Another Financial adviser story

[RobbieB]

I like the personal service. I like to have someone to talk to. Someone that knows my face and my voice. A whole team that knows my face and my voice.

My guys are not incompetent, lazy or greedy and they have a good track record;

Results (including fees)

2013 +12.7%
2014 +12.7%
2015 - 1.6%
2017 +12.8%
2017 (end of May) +9.1%

These guys only do my equities, my bonds and cash are elsewhere

So, there is no mismanagement here, no fraud, no ETF's or funds with high loads, just pure equities that they buy and sell according to the "plan" which is dividend & growth. There are no trading costs or commissions either just 1 % AUM and the above results include that deduction, it's net to me after fee. And the fee is tax deductible unlike mutual fund fees.

In addition I have a large line of credit available based on these equities that I can tap at any time if needed.

So yeah, I guess I pay a little more but I get a little more too -

[GravitySucks]

But have you started bringing those bottles and cans back for the nickel deposit? I'd hate to see you trying to cook waygu beef over a oil drum fire down at he hobo jungle.

[RobbieB]

I used to do that but I stopped recently.

My girlfriend missed the can crusher on the wall and tossed them into the bin. Which gave me a wonderful idea.

Instead of crushing and saving in a garbage can in the garage until I had a full bag I now just give them to the City. The space used by the garbage is now occupied by a "bin rack" that is helping me organize my mess.

Yeah, frugality overcome again. My broker is making me so much dough I no longer need to save cans and shlep them over to the recycle center for dough.

[Rustward]

Quote:

Originally Posted by bw5972 Obviously you are not unhappy with where you sit today. Still, the only meaningful assessment would be to calculate where you would be today going back to the beginning and moving forward with no management fees and year by year actual market returns.

So sorry to disagree with you, but the only meaningful assessment of my personal situation is the one I choose to make.

Your vote does not count.

[uofmbish]

Quote:

Originally Posted by RobbieB I like the personal service. I like to have someone to talk to. Someone that knows my face and my voice. A whole team that knows my face and my voice. My guys are not incompetent, lazy or greedy and they have a good track record; Results (including fees) 2013 +12.7% 2014 +12.7% 2015 - 1.6% 2017 +12.8% 2017 (end of May) +9.1% These guys only do my equities, my bonds and cash are elsewhere So, there is no mismanagement here, no fraud, no ETF's or funds with high loads, just pure equities that they buy and sell according to the "plan" which is dividend & growth. There are no trading costs or commissions either just 1 % AUM and the above results include that deduction, it's net to me after fee. And the fee is tax deductible unlike mutual fund fees. In addition I have a large line of credit available based on these equities that I can tap at any time if needed. So yeah, I guess I pay a little more but I get a little more too -

Just as points of reference, that works out to your return being 53.8% over that timeframe.

The MSCI World was up 60.1%, and S&P500 up 85.6% over the same timeframe.

Also everyone always pays trading cost. You may not pay any explicit trading costs like commissions, but everyone, even giant investment firms, pay implicit trading costs (bid-ask spread, etc.).

I'm also not following the logic of being ok paying 1% fee so you can deduct a portion of it on your taxes. I personally prefer to save the whole thing by not paying that fee in the first place.

That said, It's totally understandable that some folks like having an FA. I'm not against having an FA at all. It's a service that comes with a cost just like any other. Some in the industry are relatively up front about those costs, and if people find them to be acceptable, it's no skin off my rear. The only FA's that bother me are the ones selling clearly inappropriate securities, to the elderly in particular, to make a commission.

[GravitySucks]

Quote:

Originally Posted by RobbieB I used to do that but I stopped recently. My girlfriend missed the can crusher on the wall and tossed them into the bin. Which gave me a wonderful idea. Instead of crushing and saving in a garbage can in the garage until I had a full bag I now just give them to the City. The space used by the garbage is now occupied by a "bin rack" that is helping me organize my mess. Yeah, frugality overcome again. My broker is making me so much dough I no longer need to save cans and shlep them over to the recycle center for dough.

I got $10.60 on yesterday's bottle run. Seems the Boyscouts have stopped collecting them for fund raisers and I was running out of room.
I'll use the cash to upgrade from Genesee to a nice hoppy IPA. Ithaca Flower Power sounds good tonight

[SumDay]

We met with Fischer in 2008 when DH got a lump sum from his DB plan. He spent more time telling us about how much he'd make for us and how his clients loved him (and his son) than he did explaining what he has going to invest us in. I finally pushed him on it and the reply was "oil futures." I explained I didn't invest in things I couldn't explain to anyone else, and we left. He hounded us via phone - finally had to block his number. Not impressed. Then we found (thanks to this board) http://napfa.org That was money well spent. Going in for a tune up in two weeks as a matter of fact, to make sure we're on track for a 7/1/18 retirement date.

[bw5972]

Quote:

Originally Posted by Rustward So sorry to disagree with you, but the only meaningful assessment of my personal situation is the one I choose to make. Your vote does not count.

Ok, I concede, the measure of an FA's performance/value should consist entirely of how you feel.

[rodi]

Quote:

Originally Posted by Fedup At least I was told to stay away from no load mutual funds so I never invested in any.

Is this a misstatement? You avoid no load funds? You insist on paying loads/fees?

Your choice but I'd love to hear why you think this is preferred.

Personally I stick with no-load index funds.

[redduck]

Quote:

Originally Posted by SumDay . Then we found (thanks to this board) http://napfa.org That was money well spent. Going in for a tune up in two weeks as a matter of fact, to make sure we're on track for a 7/1/18 retirement date.

Can you tell elaborate a bit on how this all works? Do you pay your FA by the hour? If you just want Vanguard products would the FA be on board with that? Do you get a birthday card?

[redduck]

Of course there is always this:

"On May 20, the Securities and Exchange Commission filed an emergency civil action accusing James Putman and another employee of Wealth Management in Appleton, Wis., of taking $1.24 million each in kickbacks related to certain investments they were making for clients.
The S.E.C. also accused the pair of fraudulent conduct relating to how they allocated $102 million in client funds, much of which now appears to be gone.
Given the unfortunate prevalence of this sort of behavior, the charges would not be headline news were it not that Mr. Putman is a past president of the National Association of Personal Financial Advisors. Napfa is an organization of financial advisers that make money only through fees that clients pay directly to them." (note by redduck :It seems like client fees aren't the only way the some FA's make money).

(NY Times, June 5, 2009)

note: highlighted by redduck

[Fedup]

Quote:

Originally Posted by rodi Is this a misstatement? You avoid no load funds? You insist on paying loads/fees? Your choice but I'd love to hear why you think this is preferred. Personally I stick with no-load index funds.

I posted too fast. I meant to say I avoided the loaded mutual funds. No load mutual funds don't charge the 3-5% up front. Years ago some mutual funds have them.

[MRG]

Quote:

Originally Posted by Fedup I posted too fast. I meant to say I avoided the loaded mutual funds. No load mutual funds don't charge the 3-5% up front. Years ago some mutual funds have them.

Years ago? Many still do. Last I looked American Funds still charged a 5.75% FE load.

[Fedup]

Quote:

Originally Posted by MRG Years ago? Many still do. Last I looked American Funds still charged a 5.75% FE load.

They were the ones I remember. I have not checked them lately, but I think Fidelity also had some loaded mutual funds years ago and I don't know if they have them any more.

[SumDay]

Quote:

Originally Posted by redduck Can you tell elaborate a bit on how this all works? Do you pay your FA by the hour? If you just want Vanguard products would the FA be on board with that? Do you get a birthday card?

I think it depends on the FA. Ours charges more for the first visit, which is more extensive - it took three hours. Follow-ups are about the cost of the average plane ticket. We also get unlimited phone calls, and emails when we have specific one-off questions. She must be doing OK - it took us two months to get our bi-annual follow-up visit.

We had to provide detailed spending records, which she had no problem critiquing. "You give quite a bit to church, look for a cheaper cell plan, do you need all those cable channels", that kind of stuff. We wanted validation that we could move to a maintenance free community (DH has some residual issues from cancer treatment) and I had lots of questions about RMDs, withdrawal rates, when to take SS, etc. She's really focused on the "it's not how much you have, it's how much you spend." She gave detailed instructions on how & what to rebalance, and where to direct future 401(k) contributions.

I'm kind of an insecure investor, so it helps me sleep to have a second opinion (DH is totally uninterested).

Our FA would be fine if we were all in Vanguard - she loves them. All our $$ outside our 401(k)'s is at Vanguard. She also analyzes our 401(k) fees and returns.

I chose one in our city, but know some have no issue with doing it long distance. I liked sitting down with her & looking her in the eye.

Hope this helps - glad to answer any other questions.

[FlaGator]

So sorry to disagree with you, but the only meaningful assessment of my personal situation is the one I choose to make.

Your vote does not count.
-----------
Ok, I concede, the measure of an FA's performance/value should consist entirely of how you feel.
----------------------------------------

This is why I no longer participate in any discussions about FAs.

Doesn't matter that someone was able to pull the plug early and have a comfortable life, if wasn't done in a manner approved by some anonymous wizard, you have obviously failed

Furthermore, the presumption that someone in such a position failed to make a single sound decision about their money, much less a series of them over the years, defies logic.

[Scuba]

It does seem to me that many on this forum perceive FA's to be unethical. While there are certainly some that are, many I've interacted with are highly ethical and like other professionals, they work to generate the best outcomes for their clients.

Having or not having an FA is a personal choice. Some of us prefer having an FA or a team to support our wealth management, and some prefer the DIY approach. Somehow those of us who like our FA's have still been able to RE, so we must be doing OK. I measure our FA's performance net of fees vs a blended index based on our AA. So far, so good.

[Koolau]

I've worked with financial guys/gals. Most were incompetent and at least one was unethical (to the point of IMO fraud though it wasn't worth the effort to try to bring charges or even sue for damages - the guy declared bankruptcy before anyone could try this.) But I'm sure there are some good ones out there - somewhere.

Financial Advisor (or is it Financial Planner or both?) is a term that virtually anyone can call him/her self IIRC. It may vary state to state. Many of these FA/FP types take short courses or on-line courses which allow them to put a series of initials behind their name. Some even go so far as to get a (forgive me if I get this wrong) a Series 7 license. IIRC this allows them to sell certain products. It IS a rather rigorous process as I know someone who did it. BUT it doesn't insure ethics or even competence and it certainly doesn't insure a fiduciary relationship with clients IIRC. Also, IIRC there is the Certified Financial Planner (CFP?) which does require a rigorous education/testing program. I would still consider using a CFP if I could hire one for a specific issue/event/planning session on a per-hour basis - AND if s/he SOLD NOTHING but their time. Even CFP doesn't guarantee fiduciary responsibility to my knowledge - as always, I'm telling you way more than I actually know, so take it with a salt shaker full of grains of salt - and do your own research as always 'cause YMMV. IOW Free advice is worth what you pay for it.

I'm glad Scuba found a "good" FA. I hope it continues to work for her. I just finally figured out that NO MATTER WHAT THE FA TELLS ME TO DO, I'm still responsible for the results AND I PAY ALL THE CONSEQUENCES OF BAD ADVICE. So as Signor Ugarte (Peter Lorre in Casablanca) said "I've found myself to be much more affordable..." when it comes to financial planning. I can screw up my finances just as well as a professional - and it costs me nothing for my own advice. If I want "free" advice, I'll come here!

But I'm not bitter.

YMMV

[OldShooter]

@Koolau, if you look back at my post #32 I think you will find a little more clarity on the various (and very different) flavors of FAs.

Quote:

Originally Posted by Scuba ... While there are certainly some that are, many I've interacted with are highly ethical and like other professionals, they work to generate the best outcomes for their clients. ...

+1 I just finished helping with proposal evaluations from eight FAs to manage a $4M pot for a nonprofit, including interviews with existing customers and face-to-face meetings with four firms at various places around the country. While there were differences in experience, philosophy, and style, there was not a single one that I would not trust completely. Not coincidentally, all were RIAs.

All that said, it is a jungle out there. Screening for RIAs helps, as does using BrokerCheck (https://brokercheck.finra.org/). I don't give much weight to existing customer opinions, though, unless the customer is quite sophisticated. For the "usual" FA customer the opinion is going to be more of an evaluation of whether they like the FA personally, whether he/she takes them to dinner, remembers their birthdays, etc. Kind of like those sites where reviews of doctors are posted -- completly useless for finding a technically skilled doctor but very handy if your goal is finding a nice guy.

Continuing the riff, I know an FA from a very reputable company who is an excellent financial counselor for people, active in his church, honest, and well-liked by anyone who knows him. His investment skills, however, cost his clients roughly 200bps a year in addition to his wrap fee. IMO there are a lot of guys like that in the spectrum too.

[Rustward]

Quote:

Originally Posted by rayinpenn When I'd consider use a financial advisor. 1. They charge by the hour 2. They do not sell anything ever! 3. It never takes more then a couple of hours. 4. I am so totally uncomfortable with financial transaction and I can't feel comfortable opening an account with Vanguard and dumping my investments into 4 low cost index funds. Otherwise for the average person I'd avoid them like the plague. RobbieB ...are your results after the fees? It is unclear. S&P YTD +10% 2016 +12% So your results could actually be poor given the amount of risk you've taken. Study after study show the professional investors won't beat the S&P Over time.

Would it be possible to have a defensive portfolio that over several up and down cycles could overall perform as well or better than the S&P? We have not seen a down year for quite some time. Same overall return with smaller swings up and down.

I think comparing just a year and a half is a little shortsighted.