Do you have a financial planner?

[teejayevans]

That's the reason most of use here are DIY. When we hire professionals to help us (think doctors, lawyers or even plumbers) we expect to pay them based on what they do, not what we have.

The standard response you will get from a FA is that you don't do surgery on yourself...I respond with yes, but I don't call the doctor just because I have a splinter or a cold, and financial knowledge you acquired in a 12 week course cannot be equated with a doctor who went to 4 years of medical school and 3 years or residency.
TJ

 

[FinanceDude]

The standard response you will get from a FA is that you don't do surgery on yourself...I respond with yes, but I don't call the doctor just because I have a splinter or a cold, and financial knowledge you acquired in a 12 week course cannot be equated with a doctor who went to 4 years of medical school and 3 years or residency.
TJ

All it takes is 12 weeks to be an FA? Dang, I got screwed, I had to have college degree just to be considered........

 

[EvrClrx311]

Here is a great way to find out just how in tune your financial planner is with your financial well being. Ask him/her if they'd be willing to adopt the following payment structure:

In years when your investment advice beats the market index it is categorized with, you keep commissions plus I'll pay you 0.1% of every percentage point over the market you get, but in years when you trail the index, you must forfeit your commission for whatever products you sold me to be added to my account.

I still have yet to find a planner willing to go for it. Seems if they are all above average they'd all be jumping at the opportunity. If they just beat the average market return of an index 6 out of 10 years they'd be ahead by my model... so I wonder why they run from it

 

[teejayevans]

All it takes is 12 weeks to be an FA? Dang, I got screwed, I had to have college degree just to be considered........

That was assumed....
ok, college degree, and 12 week class for FA
Back to my original point on equating a Dr with FA, a doctor has
college degree + 4 years of medical school, and 3+ years residency
TJ

 

[brewer12345]

Here is a great way to find out just how in tune your financial planner is with your financial well being. Ask him/her if they'd be willing to adopt the following payment structure:

In years when your investment advice beats the market index it is categorized with, you keep commissions plus I'll pay you 0.1% of every percentage point over the market you get, but in years when you trail the index, you must forfeit your commission for whatever products you sold me to be added to my account.

I still have yet to find a planner willing to go for it. Seems if they are all above average they'd all be jumping at the opportunity. If they just beat the average market return of an index 6 out of 10 years they'd be ahead by my model... so I wonder why they run from it

I'd much rather work for 1 and 20.

 

[teejayevans]

I still have yet to find a planner willing to go for it. Seems if they are all above average they'd all be jumping at the opportunity. If they just beat the average market return of an index 6 out of 10 years they'd be ahead by my model... so I wonder why they run from it

No doubt, since 3 out 4 managed funds don't match their respective indexs, it's safe to say that would be true of FAs who are trying to beat the market.

I'm not anti FA, if I had a complex situation, I would certainly want to get advice. But once you have decided on your portfolio mix, you certainly don't need a FA to rebalance it. Some need a FA for emotional support during tough times. Some are bad a math. Some are not willing to learn. They need a FA and probably be better off paying the 1%, but since this isn't rocket science, the rest who aren't lazy, willing to learn, and don't panic when the market drops, would be better off not paying an extra 1%.
TJ

 

[FinanceDude]

Here is a great way to find out just how in tune your financial planner is with your financial well being. Ask him/her if they'd be willing to adopt the following payment structure:

In years when your investment advice beats the market index it is categorized with, you keep commissions plus I'll pay you 0.1% of every percentage point over the market you get, but in years when you trail the index, you must forfeit your commission for whatever products you sold me to be added to my account.

I still have yet to find a planner willing to go for it. Seems if they are all above average they'd all be jumping at the opportunity. If they just beat the average market return of an index 6 out of 10 years they'd be ahead by my model... so I wonder why they run from it

Probably because FINRA would not allow it?

 

[FinanceDude]

That was assumed....
ok, college degree, and 12 week class for FA
Back to my original point on equating a Dr with FA, a doctor has
college degree + 4 years of medical school, and 3+ years residency
TJ

You did not state that so why would it be assumed? You can get an engineering degree in 4 years, so that means I should ask a doctor how to build a suspension bridge instead of an engineer because they have more education? You make no sense..........

 

[Sarah in SC]

Everclrx, that is not permitted by the regulatory agencies. That's probably why you've had no interest.
I had to do 2 years of classes for the CFP designation, plus 3 years of apprenticeship, and have a 4 year college degree, plus pass the 2 day exam and continuing ed.

 

[Rustward]

This is truly a fascinating thread.

 

[urn2bfree]

I'm going off OP's original anonymous person, and the information provided, not sure who he is speaking of. Those FAs managing a couple billion dollars are not doing it for free is my point. A lot of folks think that hourly fee CFPs grow on trees, but they don't. The guy managing $2 billion may be doing it for 30-50 bp, but is not doing it at $1000 a year. Maybe OP can idenitfy the person or his firm and I can research it a little.

Someone with $500K generally has a less complex situation than the person with $25 million. Most people with $500K are not looking into multi-generational wealth transfer, ILIT trusts, MLP's, etc.

Someone with a more complex situation requires more hours, sure. SO when you charge by the hour you make more...but again as someone else posted. The fee should be based on what is done for you- not how much you have.

Here are two fixed fee advisors who work with Dimensional Funds Advisors funds (DFA). their size ,location and fees. IN the era of the internet, location does not really matter. data from 2007
Cardiff Park AdvisorsCardiff by the Sea, CA; AUM ($)$109M Number of clients: 290 No minimum size-$1,200-$3600 fixed fee for portfolio of any size
Evanson Asset Management Carmel, CA$ AUM ($)$1,793M Number of clients:2140 minimum size $1,000,000 $2,000-$4,000 fixed fee
for portfolio of any size

there are many many more who do not use DFA.

 

[FinanceDude]

Someone with a more complex situation requires more hours, sure. SO when you charge by the hour you make more...but again as someone else posted. The fee should be based on what is done for you- not how much you have.

Here are two fixed fee advisors who work with Dimensional Funds Advisors funds (DFA). their size ,location and fees. IN the era of the internet, location does not really matter. data from 2007
Cardiff Park AdvisorsCardiff by the Sea, CA; AUM ($)$109M Number of clients: 290 No minimum size-$1,200-$3600 fixed fee for portfolio of any size
Evanson Asset Management Carmel, CA$ AUM ($)$1,793M Number of clients:2140 minimum size $1,000,000 $2,000-$4,000 fixed fee
for portfolio of any size

there are many many more who do not use DFA.

Looks like the average fee is about $2200 a year give or take. So you are ok with paying someone $2200 and paying the internal ER on DFA, in the .25-.60 range? That works out to close to 50-75bp yearly on the portfolio, which is right in line with what our RIA charges for full portfolio management. What they are doing is not all that "cheap"......... Cardiff is a little different, when they mean "any size" they could charge you $1200 on a $20,000 investment, which is 6%..........

 

[FinanceDude]

Everclrx, that is not permitted by the regulatory agencies. That's probably why you've had no interest.
I had to do 2 years of classes for the CFP designation, plus 3 years of apprenticeship, and have a 4 year college degree, plus pass the 2 day exam and continuing ed.

Noone on here thinks any of us have any industry experience, you are wasting your breath, unless you are a doctor, they think you don't know anything.........

 

[teejayevans]

You did not state that so why would it be assumed? You can get an engineering degree in 4 years, so that means I should ask a doctor how to build a suspension bridge instead of an engineer because they have more education? You make no sense..........

No, I'm saying a FA shouldn't equate themselves with a Doctor (see original append), executive summary: financial knowledge isn't brain surgery and can be learned if someone chooses to (ie it doesn't take 11 years of education counting college). Claro?
TJ

 

[brewer12345]

Let me know when we get to "yo momma" comments.

 

[FinanceDude]

No, I'm saying a FA shouldn't equate themselves with a Doctor (see original append), executive summary: financial knowledge isn't brain surgery and can be learned if someone chooses to (ie it doesn't take 11 years of education counting college). Claro?
TJ

You would be amazed at how many very smart people have blown themselves up in the stock market, the real estate market, etc. It is truly breathtaking............

Financial knowledge isn't brain surgery, but I have seen a number of people who did the effect of frontal lobotomies on themeselves based on the choices they made.......

I don't know of many FAs who equate themselves as doctors, I for one, never have, although I have a fair number of doctors and medical professionals as clients........

 

[FinanceDude]

Let me know when we get to "yo momma" comments.

Not gonna happen, I have to save my infractions for the upcoming Presidential debates commentary.........

 

[FinanceDude]

This is truly a fascinating thread.

Thank you.........

 

[brewer12345]

No, I'm saying a FA shouldn't equate themselves with a Doctor (see original append), executive summary: financial knowledge isn't brain surgery and can be learned if someone chooses to (ie it doesn't take 11 years of education counting college). Claro?
TJ

Having seen some of what doctors manage to get themselves into, I will just say that they are not unimpeachable.

There is a fraction of the population that is either incapable or unwilling to learn finance/investing. There is also a fraction that may or may not have learned, but lacks the intestinal fortitude/ability to look away necessary to avoid making stupid mistakes when the market fluctuates. These are exactly the people who most need help from a financial advisor of some sort. Others might include those with very complex affairs and those who want a second opinion. The advisors generally earn their money the hard way if they are any good and fairly priced when dealing with the clueless and the nervous nellies.

Naturally, there are lots of sleazebag commission whores masquerading as advisors. Caveat emptor as in all things.

 

[FinanceDude]

Having seen some of what doctors manage to get themselves into, I will just say that they are not unimpeachable.

There is a fraction of the population that is either incapable or unwilling to learn finance/investing. There is also a fraction that may or may not have learned, but lacks the intestinal fortitude/ability to look away necessary to avoid making stupid mistakes when the market fluctuates. These are exactly the people who most need help from a financial advisor of some sort. Others might include those with very complex affairs and those who want a second opinion. The advisors generally earn their money the hard way if they are any good and fairly priced when dealing with the clueless and the nervous nellies.

Naturally, there are lots of sleazebag commission whores masquerading as advisors. Caveat emptor as in all things.

+1. Some of us even teach Dave Ramsey courses at our local churches and try to get people to pay down debt and save, the horror!!!!

 

[FinanceDude]

Everclrx, that is not permitted by the regulatory agencies. That's probably why you've had no interest.
I had to do 2 years of classes for the CFP designation, plus 3 years of apprenticeship, and have a 4 year college degree, plus pass the 2 day exam and continuing ed.

Well, since we are sharing. I have a bachelors in science in finance, also 2 minors, in risk management and insurance, and the other in psychology. I used to hold the ARM designation many years ago but I let it expire. My corporate "dream" was to be a risk manager at a large Fortune 500 company. When I graduated, the economy was in a minor recession and there were no jobs to be had. So, by necessity, I ended up in sales, selling group insurance and disability plans to small businesses, initially. I did some commercial underwriting later on but that got old quick. I toyed with being an actuary but didn't think I had the personality for it...............

 

[brewer12345]

I toyed with being an actuary but didn't think I had the personality for it...............

I regularly deal with actuaries and I am accustomed to conducting an entire meeting with a group of actuaries and never having anyone make eye contact with me. I cannot imagine how that professional trait would square with sales ability.

 

[urn2bfree]

Looks like the average fee is about $2200 a year give or take. So you are ok with paying someone $2200 and paying the internal ER on DFA, in the .25-.60 range? That works out to close to 50-75bp yearly on the portfolio, which is right in line with what our RIA charges for full portfolio management. What they are doing is not all that "cheap"......... Cardiff is a little different, when they mean "any size" they could charge you $1200 on a $20,000 investment, which is 6%..........

surely even FinanceDude does not really believe this...this is a test to see if anyone is paying attention, right?
How is it that we count the ER on the funds against the cost of advising as if that is not also part of any funds bought under any circumstances? with any advisor? or without an advisor at all?
Seriously, who buys funds with zero expense ratios?
Expense ratios are a cost generated no matter what and cannot be calculated as part of the cost of the advisor. DFA ER are relatively low.
....and the math on the bp for the $2200 a year? Even with a relatively small portfolio of $1M dollars that is .22% and anything more gets lower and lower. Evanson states on their public website that the majority of their money is managed at 0.05 to 0.2% if calculated as AUM. Show me an AUM charging advisor who works in that range.

 

[brewer12345]

surely even FinanceDude does not really believe this...this is a test to see if anyone is paying attention, right?
How is it that we count the ER on the funds against the cost of advising as if that is not also part of any funds bought under any circumstances? with any advisor? or without an advisor at all?
Seriously, who buys funds with zero expense ratios?
Expense ratios are a cost generated no matter what and cannot be calculated as part of the cost of the advisor. DFA ER are relatively low.
....and the math on the bp for the $2200 a year? Even with a relatively small portfolio of $1M dollars that is .22% and anything more gets lower and lower. Evanson states on their public website that the majority of their money is managed at 0.05 to 0.2% if calculated as AUM. Show me an AUM charging advisor who works in that range.

Like I said, 1 and 20 sounds a lot better to me.

 

[FinanceDude]

surely even FinanceDude does not really believe this...this is a test to see if anyone is paying attention, right?
How is it that we count the ER on the funds against the cost of advising as if that is not also part of any funds bought under any circumstances? with any advisor? or without an advisor at all?
Seriously, who buys funds with zero expense ratios?
Expense ratios are a cost generated no matter what and cannot be calculated as part of the cost of the advisor. DFA ER are relatively low.
....and the math on the bp for the $2200 a year? Even with a relatively small portfolio of $1M dollars that is .22% and anything more gets lower and lower. Evanson states on their public website that the majority of their money is managed at 0.05 to 0.2% if calculated as AUM. Show me an AUM charging advisor who works in that range.

I use DFA myself, so I am well aware of the costs on DFA......... Evanson has way more than $2 billion under management. At large portfolios over $10 million or so, most advisor firms bid out at 20bp or so all in. I think most folks on here think thall VG funds have an ER of 10bp or less..........

You can only get DFA through an advisor. The advisor decides what to charge to get paid, DFA does not hold back a dealer concession on their funds. The advisor can charge whatever they want, 1% or even higher. However, most charge less the higher the amount to be invested.

Again, you act as if I have no knowledge of anything that goes on the FA world, which is quite funny........