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Old 04-21-2008, 01:28 PM   #41
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Maybe he'll do that in a fee-based account, like Vanguard keeps asking me to do with their funds.........
Read the first post, the BIL says he'll waive all fees. To me that would be fee based fees, 12B1 and ER fees. So most likely the BIL can't and is not going to do what he said he would.
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Old 04-21-2008, 01:30 PM   #42
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That's great but Saluki just posted that the 12B1 fees yearly ER fees would continue. So unless the BIL used no load funds there would be no way he could waive his fees and commissions for a family member. I don't necessarily think he should because he should get paid for his experties but he's the one that said he would waive them.
Not true at all, you're distorting what I said.

Most likely he would just use a wrap and waive the advisory fee.
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Old 04-21-2008, 01:35 PM   #43
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Saluki, sorry, that's what I understood by your post.

When you say advisory fee can you explain.

Also can the BIL waive the 12B1 given to him from the mutual fund company?
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Old 04-21-2008, 01:40 PM   #44
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Saluki, sorry, that's what I understood by your post.

When you say advisory fee can you explain.

Also can the BIL waive the 12B1 given to him from the mutual fund company?
Brokers or Fee based advisors earn their money in very different ways. I kinda figured this was common knowledge among informed investors but I can see that it isn't.

A broker (usually somebody with an NASD series 7 license) is somebody who sells investments for a commission. Their only duty is to sell investments that are "suitable" for the client. They have no fiduciary duty to the client. (think of your typical large wirehouse broker)

An Advisor (or adviser depending on who you ask) is somebody who holds a series 65 license and provides service for a fee (usually a % of assets) They have a fiduciary duty to do what is best for the client and are held to very strict standards. They do not sell load funds and instead get money from the stated fee charged to clients. I think it is a much more honest way to do business because the client sees exactly what they are being charged and can decide for themselves if they think it is worth it. It is very easy for an adviser to simply not charge their fee. The client would still pay the underlying fund costs, but would not pay an advisory fee.
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Old 04-21-2008, 01:51 PM   #45
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I'll bet most people here don't know that. I get a mailer at least twice a week from Vanguard begging us to use their funds in our fee based accounts. We get phone calls too.


No to mention the VG ETF dudes calling me all the time.........
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Old 04-21-2008, 01:53 PM   #46
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An Advisor (or adviser depending on who you ask) is somebody who holds a series 65 license and provides service for a fee (usually a % of assets) They have a fiduciary duty to do what is best for the client and are held to very strict standards. They do not sell load funds and instead get money from the stated fee charged to clients. I think it is a much more honest way to do business because the client sees exactly what they are being charged and can decide for themselves if they think it is worth it. It is very easy for an adviser to simply not charge their fee. The client would still pay the underlying fund costs, but would not pay an advisory fee.
In other words, saluki and I do business the way described above, but in different arenas.......
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Old 04-21-2008, 01:54 PM   #47
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In other words, saluki and I do business the way described above, but in different arenas.......
Yeah, but do they buy you lunch?
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Old 04-21-2008, 01:55 PM   #48
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Read the first post, the BIL says he'll waive all fees. To me that would be fee based fees, 12B1 and ER fees. So most likely the BIL can't and is not going to do what he said he would.
Quite an assumption based upon no facts shared by OP.........
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Old 04-21-2008, 01:58 PM   #49
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Saluki, thanks but I knew that.

I just wanted to see whether the BIL was putting him into load funds and waiving all fees or no load funds and no advisory fee. When he says waiving all fees I'd like to know what he meant.
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Old 04-21-2008, 02:17 PM   #50
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Yeah, but do they buy you lunch?
Sadly no, which is a real bummer!

I will say that I severely compromised my independence by accepting a free fleece vest from Barclays iShares. I look pretty sweet in it though
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Old 04-21-2008, 02:29 PM   #51
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Sadly no, which is a real bummer!

I will say that I severely compromised my independence by accepting a free fleece vest from Barclays iShares. I look pretty sweet in it though
So, you can be bought? I got an NCAA basketball in the mail from some guy I nver heard of. I think the kids threw it at the school bus as it rolled by and it got smushed..........
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Old 04-21-2008, 02:40 PM   #52
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Old 04-21-2008, 04:46 PM   #53
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Wow! Looks like I've started a pretty active thread. I'll have to start reading from the beginning and I'll answer people's questions along the way. I'm sure I'll have some additional questions as well. This forum is great!
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Old 04-21-2008, 04:58 PM   #54
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I think that disadvantages are primarily from his perspective. Will I put my wife in an awkward situation with her brother if I suggest investments that don't work out.

In general there are three issues with using a financial adviser
  • Is he competent
  • Is he trustworthy
  • Does his fees justify what I can do on my own.
I think having a family member who is both knowledgeable and willing to help you with investments is terrific benefit. The same way that having a doctor, lawyer, CPA, or Vet in the family is great for if nothing else getting a second opinion.

Of all the silly letters that go behind financial advisers names the only two that should impress an individual investor, are CPA, and CFP in that order. The programs are rigorous and the pass rates for either credential are lower than the bar exam. I have an MBA, 25+ years of successful investing, and I can tell you that would take a full year of study for me to have a chance at passing a CFP. I have yet to meet somebody who has passed the CFP on their first try.

So while a CFP is no guarantee that guy is competent is an indication. Trustworthiness is an issue you will have to judge for yourself.

The final issue is fees, if he waives there is at least a reasonable chance he could make you more money than sticking your money in a couple Vanguard funds.

So my advice is unless your think your sister married, and stupid liar, you should at least listen to his advice. Now I don't think this gets you off the hook about learning about investing, because it is after all your money and your future. But to me 90% of successful investing is A. Saving more than you earn. and B. not doing anything stupid.
I agree, I do need to continue to learn about investing and I also think that its important for me to actively manage my portfolio even if I do decide to work with a financial advisor. Ultimately its my decision on what to do with the money.

I do think that he's trustworthy and that is why I am considering using his services. I would be very unlikely to hire a financial advisor on my own because I would have a hard time finding someone that I trust to look out for my best interests. Also, by the time you add in their fees, I would think that I would do almost as well with a low cost fund such as Vanguard. However, with him waiving his fees, I may be able to do a little better.
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Old 04-21-2008, 05:01 PM   #55
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Ah, I'd argue there is one more designation that one might value, and getting it makes getting a CFP look like a walk in the park. Just sayin'...

To OP:

Given that your BIL is treating you as a family member and he is bound by the ethical standards that go with a CFP, I would be willing to trust him were I in your shoes. It is up to you to judge his competency. More importantly, you should make sure they you see eye to eye with him. Make sure he understands your goals, risk tolerance, etc. and doesn't color outside the lines with your portfolio.

I manage accounts for my parents and my wife's parents, and I manage them A) very carefully and B) with varying risk profiles (all of which are different from my own). It can work out just fine to let a family member help you.
He has mentioned the ethical standards that he is bound to as a CFP in the past and from what I have seen with how he handles other family members' accounts, I believe that he takes this very seriously.
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Old 04-21-2008, 05:11 PM   #56
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Read the first post, the BIL says he'll waive all fees. To me that would be fee based fees, 12B1 and ER fees. So most likely the BIL can't and is not going to do what he said he would.
BIL or the original post didn't say "all" fees. I'm still trying to figure out which ones can and can't be waived and what impact that will have on investment choices and returns. This forum is helpful in coming up with what questions I need to ask him.
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Old 04-21-2008, 05:20 PM   #57
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I'm not missing your point, you are not understanding how things work. BIL of OP can buy LOAD mutual funds at NAV, because he's registered. With some fund families, you can buy at NAV for family members, so he could get American Funds or Franklin or Oppenheimer for NAV for family members. I'm sure NOT everyone on here knows that...........
FinanceDude. This is one of the things that BIL mentioned. What exactly is the benefit of this? Thanks.
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Old 04-21-2008, 08:11 PM   #58
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My brother-in-law is a CFP for a major brokerage firm and currently handles my wife's Roth IRA. I know that many on this forum don't care for Financial Planners due to the high fees and poor performance compared to low cost DIY funds through places like Vanguard. I tend to agree with that perspective, but in this case I think he will look out for our best interests.

He waives the fees for her and will do the same for me as a family member. Obviously there is the issue of mixing family and money, but other than that, are there any advantages or disadvantages to investing through him versus Vanguard? Thanks.
Well, he didn't say some fees either. You said "he waives the fees" to me that would mean that there were none.

After thinking about this I would just put your money in a low cost company such at Vanguard or Fidelity and take the free evaluation and advise that you would get. Your BIL would still be getting his 12B1 fees and you'd be paying higher costs.

Now if that's OK with you that he's getting his fees and you don't mind paying them then use him. Just remember these fees are coming out of your hide.
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Old 04-21-2008, 08:17 PM   #59
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I manage accounts for my parents and my wife's parents, and I manage them A) very carefully and B) with varying risk profiles (all of which are different from my own). It can work out just fine to let a family member help you.
brewer,

Did you offer to manage their accounts, or did they come to you asking for you to manage your accounts?

********************

allwork&noplay,

Same question.

********************

My MIL is convinced that market timing and stock selection are keys to good investing, and I've not been able to convince her otherwise, nor to get her to consider low-cost indexing. It's her money and she's an adult human being, so I've backed off and let her know that if she is interested in discussing finances, I'm there for her.
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Old 04-21-2008, 08:39 PM   #60
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brewer,

Did you offer to manage their accounts, or did they come to you asking for you to manage your accounts?

********************

allwork&noplay,

Same question.

********************

My MIL is convinced that market timing and stock selection are keys to good investing, and I've not been able to convince her otherwise, nor to get her to consider low-cost indexing. It's her money and she's an adult human being, so I've backed off and let her know that if she is interested in discussing finances, I'm there for her.
You asked Brewer, but I will answer anyway. All but one of mine came to me. One I knew was making bad choices so I stepped in to volunteer.
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