Edelman vs Do It Alone

[purplesky]

Quote:

Originally Posted by travelover Fixed it for you.

Thank you.

[samclem]

Re: the outrageously expensive 401K plans: Sure, it's a shame (and I think we all realize there are some kickbacks reverse-resource flows to the sponsoring companies/unions/municipalities going on). But at least there's usually some healthy employee match of these 401Ks, so we can rationalize (with some work) that the 1-3% overcharge in fees is being paid from that chunk of money in the account that wasn't ours to begin with. But every dime paid to Edelman (or any other FA) from IRAs or other after-tax accounts comes from money I earned and saved.

[teejayevans]

Quote:

Originally Posted by purplesky He manages over $13.5 billion in assets and sells millions of books. Yes Ric is doing well after 25 years. With 25,000 clients you would think he must be doing something right. Or thats a lot of really dumb people using Edelman financial to build wealth. It would be interesting to have Edelman himself justify his high management fee in this thread. Or one of his many advisers.

He would tell you that it's more than picking funds, it's advice on insurance, housing, trusts, etc. and it's not about a larger ROI, it's about have a relationship, someone you can call if the market drops and you need someone to talk to......blah blah blah


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[brewer12345]

Quote:

Originally Posted by teejayevans He would tell you that it's more than picking funds, it's advice on insurance, housing, trusts, etc. and it's not about a larger ROI, it's about have a relationship, someone you can call if the market drops and you need someone to talk to......blah blah blah Sent from my iPad using Early Retirement Forum

I suppose some people might call it a relationship when someone is f***ing you...

[rodi]

Quote:

Originally Posted by teejayevans He would tell you that it's more than picking funds, it's advice on insurance, housing, trusts, etc. and it's not about a larger ROI, it's about have a relationship, someone you can call if the market drops and you need someone to talk to......blah blah blah Sent from my iPad using Early Retirement Forum

Why charge more for larger nest eggs then?

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[teejayevans]

Quote:

Originally Posted by rodi Why charge more for larger nest eggs then? Sent from my Nexus S 4G using Early Retirement Forum mobile app

It's assumed the more $, the more hand holding I guess.
What's funny is his own clients call the radio show?! I can't help but think why aren't they getting advice first hand...I can only think they don't have enough money to talk to Ric personally.


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[MooreBonds]

Quote:

Originally Posted by RetireAge50 It is scary that so many people (25,000?) just give away so much money year after year. When they open their statement and see it is merely invested in regular mutual funds why wouldn't they cut out the middleman going forward? I'm glad we have a group of people here on this forum to help people come to their senses.

Part of his gig is that he uses his proprietary, sophisticated equations to diversify your portfolio into various investments, and moves money around according to his investment thoughts.

So not only do you have someone who's probably clueless about investing to begin with - but to compound it, they're looking at a statement with various investments that will instantly make their eyes gloss over. They then have no way of knowing if they're actually getting any 'value' from his services or not, because there's probably no way for them to know what benchmark to compare it against.

[jkern]

I listen to his radio show every other Saturday while I drive down to San Jose. I find it entertaining. He appears to be extremely knowledgeable on topics of personal finance and investing. He very much favors stock market investing and the use of a Financial Advisor, for obvious reasons. The high cost for his services doesn't surprise me. I don't know everything he does for a client, but for some it might be a good fit.

[purplesky]

Quote:

Originally Posted by MooreBonds Part of his gig is that he uses his proprietary, sophisticated equations to diversify your portfolio into various investments, and moves money around according to his investment thoughts. So not only do you have someone who's probably clueless about investing to begin with - but to compound it, they're looking at a statement with various investments that will instantly make their eyes gloss over. They then have no way of knowing if they're actually getting any 'value' from his services or not, because there's probably no way for them to know what benchmark to compare it against.

According to Edelman they mostly use a diversified basket of low cost ETFs and bond index funds and Edelman's investing philosophy is to use low cost investments. Edelman tells listeners to use low cost ETFs all the time.


You know considering there are millions of Americans who have 401ks and IRAs and money in bonds not properly invested due to not caring or just bad choices,etc. these people are getting really low returns on their money.

So if these uninterested investors pay Edelman 1.4%(or any FA) and Edelman gets them an avg. return of 10% wouldn't that be better for their own situation.

I meet people all the time who don't have a clue how their 401k is invested and don't seem to care.

These people are candidates for Edelman financial. Because they are not going to beat Edelman doing DIY. Because they just don't care.

And some people won't even start investing unless someone actually walks them through it step by step.

So if Edelman can get somebody to the market avg. minus 1.4%. Thats better than nothing.

THIS does not apply to this community. Obviously.

[rodi]

Purplesky - the folks you're talking about aren't engaged with their finances enough to even engage the services of Edelman. They can't be bothered to think about any of this.

[samclem]

Quote:

Originally Posted by purplesky So if these uninterested investors pay Edelman 1.4%(or any FA) and Edelman gets them an avg. return of 10% wouldn't that be better for their own situation.

Edelman can't get 10% PA return over the long haul (decades) on a portfolio that could reasonably be recommended for most retirees. Especially net of his fees. If he could, he wouldn't be hawking his services at retail.

Quote:

Originally Posted by purplesky So if Edelman can get somebody to the market avg. minus 1.4%. Thats better than nothing.

If "better than nothing" is the standard, then Edelman probably meets it--for those people who can't be bothered to inform themselves, and who will put money into investments with him rather than spend every dime they make.

Edelman is better than those crooks who churn accounts. He's better than the "advisors" who sell high cost loaded funds, put annuities inside IRAs, etc, etc. That doesn't make his services a good value in a comparative sense. He's better than getting hit by a bus.

If an advisor is needed (a point I do not concede), why should someone choose Edelman over Rick Ferri (who charges most folks about 1/4 the fees) or any other competent advisor with much lower fees?

[urn2bfree]

Quote:

Originally Posted by samclem why should someone choose Edelman over Rick Ferri (who charges most folks about 1/4 the fees) or any other competent advisor with much lower fees?

+1
There are many advisors who can provide the same services at much less cost.



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[purplesky]

Quote:

Originally Posted by samclem Edelman can't get 10% PA return over the long haul (decades) on a portfolio that could reasonably be recommended for most retirees. Especially net of his fees. If he could, he wouldn't be hawking his services at retail. If "better than nothing" is the standard, then Edelman probably meets it--for those people who can't be bothered to inform themselves, and who will put money into investments with him rather than spend every dime they make. Edelman is better than those crooks who churn accounts. He's better than the "advisors" who sell high cost loaded funds, put annuities inside IRAs, etc, etc. That doesn't make his services a good value in a comparative sense. He's better than getting hit by a bus. If an advisor is needed (a point I do not concede), why should someone choose Edelman over Rick Ferri (who charges most folks about 1/4 the fees) or any other competent advisor with much lower fees?

Your are right. Edelman has a high profile with his radio show and books and PBS appearances so I am just thinking of Zombie investors who put all their 401k in a stable value fund and forget about it for years and get a really low return. That they might hear his show and get guidance thats better than nothing.

These are people that are afraid of the markets.


I have coworkers like this. They are zombie investors who don't make any effort.

[purplesky]

Quote:

Originally Posted by rodi Purplesky - the folks you're talking about aren't engaged with their finances enough to even engage the services of Edelman. They can't be bothered to think about any of this.

Yes. Wishful thinking on my part.

[Taiko]

Quote:

Originally Posted by rodi Purplesky - the folks you're talking about aren't engaged with their finances enough to even engage the services of Edelman. They can't be bothered to think about any of this.

Then how does he sell his books? How has he earned a living all these years? He adds value for his clients. Sure most can do what he does themselves and not pay his fee or buy his books, but his clients don't.

[mrfeh]

Haven't read the entire thread; sorry if this has been mentioned...

OP - you can do it yourself. The ER on my portfolio is .14% Paying 1.4% is ludicrous.

Read this: Bogleheads® investing start-up kit - Bogleheads

[samclem]

Quote:

Originally Posted by Taiko He adds value for his clients.

We can only say with certainty that his clients believe he adds value. Truly determining if a particular FA is adding value (risk-adjusted and after-fees return) requires access to sophisticated data and analytical tools, and I am certain his clients aren't doing this analysis. And we're pretty much all in agreement that these are people who are largely ignorant of what is involved with selecting investments and/or they can't/won't make time to do this themselves. It might be safe to assume they also haven't researched alternatives, which are widely available at much lower cost.

So, given all that--what does their selection of Edelman have to say about the real value of his product? My answer: Close to zero.

[rodi]

Quote:

Originally Posted by Taiko Then how does he sell his books? How has he earned a living all these years? He adds value for his clients. Sure most can do what he does themselves and not pay his fee or buy his books, but his clients don't.

I would agree that he's great at marketing himself. That is not the same as adding value.

A friend and her husband have assets similar to mine. They use a "wealth manager". I used to get into discussions with her about what her "wealth manager" offered to justify his fees. I asked what kind of asset allocation he was suggesting/using, I asked what the portfolio return was, etc... Her eyes glazed over. But she was VERY insistent that he was well worth the money.

She couldn't tell me why this FA aka "wealth manager" was worth the hefty fees (over 1% AUM from what I gather). She kept saying she'd talk to her husband to find out why he was worth the fees but she was absolutely certain it was worth it. She never did have an answer for me. But when I was advising coworkers to DIY with index funds she'd chime in EVERY TIME about how fabulous her wealth manager was.

In her case - I think the term "wealth manager" was what sold her - made her feel...well... wealthy. Good for her ego. But she could never justify with metrics the 10,000's she was paying the guy each year.

I put Edelman in the same group - great at marketing himself... convinces folks they are getting great value... but when you ask them to prove the value - they can't....

[Lakewood90712]

Too bad Edelman Financial is not bigger and listed on an exchange. it's a company I would like to own part of , rather than be a customer.

I remember Joe Granville quite candidly stating "you make more selling the advise , than using it" (referring to his own market newsletter ). An honest man on Wall Street. He was spot on with gold for a short period of time back in the 1980's.

[travelover]

Quote:

Originally Posted by rodi ........ But she could never justify with metrics the 10,000's she was paying the guy each year........

The key is that those thousands of dollars slip out silently month after month with hardy a notation on the statement. If Joe Investor had to write a check for $10,000 once a year, I suspect that he'd have some harder questions for his wealth manager. It really is a perfect racket, with no hard metrics to compare performance to and an easy bleed off of cash.