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Old 07-07-2009, 09:29 PM   #21
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When I worked for Megacorp a FA review of retirement goals and means was offered to go along with their 401K plan. After an extensive questionaire and interview the veredict came back that my planning for "Financial Independence" as they called it was right on track and they wouldn't suggest any meaningful changes. I went ahead and ER'd shortly thereafter and here we are 7 years later still enjoying ER. I must say that the "validation by experts" was comforting enough to where my wife also felt good about taking this big step.
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Old 07-07-2009, 10:30 PM   #22
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We used one briefly to do an independent reality check to see if we were on plan.

Someone else said it- 'no one cares about your money like you do".

I think they can add value, but when mine started suggesting I should consider an annuity, I knew it was time to cut the cord.
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Old 07-07-2009, 11:00 PM   #23
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Well, if you are an FA, here's how to keep your clients:
What’s More Important? Client Retention or Academic Theory
Thanks. That piece has advice that will help FA's, but I'm not sure it will do much for their clients. Summarized: "As an FA, your objective is to keep your clients. Do this by finding out what your clients want to do and then advising them to do that. Don't try to influence them with information gained from actual research."
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Old 07-07-2009, 11:05 PM   #24
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Well, if you are an FA, here's how to keep your clients:
What’s More Important? Client Retention or Academic Theory
How many years were YOU an FA?
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Old 07-07-2009, 11:08 PM   #25
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Most intriguing part of the piece:

Given time and resources the most productive research for money management should be done with an eye toward teaching us how to manage more consistently with personality styles. Instead, we secretly go about trying to change personalities to be consistent with proven investment theory. This is one reason why target-date and retirement type funds will not work. They are created on the supposition that investors will buy into the assumptions behind the funds. Most attempt to change investment behavior through reallocation of the asset mix during certain periods of life and totally ignore the fact that the investor will likely reject these funds due to inadequate investment results within short periods
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Old 07-07-2009, 11:21 PM   #26
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Given time and resources the most productive research for money management should be done with an eye toward teaching us how to manage more consistently with personality styles.
They should just cut to the chase and recommend the appropriate asset allocation for a left-handed INTJ engineer...
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Old 07-08-2009, 10:06 AM   #27
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They should just cut to the chase and recommend the appropriate asset allocation for a left-handed INTJ engineer...
I'll start giving a Myers-Briggs test to all my new clients........

When I started in the business, the "old advisor" in my branch (40 years+) gave me this sage bit of advice: "There are four kinds of folks you DON'T want as clients, engineers, doctors, lawyers, and teachers"........
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Old 07-08-2009, 05:48 PM   #28
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Thanks everyone...I am kinda distrustful of FAs in general so I definitely wouldn't let one run the show. Its starting to seem like unless I just want a third party sanity check (which right now I don't, but may in the future as I get closer to FIRE-ing) it would be pretty much a waste of time and $ to consult with one.

Thanks again everyone!
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Old 07-10-2009, 12:13 AM   #29
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I don't use an advisor, but IMO an advisor's role is less about getting you good returns (they will get what the market gives them), and more about keeping you/us from making stupid mistakes.

Case in point? My MIL and husband had bought EE savings bonds all their lives as investments, they were afraid of the market. They were lower middle class, and did not accumulate much for retirement (they retired in about 1995 with about $90,000 of savings in EE bonds and a couple small pensions).

The husband died. MIL took all the savings bonds to the bank and cashed them all at once. Then she was shocked when she had the CPA do her taxes, only to find out she had inadvertently placed herself in a wealthy tax bracket for that one year, thus wiping out a large portion of her bond money.

IMO those are the types of things advisors are good for. Another example is that if you leave a job and want to roll over your 401k, they will tell you to not cash the check, safer to simply sign it over to the new 401k to avoid the penalties/fees. Many people are unaware of this.

Lots of similar examples.
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Old 07-10-2009, 02:08 AM   #30
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A dad we know through our kids' school functions is a financial advisor for one of the major brokerages. I talked to him a couple of times and he wanted me to turn our portfolio over to him (2% per year charge) and for that fee he would not actually manage our money but find someone (a golf buddy?) to manage it for us (another 1-2% charge!). I had a hard time believing he was really even serious or that he would actually have other clients. But he lives in an expensive home and we have a mutual friend who uses him as her financial advisor so I guess he really does get at least some clients. His portfolio manager would have to get returns of 3-4% over index funds in order to cover their fees, and have even higher annual returns to actually come out ahead of index fund returns.

I ended up talking to a few other people at the local brokerages, and most seemed more like sales people than actual financial advisers. I never went to a fee only financial planner. I ended up just buying several hundred dollars worth of books on taxes, small business structures, investments, etc. from Amazon and for me because I like to read and do my own research that was the right way to go.

We have also had a retirement plan done by Fidelity, but I think the one I did on my own was more accurate for us. Fidelity pushes what they make money on and not things like TIPS, which make sense for a lot of people. But it was still good to hear what the guy at Fidelity had to say and to compare the numbers I came up with on my own to his.
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Old 07-10-2009, 04:47 AM   #31
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I'll start giving a Myers-Briggs test to all my new clients........

When I started in the business, the "old advisor" in my branch (40 years+) gave me this sage bit of advice: "There are four kinds of folks you DON'T want as clients, engineers, doctors, lawyers, and teachers"........
I think early retirees would be near the top of the list as undesirable clients.
I am sure poor people wouldn't be any good.

So other than stupid rich people, who are good clients for FAs?

I couldn't figure out the answer to the question so I stopped trying to become one.
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Old 07-10-2009, 10:06 AM   #32
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Hi,

I have a question for everyone...I'm wondering how many people on here have used a financial advisor to help with retirement planning, either during the accumulation phase or prior to FIRE-ing to come up with their plan for how to draw on the money? Or have you done everything on your own?

I'm trying to get a handle on how useful their services/advice would be compared to what I can do on my own with calculators like Firecalc...

Thanks in advance, and Happy Monday to everyone!
Over the last six months I have listened to a dozen FA's. I have no intention of turning over my decisions, but use these opportunities to get a free dinner, and test my assumptions.

I feel that your best advisors are on this board, and also over at Morningstar and Bogleheads.

I look at this as life-long educational opportunity, with significant payout. It is in our best interest to keep looking for good advice, and remain skeptical.
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Old 07-10-2009, 11:16 AM   #33
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I think early retirees would be near the top of the list as undesirable clients.
Not so at all. Our firm works with a bunch of them. Most are great clients, easy to work with, and don't expect us to wear ties
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Old 07-10-2009, 12:01 PM   #34
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I think early retirees would be near the top of the list as undesirable clients.
Most of mine are early retirees, a lot of them from GE.

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I am sure poor people wouldn't be any good.
They could be over time, but rarely listen anyways.......

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So other than stupid rich people, who are good clients for FAs?
So, only stupid rich people use FA's? You need to get out more......
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Old 07-10-2009, 12:03 PM   #35
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Over the last six months I have listened to a dozen FA's. I have no intention of turning over my decisions, but use these opportunities to get a free dinner, and test my assumptions.
So, you're a mooch..........

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I feel that your best advisors are on this board, and also over at Morningstar and Bogleheads.
hey, its your money.......

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I look at this as life-long educational opportunity, with significant payout. It is in our best interest to keep looking for good advice, and remain skeptical.
Remain skeptical no matter WHERE you get advice from. Pretty hard to sue an anonymous person on the Internet if their advice blows up your nest egg..........
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Old 07-10-2009, 12:14 PM   #36
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After I sold my business last year, I looked around at various financial advisors and paid a fee-only one for what I hoped would be some advice, but nobody was willing to give any advice. They all just wanted to tell me about the various things I "could" do with the money but they all wanted me to ultimately decide what to do. They also wanted me to lay out my financial goals and plans in detail.

Okay, but I didn't have long term financial plans and specific goals and didn't want to have to come up with them NOW like they all insisted. Also I didn't know what I wanted to do so that's why I wanted to hire an advisor. So it was very frustrating that I couldn't get advice from them. Maybe it was just liability concerns on their part, but to me it wasn't worth the time and money, and some of the newer financial products I did learn about from them I could have found with a little research online.

I wonder if their profession has been "dumbed down" maybe because the vast majority of their customers don't understand even simple mathematics, statistics, and concepts like interest and inflation, so these "personal financial advisors" have their hands full just getting people to do the very basics like understanding they can't spend more than they have, staying within a budget, and putting money toward retirement. All of their standard presentations seemed to focus on that, and for me anyway spent way too much time trying to teach me the "powers of compounded interest" and what inflation was even though I politely told them I knew those things already (engineering and economics background, corporate finance, etc).

Maybe I just picked bad FA's though, who knows. I just don't see what value they add if you already know the basics and know how to research things yourself.
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Old 07-10-2009, 12:33 PM   #37
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After I sold my business last year, I looked around at various financial advisors and paid a fee-only one for what I hoped would be some advice, but nobody was willing to give any advice. They all just wanted to tell me about the various things I "could" do with the money but they all wanted me to ultimately decide what to do. They also wanted me to lay out my financial goals and plans in detail.

Okay, but I didn't have long term financial plans and specific goals and didn't want to have to come up with them NOW like they all insisted. Also I didn't know what I wanted to do so that's why I wanted to hire an advisor. So it was very frustrating that I couldn't get advice from them. Maybe it was just liability concerns on their part, but to me it wasn't worth the time and money, and some of the newer financial products I did learn about from them I could have found with a little research online.

I wonder if their profession has been "dumbed down" maybe because the vast majority of their customers don't understand even simple mathematics, statistics, and concepts like interest and inflation, so these "personal financial advisors" have their hands full just getting people to do the very basics like understanding they can't spend more than they have, staying within a budget, and putting money toward retirement. All of their standard presentations seemed to focus on that, and for me anyway spent way too much time trying to teach me the "powers of compounded interest" and what inflation was even though I politely told them I knew those things already (engineering and economics background, corporate finance, etc).

Maybe I just picked bad FA's though, who knows. I just don't see what value they add if you already know the basics and know how to research things yourself.
Most folks in your situation DON'T WANT to invest themselves, you are different.

If I talk to a prospective client, I find out their background, so I don't look like an idiot. Someone with a finance background, I have an entirely different conversation than another prospect that knows nothing about investing and money.

Two of my best clients both have an MBA from the University of Chicago and are CFOs for major companies. Having a conversation with them about compound interest would have a bad effect.........
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Old 07-10-2009, 12:54 PM   #38
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I shudder to think what a "best client" means to a FA. Goose that lays golden eggs and lets you have them?
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Old 07-10-2009, 12:57 PM   #39
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Our good clients are those that understand that investing is long-term, stay actively involved in their investments and tax planning, and keep their estate plans up to date. Smart people are who we want as clients. It helps if they are reasonable and nice, and are good savers.

I can't speak for the other FAs, but our clients are pretty good folks--no geese that I've seen so far, LOL.
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Old 07-10-2009, 01:04 PM   #40
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I shudder to think what a "best client" means to a FA. Goose that lays golden eggs and lets you have them?
Most rich people are smarter than they get credit for, and are good savers and conservative folks besides. A large number of millionaires and mult-imillionaires use financial advisors......
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