that's exactly how I feel about the situation.

Audrey
Well you are certainly entitled to you opinion. However Amany of the concerns you just listed can be avoided by going to an ADVISOR and not a BROKER. If you want unbiased advice seek advice from a professional who does not hold a FINRA licegnse, for them it would be illegal to get any investment commissions other than the fee you pay them.
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