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Old 09-13-2015, 05:10 PM   #61
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Alright, if you want to defend this CFP, a good place to start would be with those expensive bond funds. They have ERs of about 0.5% above functionally equivalent bond funds that are readily available. How can we possibly say they meet the "fiduciary standard" of being in the client's best interest, rather than those of the CFP? I know CFPs do it all the time, but it's not at all in the client's best interest.


And then what will she do? We don't know if these are taxable accounts or not--selling these loser high-fee funds and getting new ones could require that she pay a lot of cap gains taxes. And then she'll get to fight the CFP's efforts to hold on to her account (see the many threads by folks who have struggled to get free of Ameriprise and other CFPs--Lisa99 documented her experience well). Why not just start out on the right foot? The OP is asking the right questions and has shown a willingness and ability to do research. Nothing about this investing is hard--she's one good book and a few hours away from being set to do this herself. I'm not ready to infantalize her and urge that she just go along with the nice man who will take her money and leave her with a bigger mess to clean up. She's a retiree, the 1% fee paid to this CFP will cost her about 25% of her annual withdrawals from her savings--does that seem like a good use of her funds, compared to doing some reading and getting good guidance here? If she spends 20 hours on reading/posting/setting up the accounts, that's quite an attractive payback, and in future years it will take her far less time.

I'm going to side mostly Karluk. I don't think the CFP is charlatan here.
I'm guessing based on the heavy mix of Schwab funds, that he is part of the Schwab adviser network and the ones I've meet have have been pretty sharp.

I look at the the bond funds he is recommending and I think here is a guy who has been listening to all the smart money guys like the ex PIMCO folk (Bill Gross Mohamed A. El-Erian) Warren Buffett who calls Government bonds return free risk. He has figured out away of getting 1/2 of her money into bonds without an exposure to the bubble of US Government and Agency bonds.

The problem the standard portfolio of 50% total stock market and 50% total bond market is the bond portfolio. Total bond market is 70% US government bonds and agency's (e.g. GNMA.Fannie Mae). There is very little upside potential for these bonds and lot of down risk. Interest will rise hopefully in a controlled manner by the Fed. However there is reasonable chance they will rise much more rapidly if for example China needs to raise cash to prop up their stock market, economy and sells there several trillion dollars worth of US bonds. A 4% rise in US government bonds over the next couple of years back to historical interest rates would result in ~20% loss in the Total Bond Market. Her portfolio of international bonds, short-term and unconstrained bonds funds would do much better, my guess is probably only lose 1/2 as much.

Of course it is important to point out the smart money guys, and myself have been wrong about rising government interest rates for many years.

That said I do agree with SamClem 1% of the total assets (assuming we are talking >250K) is entirely too much money to be paying for this advice.
If they were charging $250/hour and gave you a bill of $2,000 I wouldn't be upset.

You can do this yourself and as motivation look at how much that 1% fee adds up to. I see no reason to pay 1% on a long term basis, but I also think you could do worse than stick with his recommendations for the next 1 year.
Stick around read the various recommended books. Then next year give us your result and you'll be in a better position to fire, or cut back the expenses of the CFP.
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Old 09-13-2015, 05:17 PM   #62
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1% never sounds like a lot in the abstract. However, remember that around here we fight about what constitutes a safe withdrawal rate from a portfolio in retirement. Many say between 3 and 4% approx. That is folks take 3 to 4% of their portfolio each year to live on. If you are conservative and are taking 3% then the CFP is getting $10000 a year EVERY YEAR for every $30000 you get. If you had a million dollars then you would paying him approx $200,000 over the next 20 years.

And all he did was chose some mutual funds for you.


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Old 09-13-2015, 05:29 PM   #63
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He has figured out away of getting 1/2 of her money into bonds without an exposure to the bubble of US Government and Agency bonds.
It's generous to ascribe his selections to anything but self interest. But, okay, let's say this guy is trying to avoid USG bonds (the safest investments in the world, as far as risk to capital, but let's put that aside and decide that reaching for extra yield in bonds is a good idea in the case of this retiree). Could you put together a high-grade corporate bond portfolio of MFs or ETFs with fees less than these .80% - .98% ERs? I know you could. Me, too, in about 15 minutes. And the fees would be a LOT less. So, let's hear how this guy is a good egg. He's absolutely not putting her interests first, and that's what he's supposed to be doing.
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Old 09-14-2015, 05:27 AM   #64
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Bond Funds in Retirement

"In fact, most of our account is currently in cash and is in the process of being transferred to the CFP."

Now you are scaring me... I assume you would have an account with a nationally known investment firm? If you invest with vanguard the accounts are in your name and available for your review and modification a couple of laptop clicks away.

Call me crazy but I don't give my money to anyone.., now I'm sure this CFP is legit but I'm just not comfortable with people holding my money. Yeah I know not everyone is Bernie Madoff but they could be. Sure people have done it for years without a problem - but some have and it was terrible.
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Old 09-14-2015, 05:43 PM   #65
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"In fact, most of our account is currently in cash and is in the process of being transferred to the CFP."

Now you are scaring me... I assume you would have an account with a nationally known investment firm? If you invest with vanguard the accounts are in your name and available for your review and modification a couple of laptop clicks away.

Call me crazy but I don't give my money to anyone.., now I'm sure this CFP is legit but I'm just not comfortable with people holding my money. Yeah I know not everyone is Bernie Madoff but they could be. Sure people have done it for years without a problem - but some have and it was terrible.
GoldenMom. I'm scared too. Your account is in cash and being transferred to a CFP. " RED FLAG!" Appears your CFP is in a hurry to get your money before you change your mind. (get informed).

If you can, stop the transfer.. Listen to Sam Clems advice. Stop talking to the CFP. Everything "CFP" says is biased.

There is no rush. Learn before you make any cash moves. As many have
already said, Vanguard, is nationally known, low cost fund company.

Glad you are asking for advice. PLEASE TAKE THE ADVICE!!!
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Old 09-14-2015, 05:54 PM   #66
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The 401K rollover cash arrived at Schwab today. I called Vanguard to open our account and we called Schwab together to check on what is in my accounts. I asked them to put a restriction on any buying while we were opening/transferring funds to our Vanguard account and they said they would put a restriction on the accounts. Vanguard is sending me paperwork for my new account and fund transfer form and when they talk with my husband they will get his paperwork sent. He is out of town working all week. Too late to stop the transfer, but I have told CFP twice in emails and on phone there is to be no trading at this time. I will reiterate this again on the phone tomorrow. Not sure what else we can do as we will need to complete and return forms to Vanguard. Ideas?
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Old 09-14-2015, 06:31 PM   #67
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Hope they do not charge you a 1% annual fee?

Good luck.
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Old 09-14-2015, 09:03 PM   #68
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Not sure what else we can do as we will need to complete and return forms to Vanguard. Ideas?
If all your funds are at Schwab now, you could call them and modify the account so that the CFP is no longer authorized to trade on your account, see balances, act as your agent, etc. He has no need to do any of that at this point, and it's just a bad idea to allow >any< person to have access to your funds without good reason. He doesn't have a reason any more.

You'll want to arrange the transfer to Vanguard so that they "pull" the money from Schwab, not so that Schwab (or your CFP, especially) "pushes" the money to Vanguard. Neither your CFP nor Schwab has any particular interest in seeing your money leave, and so sometimes it seems to take a while to get these things done if a person arranges things so that the "losing" party has to move the money.

BTW, since all your funds are in IRAs, it will make arranging your asset allocation simpler. If you had a mix of IRAs and "regular" after tax accounts, there would be some value in preferentially putting "tax inefficient" assets (e.g. bonds) in your IRA and putting more tax efficient assets (e.g. stocks) in your regular accounts. But, all your accounts are in IRAs, so this won't be a further complication. (If what I wrote above doesn't make sense to you now, don't worry about it. There's a quick primer at this link. But the "takeaway" is that the simplicity of your situation is one more thing that argues for your ability to handle all the management of these funds by yourself--soon).

Another thing: Will you be wanting/needing to see your husband's Vanguard accounts, set up automatic bank transfers on his accounts, etc? If so, talk to Vanguard about sending the paperwork so that you can do this (and so that he can do the same in your accounts, if desired). Yes, as a practical matter you could just share passwords to your online accounts with your husband, but if you get appointed as his "agent" everything is "legit" and if you need to call and ask for help over the phone about his money, Vanguard will talk to you.
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Old 09-15-2015, 11:44 AM   #69
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I would like to take the opportunity to compliment the members of this forum who participated in a most effective hatchet job on OP's CFP. I see that the slander has progressed to the point of accusing said CFP of being a thief, apparently based on no more substantive an issue than OP's transferring money to a Charles Schwab brokerage! I wonder what a Schwab spokesman would have to say if he happens to see this thread?
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Old 09-15-2015, 11:59 AM   #70
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Reading all the entries in this thread, I see mostly reasonable and well-intended posts offering helpful and proactive investment advice to Goldenmom. This thread could be useful for other current and future members if it continues along that line.
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Old 09-15-2015, 12:06 PM   #71
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Wow, missed all this. Interesting.

Hi Golden, I'm a CFP, and glad to have the chance to at least defend my ignoble profession for a few minutes.

So your IRAs are now at Schwab, in cash. That's a fine place for them to be while you get your ducks in a row, investment education wise.

You will want to put in writing to your advisor that you want your accounts to remain in cash for a little while, and to make no purchases. He will most assuredly not want to go against your written wishes.

Once you've confirmed that the IRAs will remain in cash, you can do some comparison shopping among the various places. Schwab is the custodian (that's the industry term for where your IRAs "live") we use, so I'm very familiar with their offerings.

Many of the stock and bond funds you may wind up purchasing can be bought right there at Schwab, if you wish, there is no need to move the funds to another custodian, unless you have a compelling wish to do so. So you could buy Vanguard, Fidelity, Oakmark, or whatever funds through their platform. Again, that is if you wish to keep them there rather than move to Vanguard or wherever.

Many of my fellow ER forum folks are incredibly savvy DIY investors who have spent decades in some cases learning about investing and are extremely comfortable with their level of experience and their subsequent choices of investments.

I recognize there are people not quite at this level, myself included, who are always going to be a little less confident in our choices, and I for one always want to be learning more, for my own investing purposes and for work. Please don't be worried that you have so much catching up to do--once you get into learning more about investing, it can actually be fun!

And welcome to the forum, which certainly contains a hefty share of opinions!
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Old 09-15-2015, 12:12 PM   #72
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Reading all the entries in this thread, I see mostly well-intended posts offering helpful and proactive investment advice to Goldenmom. This thread could be useful for other current and future members if it continues along that line.
Sorry, MichaelB, but I don't agree at all. To me the tone of this thread is that, no matter how highly rated the investments are that a CFP recommends, he is certain to be accused of being a "charlatan" at best, a thief at worst, unless every single one of his recommendations is a low cost index fund. I consider that anyone reading this thread in the future will think twice about trusting any financial advisor, even one acting as a fiduciary, because of course "everyone knows" that even fiduciaries are all out to line their own pockets at the expense of their clients.

Sorry again for speaking up, but if this thread were representative of the kind of investment advice that one commonly sees on er.org, I would consider that this would be the last place I would go to find objective financial feedback.
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Old 09-15-2015, 12:46 PM   #73
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Sorry, MichaelB, but I don't agree at all. To me the tone of this thread is that, no matter how highly rated the investments are that a CFP recommends, he is certain to be accused of being a "charlatan" at best, a thief at worst, unless every single one of his recommendations is a low cost index fund. I consider that anyone reading this thread in the future will think twice about trusting any financial advisor, even one acting as a fiduciary, because of course "everyone knows" that even fiduciaries are all out to line their own pockets at the expense of their clients.

Sorry again for speaking up, but if this thread were representative of the kind of investment advice that one commonly sees on er.org, I would consider that this would be the last place I would go to find objective financial feedback.
I don't know what you mean by the "tone" of this thread. It is just a bunch of anonymous strangers giving their own personal opinions on the subject. And as I read it, most of the posters do not assume the CFP is a charlatan, but rather question if the expense makes any sense.

For example I said in my post 58:
"I don't think the question is whether the CFP is a charlatan or not, but rather does the added extra expense for his/her recommendations make sense.
...
When the expected long term return may be somewhere around 4%, why would you want to give 1.65% to your adviser. You are giving more than 40% of your income to your CFP! Now does that make any sense?
...
This is really not rocket science."

These are the opinions of various anonymous strangers. The "tone" as you say it, is just what you make of it, or what posts you want to single out.

The reader has to take them, collectively or individually for what they are worth, and in the end make their own judgement.
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Old 09-15-2015, 01:22 PM   #74
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CaliforniaMan, I willingly acknowledge that some of the posts in this thread were helpful and avoided gratuitous ad hominem attacks on the CFP. Yours was one of the them, and I apologize if my criticism of this thread as a whole comes across as unfairly including the helpful posts.

But I stand by my criticism of the thread as a whole. Somehow er.org has allowed too many posts in this thread to slander the CFP without any supporting evidence whatsoever. There are lots of places on the internet where lies and slander are the norm. I expected more from er.org.
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Old 09-15-2015, 01:24 PM   #75
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I have accounts at a few different brokerages, including Schwab and Vanguard. Schwab is a fine place to keep my money, and they have some index funds with even lower expense ratios than Vanguard equivalent funds.

I have had my accounts at Schwab for decades vs only a few years with Vanguard. So my opinion may be biased, but Schwab's service is better for no more money.

Vanguard is also a fine place to keep your money, but I do not see it as "the" place.
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Old 09-15-2015, 01:32 PM   #76
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Goldenmom is asking for advice. It might help if we alert her that many (not all) forum members achieved financial independence without the help of financial advisors and believe others can do the same. They believe the costs of professional help are not offset by the portfolio design or fund selection. The advice they give is “how to DIY”, or invest without paying for an FA.

Other members feel not everyone is geared up to be a successful investor, and for them FA’s play a meaningful role. Their advice in this thread would be how to choose the FA, and how to manage the relationship and how to measure their helpfulness.

Both of these views are legitimate, right for some folks and not for others. Goldenmom, and others, are best served by people advocating the positive aspects of one of these views and providing specific suggestions to implement. There is no one right view, so let’s not get into a catfight unnecessary dispute that does not help the OP. Let's instead focus on giving the advice each of us feels most appropriate for her situation.
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Old 09-15-2015, 01:41 PM   #77
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There is no one right view, so let’s not get into a catfight.
I am completely at a loss to see how you characterize anything in this thread as a "catfight". The question is simply what is the responsibility of the moderators. This thread contains frequent posts slandering the integrity of a CFP who is not here to defend himself. I find it hard to believe that the moderators would tolerate similar remarks if they were directed towards a forum member. But somehow slander directed at the CFP seems to be perfectly ok. I say that's wrong, and am disappointed in er.org for tolerating it.
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Old 09-15-2015, 01:47 PM   #78
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Whoa, whoa, whoa, Karluk.
I'm a CFP...and a moderator.
I'm okay with the occasional defending of my life's work, mildly, but I'm not trying to convert the world.
Thanks for the backup, but as a mod, and a CFP, I promise, I'm just looking to keep an open mind. As are so many of the folks who come to our little corner of the internet.
They haven't slandered me and mine to the point of outrage...yet.
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Old 09-15-2015, 01:57 PM   #79
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They haven't slandered me and mine to the point of outrage...yet.
Moderators need not, and in fact shouldn't, be required to feel "outrage" in order to enforce policy. In my view, if a post is slanderous it should be removed, or edited. Are you saying that slander is now ok on er.org? Or do you think that none of the posts in this thread contain any slanderous comments directed at the CFP?

Just trying to clarify what the mods are thinking, so I won't participate in future threads with such high expectations about the civility of discourse on er.org.
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Old 09-15-2015, 02:50 PM   #80
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Goldenmom is asking for advice. It might help if we alert her that many (not all) forum members achieved financial independence without the help of financial advisors and believe others can do the same. They believe the costs of professional help are not offset by the portfolio design or fund selection. The advice they give is “how to DIY”, or invest without paying for an FA.

Other members feel not everyone is geared up to be a successful investor, and for them FA’s play a meaningful role. Their advice in this thread would be how to choose the FA, and how to manage the relationship and how to measure their helpfulness.
I agree, and think that Goldenmom has gotten some of both in this thread. Others that come to this site similarly get a wide range of opinions. While I would not characterize Goldenmom's CFP as a "thief" or a "charlatain", I would say that >nobody< is best served by going to a CFP with fees that are this high and who deliberately chooses high-fee funds when lower-cost alternatives are available. The later practice, in particular, is a breech of the trust the client has placed in the CFP.

Yes, I believe most people can handle the mechanics of investing without paid assistance if they will take some time to read appropriate materials, educate themselves online, and bounce their questions off the folks here. For the few who cannot/won't do that, then there are lower-cost advisory services that also come with fewer (apparent) conflicts of interest than the relationship the OP has with her CFP. IMO, it does a lot of damage to the OP and others if folks here just assure her that everything is fine with what this CFP has proposed. It's far more productive to take a few minutes to expose her to a way to 1) prevent from being victimized now and in the future and 2) increase the annual take-home from her investments by 30% (plus).
But I'm sure her "advisor" would disagree with me. His life is made better if clients are not exposed to information like this.
Disclaimer: I'm not a CFP and have no vested interest in making happy talk about CFPs who don't put the interests of their clients first. Quite the opposite.

About Schwab: I agree they are a good company, and were leaders (decades ago) in reducing the cost of stock trading for retail investors. Their brokerage has a good reputation. But Goldenmom does not sound like she'll be making tons of trades. She needs either a few MFs or ETFs--that's it. Vanguard can do that well, and their corporate structure (unlike Schwab or anybody else) assures account holders benefit when the company makes money. Vanguard's low cost advisory service is there if she needs it (maybe she will at first--I doubt it) and will be out of the way when she doesn't. Her present CFP's relationship with Schwab only muddies the waters, and Schwab's less-than-transparent fees and costs incorporated into their "free" "Intelligent Portfolios" (ha!!) lead me to believe they aren't the best choice for her, and that she'd be better off to simply move the funds to Vanguard and then set off on the right foot without any unneeded additional players.
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