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Old 11-26-2017, 02:41 PM   #21
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My guy has never once tried to sell me annuities, insurance or bonds. No mutual funds either. He doesn't call me, but he is there when I call and his assistant (who I've also met) picks up the phone when I call. I've actually had 3 FA's at the same firm, one left to work elsewhere, the next guy was an old guy who was teamed with a younger guy who then became my guy after the old guy retired.

None of these guys tried to sell me anything "questionable"

As I've said I have worked with 3 different firms with this stuff and the one I kept was superior in performance, professionalism, service and results. I feel as if I'm getting a bargain -

So that's how I chose my FA. Tried a few and kept the best.
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Old 11-26-2017, 03:37 PM   #22
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I've never understood the AUM scheme. If a portfolio is $1 million is there the belief that a portfolio of $3 million requires three times as much work? I don't think so, especially if the investor uses the buy and hold approach. I don't see the incremental value that justifies the additional expense.

I use an investment advisor. He is certified, registered, and clearly states he is a fiduciary. Our relationship started in 2007 via the internet. We have not met. After an initial discussion, risk assessment, and a little back and forth about asset allocation we agreed to begin a relationship that typically consists of one phone call and a few of emails a year. His concept of fees is based on how much time he spends working a clients account and overhead. According to the SEC ADV he manages well over a billion dollars.

My IA has never attempted to sell me anything. I believe in maximum diversification in passive accounts which he spreads over multiple funds (DFA primarily) and ETFs in accordance with our agreed upon asset allocation. Absolutely nothing financially sexy.

As for why I chose an IA, I think I can manage our portfolio but I don't think my wife has the background. So if I pass away unexpectedly the portfolio will continue to be professionally managed. I was also concerned about making a mistake with the portfolio. I am much more comfortable about our portfolio than before I obtained the services of an investment advisor.
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Old 11-26-2017, 05:20 PM   #23
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Originally Posted by stedmakr View Post
... I use an investment advisor. He is certified, registered, and clearly states he is a fiduciary. Our relationship started in 2007 via the internet. We have not met. After an initial discussion, risk assessment, and a little back and forth about asset allocation we agreed to begin a relationship that typically consists of one phone call and a few of emails a year. His concept of fees is based on how much time he spends working a clients account and overhead. ....
Interesting. I think a few posters here have checked in with a by-the-hour advisor for a specific need, and maybe occasional checkups, but I don't recall anyone with a relationship where they do a quick (or lengthy) check up annually. But it could certainly make sense to do it that way, and as you say, to maintain the relationship so that your wife would be set up without any discontinuity.

So I'm curious, if you don't mind sharing, what are you paying on an annual basis, and what might be typical discussions/adjustments?

-ERD50
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Old 11-26-2017, 05:48 PM   #24
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Small sample size, but most of my friends/acquaintances that use an advisor do it because they aren’t confident in their own ability, and/or because they just don’t want to deal with it. Many aren’t sure what fees they’re paying, or how their returns compare to “market returns”.
One friend told me he pays "just" 0.1%.

Per month.
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Old 11-26-2017, 09:17 PM   #25
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Interesting. I think a few posters here have checked in with a by-the-hour advisor for a specific need, and maybe occasional checkups, but I don't recall anyone with a relationship where they do a quick (or lengthy) check up annually. But it could certainly make sense to do it that way, and as you say, to maintain the relationship so that your wife would be set up without any discontinuity.

.......
-ERD50
I've been with this firm for over 4 years, and phone calls of >90 minutes are typical, and they happen 3-4 times per year (they are not local to me). When I first started with them there were many things in motion, and the discussions were even more frequent.

It's a full exchange of what we're doing now, any changes they recommend or ideas I want to explore, and a look ahead to what may happen income and expense wise. Basically making sure the planning corridors that we've developed over the last few years are still valid. If I have a question between these calls, a quick email exchange answers my question. Expect to have another within the next few weeks to finalize a Roth conversion.

There was a comment above about using a FA to provide continuity for one's survivors. This was a big factor for me. My kids are minors and wouldn't have access to any meaningful amount of money until they are well into their 20's. Although the designated trustee is empowered to change how my estate is invested, at least there is a stable platform from which to evaluate alternatives.
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Old 11-26-2017, 09:36 PM   #26
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Yes, Roth conversions are on the list for me as well. Gotta get married first as the single bracket is very limiting.
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Old 11-26-2017, 10:36 PM   #27
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I'd like to hear more about this [Roth Conversions]. I keep poking at it with various spreadsheets, ROTH versus 0% LTCG harvest is a question for me. I might even consider a by-the-hour FA for this, but my feeling is (like SS at 62 versus 70), the 'answer' is so dependent on unknowns, and the likely difference isn't great enough to worry too much about. I just want to avoid a big mistake.

-ERD50
My tIRA is about 55% of total portfolio. Doing conversions was one of the FAs recommendations at our first phone conference. Due to trailing comp from my former employer, 2017 is the first year it makes sense to look at them.

Spent some money with the the tax guy iterating through scenarios to find the optimum amount for my situation in 2017. It will save some money come RMD time, but more importantly, moves my estate in the direction I prefer in the event I expire before the IRA is exhausted.

I would label myself an "opportunistic converter." Due the possibility of ACA subsidies in 2018, don't expect to do any next year, and will be evaluating this annually.

Agree on the conversion dilemma. I finally settled on "what do you want to optimize for, and can you live with the costs and risks that come with that decision?" Many factors, and I haven't found a clear long term answer for my expected scenarios. Another reason why I haven't mentally committed myself to a multi-year conversion plan.
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Old 11-26-2017, 11:12 PM   #28
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This post isn't exactly on-point, but I am meeting Wednesday with a Fidelity advisor, since I'm about to start pulling funds from the portfolio for the first time (DW is retiring early next year) and have a series of questions about that process, including required tax payment withdrawals and if I can set up the account to no longer re-invest dividends. There is no obvious way to accomplish the latter, so I may just have to sell dividends once or twice a year, which is a pain but manageable.

I'll also look for some feedback on my portfolio, just to get a second opinion.
Maybe I'll report back after the fact; I usually find alternative views useful (which is why I hang out on the forum). In 3 years, I'll pull from only my portfolio for two years until DW reaches the age of discretion and can pull from her IRAs without penalty, so those two years until she can withdraw are my main concern. Until then, I'll continue to work about 15 hours/week online for 1/2 salary, so the next few years are not much of a concern. After DW is able to pull funds, I'll qualify for full SS in another two years, at which point the withdrawal rate will go down considerably.

I'm also considering moving a hunk of cash into PIMIX for more income, so I'm curious about his feedback on that (I'll probably sell a junk bond mutual to fund part of the 100k minimum since I don't think the dividend rate is worth the risk).
Roth conversions is another topic, but I'm skeptical that it's worth the trouble, particularly with the whiff of tax legislation in the air.
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Old 11-27-2017, 07:55 AM   #29
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FINRA will actually tell you if an FA lives paycheck to paycheck, has large CC debt, or lives beyond their means?
No but they will tell you if they have any actions against them like fraud, bankruptcy, lawsuits, etc... Your interview with the FA should be able to uncover people living beyond their means. I was referred to a wealth management adviser by TD Ameritrade. I did not want to go, but they asked me to talk to someone with an open mind. I agreed to it after they offered me $400 credit on future trades for my time. The person I saw was at five different firms in the past 4 years. When I asked him if he ever held a job for more than a year, I drew a blank stare ( I took that as no). I asked him what his net worth was, and he told me that he took some heavy losses recently on his investments. He then asked me what does that have to do with anything. I left the meeting at that point.

The questions you need to ask are:

Job history
Financial performance history
Net worth and how was it acquired
How much debt are they carrying?

My view is that unless a FA has a net worth in the millions acquired over time through investing (equity, fixed income, real estate, business ownership), they are worthless to me. Most FA are salesmen/women.
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Old 11-27-2017, 08:08 AM   #30
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We engaged a FA 3 years ago before I retired. My wife and I interviewed them together, if we, especially my wife, did not get a "good vib", we moved on. I wanted someone to "advise" her if something happened to me. We ultimately settled a fee only FA that works independently and is a fiduciary. We review the portfolio at least quarterly with him. Any changes to the portfolio are made by us; he can not get into our accounts. Fun teaching her how to do it, but she needs to know. We also have a CPA and an Attorney that we use for tax advice etc.
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Old 11-27-2017, 11:13 PM   #31
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Why not just go with a small/value ETF, save the fees and boost your return?
I could do that, or many other things.

Boosting my return, as long as I'm getting enough to meet my goals, is not the top priority right now.

I'll refer you back to my OP instead of rehashing the life-changing events that lead to using an FA at this point.
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Old 11-28-2017, 08:39 AM   #32
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We use an AUM-fee charging FA firm.

Why? – It makes our life much easier. DH has no interest in managing things like that and I don’t feel I have the time. We travel much of the year – mostly overseas – and aren’t fully retired since we both work for DH’s consulting firm (which also gives us the opportunity for much of the interesting travel).

I had a very long (>600 word) description of why and how we chose but you can imagine. Years of busy lives, proliferation of accounts (multiple places and instruments some with high fees), not-so-great experience taking care of probating parents' small estate, etc. all fed into the decision. We think we get good value and we definitely have more peace-of-mind now. We can afford it. It’s a personal decision just like what we spend on our home, car, and travels.
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Old 11-28-2017, 09:15 AM   #33
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If you can follow what your FA is doing, track it, understand the costs, etc.

Then you do not need the FA.

Circular reference.
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Old 11-28-2017, 09:26 AM   #34
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If you can follow what your FA is doing, track it, understand the costs, etc.

Then you do not need the FA.

Circular reference.
Yep, the Financial Advisor Quality Paradox (FAQP): If you know enough to be able to identify a good advisor vs. a bad advisor, you probably don't need one.
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Old 11-28-2017, 11:23 AM   #35
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I knew it wouldn't be long before those opposed to FA's would start telling those of us who choose to use FA's that we are wrong.

The simple answer is those of us who use FA's do it because we want to and we can afford it. As Crewer said, it's a personal choice just like many other life decisions.
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Old 11-28-2017, 11:25 AM   #36
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I can certainly agree with that, I don't need an advisor.

But I want one.
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Old 11-28-2017, 11:29 AM   #37
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I knew it wouldn't be long before those opposed to FA's would start telling those of us who choose to use FA's that we are wrong.
Please note the FAQP definition above contains the term "probably". That was a deliberate inclusion to allow for individuals such as yourself, FlaGator and others who choose to employ an FA.

I am NOT saying your decision is wrong.
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Old 11-28-2017, 11:54 AM   #38
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Yes, Roth conversions are on the list for me as well. Gotta get married first as the single bracket is very limiting.
This is perhaps the worst of many poor reasons to get married. There are likely some good reasons too, but I struggle to remember them.

When I was dating, a woman asked me if I would ever consider getting married again. No I said, and if somehow that happened, I would definitely never marry her.

I felt this was clear enough to absolve me of anything other than being incredibly impolite.

Ha
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Old 11-28-2017, 12:01 PM   #39
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You don't say? Really? Getting married for lower taxes is not a good idea?

Hmmm...

Don't worry, that is just one benefit of getting married. I'm getting married because I want to -
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Old 11-28-2017, 12:44 PM   #40
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I knew it wouldn't be long before those opposed to FA's would start telling those of us who choose to use FA's that we are wrong.

The simple answer is those of us who use FA's do it because we want to and we can afford it. As Crewer said, it's a personal choice just like many other life decisions.
Don't go looking for trouble. I haven't been following this thread too closely, but what I've seen is a few people who say you don't need one...not that it is wrong. Maybe I missed a post because I have a few people on ignore, but you generalized this as "those opposed". You want an FA? No skin off my back.
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