Value of a Financial Advisor

[Helen]

SO, you want to meet with a commission-based FP and waste his/her time with no intentions of using them anyways, just to impress your partner? Sounds like a barrel of fun...........

There is someone at Edward Jones who is offering free portfolio evaluations. If s/he is willing then so am I. I doubt that he would feel bad about fleecing me out of my money and I will absolutely not feel bad about fleecing him/her out of their time.

I don't know how a lot of financial salespeople can sleep at night.

 

[CoopersBeach]

I don't trust any FAs. I think the vast majority of them are either incompetent, or dishonest, or both.

My parents have a substantial amount in CDs in a couple of major banks. The "FAs" in these institutions are always calling to offer "investment advice" everytime a CD is about to mature (I'm sure it's probably just coincidence). Based on these advice, they put $150k in annuity even though they are in their 70s and have substantial income from other investments; another $200k in some stupid high-yield bond fund with a large frontload charge and annual expenses; another $100k on this; another $100k in that, etc. Add them all up, and pretty soon we were talking about real money.

When I finally found out about these, I called these banks and told them to f*** off and stop calling and bothering my parents. Now when they go into the bank for a maturing CD, the only decision they have to make is for how long and at what rate to renew the CD. No more unwanted "advice" from anyone else, and no more hard sales, or else we take all the money out. Unfortunatetely they are still stuck with these "investments" that just don't make sense for them, but at least we've closed the door on all the vultures.

 

[FinanceDude]

I don't trust any FAs. I think the vast majority of them are either incompetent, or dishonest, or both.

My parents have a substantial amount in CDs in a couple of major banks. The "FAs" in these institutions are always calling to offer "investment advice" everytime a CD is about to mature (I'm sure it's probably just coincidence). Based on these advice, they put $150k in annuity even though they are in their 70s and have substantial income from other investments; another $200k in some stupid high-yield bond fund with a large frontload charge and annual expenses; another $100k on this; another $100k in that, etc. Add them all up, and pretty soon we were talking about real money.

When I finally found out about these, I called these banks and told them to f*** off and stop calling and bothering my parents. Now when they go into the bank for a maturing CD, the only decision they have to make is for how long and at what rate to renew the CD. No more unwanted "advice" from anyone else, and no more hard sales, or else we take all the money out. Unfortunatetely they are still stuck with these "investments" that just don't make sense for them, but at least we've closed the door on all the vultures.

Most bankers are reps, not FAs. They have a very small platform of products and the bank makes them sell everything with front end loads and long surrender charges........

 

[FinanceDude]

There is someone at Edward Jones who is offering free portfolio evaluations. If s/he is willing then so am I. I doubt that he would feel bad about fleecing me out of my money and I will absolutely not feel bad about fleecing him/her out of their time.

I don't know how a lot of financial salespeople can sleep at night.

You sound bitter about it, why even go? Have your partner meet with him if that's what you want........

 

[73ss454]

Any time you are dealing with someone in sales, most likely they will be doing what's best for them, not you. Especially if it is all commission based.

 

[brewer12345]

I figured you'd get a kick out of that. Most likely the truth though.

Actually, the measure of success is a lot simpler: the advisor is successful if the client meets their goals.

Now those goals have to be reasonable, which may involve some education...

 

[kombat]

Good advisors are the ones which are in it for the people
the 44% of advisors who are in it for the money leave something to be desired IMO

Huh?

Where are all these advisors who get all dressed up in a suit and tie, drive to my house at 7:00 in the evening, and spend an hour talking about life insurance and mutual funds, "for the people?" Why would someone do that - out of the kindness of their heart? Do they view it as some sort of charity?

It seems to me that they're all in it for the money. I don't hold that against them - it's the same reason I go to my job. It's not like I can't think of anything better to do with my time, so I dress up and slog to work at 7:00 in the morning every day (you, know, "for the people"). I do it for the money. Just like everyone else.

I'm not saying it's a bad thing, I'm just saying let's be realistic about it. I have a hard time believing that there are any financial advisors out there doing it "for the people." If they were really doing it "for the people," they'd be recommending low-fee index funds, instead of pushing whole life insurance policies and the high-fee actively-managed funds that generate the biggest trailing commissions for themselves.

 

[Helen]

You sound bitter about it, why even go? Have your partner meet with him if that's what you want........

Why is it a problem for you if I want to educate my partner on the difference between a fee only financial planner and a commission based sales person?

 

[kombat]

If s/he is willing then so am I. I doubt that he would feel bad about fleecing me out of my money and I will absolutely not feel bad about fleecing him/her out of their time.

So two wrongs make a right now? Helen, I think this says a lot more about what kind of person you are than the morals of financial advisors.

While you're at it, why don't you head on down to a car dealership and pretend like you're in the market for a luxury SUV? Take the test drive (make sure you really flog the thing hard, too), waste a couple hours of the guy's time, then laugh in his face and walk out. After all, that snake would've probably tried to sell you rust proofing and an extended warranty, so he deserves it.

 

[kombat]

Why is it a problem for you if I want to educate my partner on the difference between a fee only financial planner and a commission based sales person?

Because you can achieve the same goal without being dishonest and vindictive against an innocent stranger.

 

[RonBoyd]

Because you can achieve the same goal without being dishonest and vindictive against an innocent stranger.

And where's the fun in that?

 

[FinanceDude]

Why is it a problem for you if I want to educate my partner on the difference between a fee only financial planner and a commission based sales person?

I guess if you dislike FAs so much, why put yourself through that? It is none of my business, just curious........sorry if I offended you.......

 

[FinanceDude]

If they were really doing it "for the people," they'd be recommending low-fee index funds, instead of pushing whole life insurance policies and the high-fee actively-managed funds that generate the biggest trailing commissions for themselves.

Some of us do manage money with low-cost alternatives.........

 

[FinanceDude]

Any time you are dealing with someone in sales, most likely they will be doing what's best for them, not you. Especially if it is all commission based.

Kind of like car sales..........

 

[jIMOh]

Huh?


I'm not saying it's a bad thing, I'm just saying let's be realistic about it. I have a hard time believing that there are any financial advisors out there doing it "for the people." If they were really doing it "for the people," they'd be recommending low-fee index funds, instead of pushing whole life insurance policies and the high-fee actively-managed funds that generate the biggest trailing commissions for themselves.

The licenses a person has will change how advice is given and what advice can be given. It's not as simple as you suggest.

If the salesperson has a series 6 or series 7 license (only), they cannot give financial advice for a fee is problem 1. This is by law.

The advice comes from the products they sell (this is how series 7 works- the advice is coming from the products being sold). The standard for the series 7 is only recommend products suitable (based on risk tolerance) for the client. If the index funds had 12b1 fees or loads, then the advisor can sell those products and give advice to the client. Those same fees would raise the costs for all other investors. It's how the industry is set up.

If the client only wants advice, that is the series 65 (different license, different test) and those recommendations are paid for with a fee paid for the financial plan.

 

[Bestwifeever]

I have a feeling that the Edward Jones person Helen is going to would still want to talk to her and her partner even if she told him they already had a plan, rather than not see them at all. I tell business enterprises all the time that we are just looking, gathering information, etc., and reputable ones always say no problem. They know they might still make the sale if we look, but they surely won't if they tell us not to bother them.

A lot of people look at and test drive cars at one dealer and then buy them from another (we have never done that but we are notoriously poor car shoppers/negotiators--we drive it, we buy it). I think the dealers expect that.

 

[Animorph]

How do you define a good job?

Low costs, diversification, and education would be a good start. I wasn't thinking of performance necessarily.

Just like buying a car or getting it repaired. Either you learn something about cars to make sure the sales/repair person isn't just making stuff up or you have to trust them quite a bit. Some times I'm OK with that, but not with my life savings.

 

[saluki9]

I'm not saying it's a bad thing, I'm just saying let's be realistic about it. I have a hard time believing that there are any financial advisors out there doing it "for the people." If they were really doing it "for the people," they'd be recommending low-fee index funds, instead of pushing whole life insurance policies and the high-fee actively-managed funds that generate the biggest trailing commissions for themselves.

I suppose you don't think it's possible for doctors to care about their patients, or attorneys to care about their clients either? The fact that you earn a living from somebody doesn't mean you don't care.

The sad thing is that I've seen a couple good advisors leave the business after the 2007-08 crash, simply because they couldn't stand the emotional toll of worrying about their clients anymore. It's much more common that you think.

 

[Midpack]

I can't remember the exact adage, but 'the problem with finding a good financial advisor is that by the time you know what a good advisor is, you know enough to do it yourself' always made sense to me.

I feel really sorry for the (many) folks who can do neither for whatever reason. And many who think they can, suffer from 'don't know what you don't know' syndrome. I know several at work who repeatedly sell at bottoms and buy at tops. I know others who rebalance weekly, to tenths-of-a-percent!

 

[73ss454]

Kind of like car sales..........

Kinda, but the owners of the dealership pretty much took away any chance of making a living selling cars. Mostly all flats on all the cars and the packs are so high no one can hit them so the salespeople are mostly on the customers side at this point. Do you agree?

 

[John Galt III]

My Dad had an account with Merrill Lynch (I think) for a long time, but got disgusted with the fact that his brokers could never do better than the average market performance. The final straw was when he asked them to give him some sort of statistics on something, and I think the problem was that they just didn't want to take the time to put the numbers together for him. My Dad now has an online investing account of some sort without any actual broker, and says he is doing better without the brokers.

 

[chinaco]

Value of a Money Adviser.... Hmmmmmmmmmm.

Oooh oooh! I know the answer.

Value of a Money Adviser = Their Fees * #ofClients

Some might even try to sell you a Whole Life Policy for good measure!

Which would mean

Value of a Insurance Agent Money Adviser = [Their Fees + Commissions] * #ofClients

 

[pb4uski]

I suggest that you talk with Vanguard. I have used their FA unit a number of times and have found them to be informative and provide good advice. While their process is a bit cookbook and has trouble dealing with some of the intracacies of my personal situation, I have nonetheless been pleased overall. If you have a certain amount of investments with them the service is free and can be refreshed each year.