What to ask your financial advisor

[Texas Proud]

First... I do not have one... and I know MOST here do not... but there are enough people that come and take a look here that seem to want one or have one...


I saw this video that seemed appropriate... and he had three questions that any FA should answer IN WRITING... the lady said that FA can not tell you something that is not true.... the guy corrected her and said they can tell you something, but they will not put something down in writing that is wrong...

The three questions are:

1> Total annual fees (includes all fees)
2> Portfolio performance (vs the appropriate benchmark which should be spelled out... IOW, if you are 50%/50% the benchmark should also be 50%/50%)
3> Why portfolio is right for you

I find these are interesting questions and I just thought I would throw them out for discussion....


Here is the link..

3 Things Your Financial Advisor Won't Tell You - CBS MoneyWatch.com

 

[youbet]

I don't have an FA either and I'm not going to attempt to discuss the questions. But I would like to point out that there is an assumption being made here that the FA is being handed all your money to invest for you. The situation where the customer pays an FA for specific services on a per hour basis isn't part of this. And that's how I'd use an FA if and when managing things exclusively myself becomes too much of a challenge or pita.

Questions I'd ask might be more on the order of "what moves would you make with my FIRE portfolio to enhance tax effiiciency?" Or, "would it be beneficial for me to do some Roth conversions?"

I think the three questions in the article are simply a rehashing of the very stale pros and cons of turning your assets over to someone else to manage for you. And I expect the discussion here will be the same.

 

[MasterBlaster]

Good Luck getting straight answers on these questions.

here's what I suspect they'll say

1) Our fees are reasonable and in-line with other planners.

2) Here's our cherry picked numbers that overstate the performance of our one fund that did well last year selected specifically to show you.

3) This portfolio is the standard retired guy portfolio that generates those big fees for us and our mutual fund company.

 

[Texas Proud]

Good Luck getting straight answers on these questions.

here's what I suspect they'll say

1) Our fees are reasonable and in-line with other planners.

2) Here's our cherry picked numbers that overstate the performance of our one fund that did well last year selected specifically to show you.

3) This portfolio is the standard retired guy portfolio that generates those big fees for us and our mutual fund company.

Then you are supposed to 'run' if they do not answer... and answer for YOUR portfolio...

IOW, #2 is the return of your portfolio, not some cherry picked fund... but what you earned

I guess this means you had to be with them for a time... so that does not sound that great... something like..... "OK, take my money and in a year I will ask these questions...." hmmmmm...

 

[freebird5825]

I used a FA (fee only) back in 2002. I felt I needed to understand how it all came together, AFTER I had read several books on investing. I was an Engineer by profession, and only had 1 course (Business 100) in college about financial and investing areas.
I had heard somewhere that the smartest people are the ones who know what they don't know.
I am glad I went for the advice, as some personal life events happened a few years later. I was properly positioned across the board due to the prior advice given, i.e. I actually listened and acted upon it.
I feel more confident as a DIYer these days, and probably would not return for advice unless there was a darn good reason.

 

[easysurfer]

Back in Fall of '07, when I was comtemplating FIRE'd, I did use a fee only planner to help do the "what ifs". At that time, I was still expecting to w*rk until later 2011 but circumstances changed so in Jan '08 I used the fee only planner again to do "what if, this and that? and THAT?"and called it a career in Jan '08. I did find using a FA helpful. For particular instances, but would limit it to fee-only and as needed.

 

[Nords]

Hawaii has a pretty high percentage of military retirees, and an apparently abnormally high percentage of financial advisers who are ignorant of the asset-allocation implications of a federal COLA'd pension. Same problem with Fidelity.

When I was getting close to my ER date I was concerned that I was missing some important aspect of my planning. ("Why is this so easy? Is it... too easy?") I made the phone rounds of a half-dozen of the more well-known local firms and availed myself of the free consultations. Advice ran the spectrum of "Hunh, always wanted to work on one o' those" to "No, I don't think your pension is already the equivalent of bond income from this mighty fine portfolio we're offering" to "This will never work out, you're way too young to retire". Finally one of them said "Well, gee, I guess if you limit yourself to your pension and 3-4% of your portfolio then you'll be fine!".

That was the end of that research.

Gee, I haven't thought about that in a while. I'm gonna have to work up a blog post about it.