Seeking advice on picking a new broker

[FinanceDude]

If the person had most of their money invested in the stock market in 2009, 2010 and managed to shift heavily into cash in summer of this year before the latest correction, than I'd be inclined to let him invest my money.

So, you would trust an FA who is a market timer? Now that's funny!

 

[Lisa99]

We had a FA (Ameriprise) who was essentially robbing us blind and doing it legally.

Our lack of knowledge of investing translated to expense ratios of 1.9%, plus wrap fees, plus marketing fees, plus $750 year for the priviledge of getting the annual b-day card.

Almost a year ago we saw the light, started reading and moved everything (a high six-figure) portfolio to Vanguard that is now self-managed. Today our expense ratio is .08% and I would estimate that we're saving about $4,000/year in fees. Oh, and the most important, we are seeing returns significantly higher than anything the FA ever produced. The reason is an appropriate AA and no longer buying and selling the next great 'thing'.

So my recommendation...do nothing right now. Start reading, learn about the power and simplicity of investing in index funds and then make your decision.

 

[clifp]

So, you would trust an FA who is a market timer? Now that's funny!

Hey I am not down on market timing. I am just not very good at it.
If somebody has done it successful over the last 5 to 10 years and has the brokerage statements to prove it...I'd consider giving them much of my money. To be honest not having Buffett's money I haven't met a FA who has agreed to my request.

 

[shooter]

When I ascribed to this forum I told them I use an FA and they almost all said to get rid of "her/him". I STRONGLY DISAGREE! My wife and I were extremely successful at saving our money, then didn't have a clue how to handle it for retirement. Now, no one can give you great advise on how to invest, trade, or keep your capital to live out your life - but I found Edward Jones to be the best bargain, honest (MY advisor anyway) and once you invest you have 15,000 financial instruments you can buy/sell around in without commissions. I have had my gal since summer '07 and my investments have grown almost 30% AFTER my monthly "retirement pay" including up to today. Again, NOBODY can give you advise like this - it costs nothing to go visit these folks. Ask all the questions you want, don't feel like a financial idiot-if they can't help you understand what they're talking about AND make you comfortable, then go on to the next person until you find one who speaks in your "language". I pay less than .75% annually on my total portfolio and I don't have to worry about watching the damn market, she reallocates my investments based on my risk factors, growth factors, and is always available to talk to me.

 

[REWahoo]

I pay less than .75% annually on my total portfolio...

Since a "safe" withdrawal rate is 4% of your portfolio annually, you are paying her 19% of your annual portfolio income. Might be worth it to you, but many of us feel that is way too much retirement income to fork over to a "gal" to manage our money.

 

[travelover]

Since a "safe" withdrawal rate is 4% of your portfolio annually, you are paying her 19% of your annual portfolio income. Might be worth it to you, but many of us feel that is way too much retirement income to fork over to a "gal" to manage our money.

Oh sure, but does Vanguard send you a birthday card?

 

[Bestwifeever]

Oh sure, but does Vanguard send you a birthday card?

DH has a small Edward Jones account that he inherited and decided to keep there and yes "his" pretty young rep (I wonder why he likes to stop and and say hi when he's in his hometown) did send me a birthday card! Everyone in the office signed it, too.

Sadly, nothing from Vanguard which has most of the nest egg. I am crying all the way to the bank.

 

[AShyOne]

Nobody will care more about your more than you do. The bad news is that this investing thing isn't something that can be reliably "hired out," because it takes some research to know if the "expert" is a snake-oil salesman or really working for your best interests.

Thanks again! I am facing the hard truth that this can not be one of the zillions of things I "don't have time for." Or, more accurately, don't trust myself enough to do on my own. I found this thread about recommended readings in the FAQ: http://www.early-retirement.org/forums/f28/fire-recommended-reading-list-22300.html and I will check it out.

I have never heard of Bogleheads but I will look it up too. Many thanks for the tips.

Any thoughts about a financial "planner" as opposed to an "advisor" or "money manager"? My husband and I are trying to get ourselves straight, even in terms of such things as how much life insurance we should have with our first baby on the way. We are basically nowhere right now with our finances. Both of us are currently doing the bare minimum, contributing to our company savings plans and that's about it! I am so ashamed to admit that and I know a collective shudder has just arisin from the community!

 

[REWahoo]

Both of us are currently doing the bare minimum, contributing to our company savings plans and that's about it! I am so ashamed to admit that and I know a collective shudder has just arisin from the community!

I think it is more a sigh of relief that you've realized you need to do something about your situation and, based on the FAQ and Bogleheads comments, are taking steps to improve things.

Our collective shudder is usually reserved for those who post here when it is way too late: "Help, I'm 65, just lost my job, in debt to my eyeballs, have no savings and upside down in the mortgages on both our primary and vacation homes! What do I need to do to be able to maintain my lifestyle?"

 

[Bestwifeever]

Thanks again! I am facing the hard truth that this can not be one of the zillions of things I "don't have time for." Or, more accurately, don't trust myself enough to do on my own. I found this thread about recommended readings in the FAQ: http://www.early-retirement.org/forums/f28/fire-recommended-reading-list-22300.html and I will check it out.

I have never heard of Bogleheads but I will look it up too. Many thanks for the tips.

Any thoughts about a financial "planner" as opposed to an "advisor" or "money manager"? My husband and I are trying to get ourselves straight, even in terms of such things as how much life insurance we should have with our first baby on the way. We are basically nowhere right now with our finances. Both of us are currently doing the bare minimum, contributing to our company savings plans and that's about it! I am so ashamed to admit that and I know a collective shudder has just arisin from the community!

Not at all--unless you had some great role models or majored in business or finance (and even those majors are often not able to transfer their knowledge to their personal situations), how would you know to do more than the "bare minimum" considering how much money is spent on advertising and marketing to separate us from our money for things other than investing? You should be proud of yourselves that you have been able to see your fiscal future and how you can control it.

How to plan for life insurance and a young family? I think you can find guidelines for that too without having to pay someone--keep looking through the faqs.

 

[devans0]

There isn't a collective shudder. Many..most...nearly all of us started at what you have described. We don't want people to go through the expensive learning curves that we did and post what has worked or not worked.

For me, not trusting myself and my abilities was a siren song that kept me hovering near the rocky shores of wanting a pro for financial advice. I frankly wanted the hand holding.
It took a leap to go independent, but that leap was also where and why we have almost become financially independent. It won't be long. Asset allocation was the framework that taught me what I needed to make that leap.
There are many who have made a success of financial independence on this forum. A wealth of knowledge is here from those who have started where you are and are good people. This is a great place to start.

 

[panacea]

I would not consider a 1% of assets a "fee only" advisor. Fee only is a flat fee for performing a specific function or hourly rate (and if you think that rate is high calculate what 1% per annum of your portfolio is!). To put that 1% in perspective the SWR (Safe Withdrawal Rates - Bogleheads) is ~ 4% annually. So you are giving the advisor 1/4 (25%!!!) of your SWR. Of course they will tell you they will earn back that amount for you with their superior knowledge and skill. This IS NOT true. NO academic study (ie not paid for by the industry) has shown that they beat the market by enough to make up for their costs, let alone provide more money for you.

I would suggest reading from the recommended list here: http://www.early-retirement.org/for...reading-list-with-a-military-twist-46732.html or here: Investment Books.

It is NOT hard to do this yourself - the industry wants you to think it is and that they have special knowledge. This reading would be worthwhile even if you decide you still need some help/handholding in creating and managing your portfolio.

DD

DblDoc is right. However, I'd say that for someone who simply won't read the books or pay attention to their investments (too busy or traveling the world perhaps) it's probably better to pay a fee than let the portfolio fall apart. Us DIYs come from a world where it's hard to imagine not willing to put in the time necessary but I've met plenty of people that just simply won't. For those people, they should go to a low cost, fee only, advisor. Hourly is best if the person will participate at least a little, but the 1% is arguably worth the cost for someone who isn't even going to open their statements.