Trust Me I'm Not a Financial Adviser

[saluki9]

Double yikes. 19 pages of discipline and only one dismissed complaint!

The NASD falls somewhere between the mob and Al Qaeda in their leniency

 

[elroy]

With pension systems going the way of the "dodo birds", and the lack of trust with the mostly "dodo birds" wanting to help you manage there your own retirement savings plan how in the heck can you win if your an average joe. Do we need additonal, dare I say it, goverment regualtion or forced savings accounts? Shoot, the govement can't even keep SS solvent. I see a storm a brewin'. Its already effecting my spelling

elroy

 

[riskadverse]

My idea of a warranty doesn't involve arbitration or a courtroom.

 

[audreyh1]

With pension systems going the way of the "dodo birds", and the lack of trust with the mostly "dodo birds" wanting to help you manage there your own retirement savings plan how in the heck can you win if your an average joe.  Do we need additonal, dare I say it, goverment regualtion or forced savings accounts?   Shoot, the govement can't even keep SS solvent. I see a storm a brewin'.  Its already effecting my spelling

elroy

It seems like money management - LBYM, managing credit, basic investment information, taxes, etc. - should be a required high school course. I really can't believe it's not taught. This is really the only hope for the "average joe".

Once you are past that, I don't see how anything can force people to live below their means or save or make wise investing choices. As long as it's socially acceptable to be clueless about money management and investing, a lot of people are going to avoid the responsibility.

It's too bad, but that just seems to be the way it is.

Audrey

 

[frayne]

It seems like money management - LBYM, managing credit, basic investment information, taxes, etc. - should be a required high school course.  I really can't believe it's not taught.  This is really the only hope for the "average joe".

Once you are past that, I don't see how anything can force people to live below their means or save or make wise investing choices.  As long as it's socially acceptable to be clueless about money management and investing, a lot of people are going to avoid the responsibility.

It's too bad, but that just seems to be the way it is.

Audrey

Well said and so true !

 

[larry]

Would most people be better off just investing in index funds? Obviously. But there are an awful lot of people out there who are not financially educated and are terrified at the thought of taking responsibility for this stuff. I personally think there is a crying need for ethical, reasonably-priced advice that is not driven by commissions. There are already plenty of advisors out there who probably dispense reasonable advice, but many of them are quite expensive and they tend to suggest hgh cost investment options.

I agree and want to add that I personally could never sell financial products because of the fact that I don't believe in selling a loaded product when it wouldn't benefit the client.

My sales spiel would probably go something like this, "So Mr. Jones, do you have 3-6 months of rainy day funds? No? Then perhaps you should try to build that up before we meet again!" Then after Mr. Jones has built up his savings (1-2 years later), "Mr. Jones, are you contributing to your 401k and IRA? No? Perhaps you should do that before we meet again."\

You see my point? If people were to simply act then there would be much less need for planners. In my opinion, people are generally lazy and will procrastinate until they are forced to act. That is why this board doesn't have 100 million members.

Education (teaching a man to fish) is the best answer for our future.

 

[Nords]

It seems like money management - LBYM, managing credit, basic investment information, taxes, etc. - should be a required high school course.  I really can't believe it's not taught.  This is really the only hope for the "average joe".

I don't really understand the urge to have the government provide our kids' education. I may struggle a little with T-1 helper cells' role in the immune system's response to fighting infection or the basics of polymerase chain reaction systems in DNA analysis, but any parent should be capable of teaching their kids the basics of financial management just as they should be capable of teaching them how to use a toilet. And luckily my spouse likes that biology stuff as much as she lets me handle the computer topics.

Our kid is taking the 8th-grade business course and she says it's a sorry rehash of everything they did in 4th grade. Personality tests, career assessments, how a company is organized... so I offered to teach her how to read a financial report. Got my bluff called, too.

 

[free4now]

Costs a quarter of retirement income or more.

Nearly all non-fee financial planners end up increasing your investing cost by at least 1% of assets per year versus thrifty DIY.  This reduces your SWR from 4% to 3%.  Actually it's even less if you include the effect of the fees during accumulation phase.  Some FPs charge 2% or even 3% total, making your SWR 2% or even 1%.  

There are people who can't do it themselves and therefore have to content themselves with 1-3% SWR with financial planners.   Or more likely they will take 4% or more on the advice of the FP and have a good probability of going bust.

But for those of us who can do it ourselves and get 4% SWR, we wouldn't consider giving a quarter of our retirement income to a financial planner.    That would be like working every Saturday and some of Sunday all our working lives just to pay the FP.

 

[justin]

I could see a role for more required disclosure in the "financial advisor" industry regarding the advisor's lack of fiduciary duties.

I think people go to financial advisors (which are really salespeople) expecting an advisor who has a fiduciary duty to act in their clients' best interests. No such duty exists. The FA has very wide discretion to line his own pockets through sales fees and commissions. For example, why would an FA ever advise a client to buy an index fund with a high expense ratio and sales load when they can get the exact same thing from fidelity or vanguard for a fraction of the cost? Why would an FA put clients in Fidelity Advisor funds (with the sales loads and fees) when the same Fidelity funds are available without the sales loads and high fees?

People naively assume that there is a relationship built on trust between a financial advisor and his clients, much as one assumes a doctor, dentist, or lawyer has their client/patient's best interests in mind.

A disclosure statement along the lines of "I do not have a duty to act solely in your best interests when I provide financial advise. My compensation as a financial advisor comes from the products I sell to you that may be available in a more cost-effective manner elsewhere. I may recommend funds or products where the primary interest is the compensation I will receive from the fund or product and the secondary interest is for you, my client, to receive an acceptable rate of return."

Wishful thinking :

 

[audreyh1]

I don't really understand the urge to have the government provide our kids' education. .... any parent should be capable of teaching their kids the basics of financial management just as they should be capable of teaching them how to use a toilet. 

Well, seems like we as a society think kids need to go to school to get the basics of reading, writing and arithmetic - the skills considered important to getting and holding a job and being a citizen - so money management should factor in as an important topic too. We don't rely on parents to give their kids a basic education, and for some kids with illiterate parents, they would be left out in the cold. Seems like a large majority of parents are illiterate today when it comes to money management skills and their kids have no one to learn from.

Of course, there is probably a stronger societal agenda to keep people ignorant about money management, so that you have workers trapped by their over consumption and lots of people eager to take on too much credit and work for the rest of their lives. Unfortunately I believe this agenda actually exists and would discourage any attempt to educate the general public to live below their means.

Audrey