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Re: Index Funds Pros and Cons
09-26-2006, 02:19 PM
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#41
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Moderator Emeritus
Join Date: Feb 2004
Location: minnesota
Posts: 13,228
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Re: Index Funds Pros and Cons
Quote:
Originally Posted by FinanceDude
One more thing: *Management fees can be deducted on your taxes, commissions can not............
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Commissions are deducted from the sales price when determining your gain on the sale of the asset.
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Re: Index Funds Pros and Cons
09-26-2006, 02:27 PM
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#42
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Apr 2003
Location: Hooverville
Posts: 22,983
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Re: Index Funds Pros and Cons
Quote:
Originally Posted by FinanceDude
Pretty common fee applied to investment accounts...........but that's my business models, and I price them accordingly:
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I assume that Fin. Advisors don't spend a lot of time with people who have no money, so for the most part their clients will not be dolts.
Still, I can easily imagine a busy person who might never bother to consider that the advisor is getting almost half the spendable income from an investment, while bearing none of the risk. And of course, in tough markets, he is the only one who is clearing anything.
I imagine that if you were so self destructive as to point that out to your clients, quite a few would reconsider their investment plan. *
I appreciate your honesty on this board because for the most part FPs have a pretty short half life around here.
Ha
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"As a general rule, the more dangerous or inappropriate a conversation, the more interesting it is."-Scott Adams
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Re: Index Funds Pros and Cons
09-26-2006, 02:33 PM
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#43
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Thinks s/he gets paid by the post
Join Date: Jun 2005
Posts: 4,005
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Re: Index Funds Pros and Cons
Financedude,
What happens to the 12b-1 fees and sales loads/commissions paid (if any) by your clients? That $50 fee to buy vanguard funds is an additional expense to your clients on top of the 1%/yr, right? What about commissions on stock purchases or sales? Do those come out of your 1%?
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Re: Index Funds Pros and Cons
09-26-2006, 02:42 PM
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#44
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Feb 2006
Location: Washington, DC
Posts: 11,317
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Re: Index Funds Pros and Cons
People who read this board are generally taking enough interest in personal finance to figure out how to manage their own portfolio. Also, many of us are in or near ER and the reality of maintaining a SWR over 30-40 years takes on real meaning. But in the accumulation years many of us (unwisely) considered ourselves too busy to pay attention to this stuff. An FA can come in handy for such people. It enabled DW and me to put together a nice nest egg that we now manage ourselves. Could we have done better? Maybe, but we could have done a lot worse. For those who use an FA a fee advisor like the dude here makes more sense (to me) than an FA who is biased by load commissions. Of course if the fee advisor traps you in load funds on top of the 1% something is wrong :P
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Idleness is fatal only to the mediocre -- Albert Camus
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Re: Index Funds Pros and Cons
09-26-2006, 02:59 PM
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#45
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Aug 2006
Posts: 12,483
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Re: Index Funds Pros and Cons
Quote:
Originally Posted by Martha
Commissions are deducted from the sales price when determining your gain on the sale of the asset.
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True, but I was referring to the fact that people can deduct their management fees on an annual basis on their taxes, what you are saying is true, but happens upon sale, which could be several years out............
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Consult with your own advisor or representative. My thoughts should not be construed as investment advice. Past performance is no guarantee of future results (love that one).......:)
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Re: Index Funds Pros and Cons
09-26-2006, 03:03 PM
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#46
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Aug 2006
Posts: 12,483
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Re: Index Funds Pros and Cons
Quote:
Originally Posted by donheff
Of course if the fee advisor traps you in load funds on top of the 1% something is wrong* :P
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That doesn't happen a lot anymore, unless you got a famous Northwestern Mutual "wrap account" with Mason Street funds that has been shut down...........
However, "wrap accounts" are still all the rage, which is sad. Basically, it involves the client paying a management fee on TOP of the mutual fund expense, and even though a lot of the programs use institutional and A-share expenses, the program easily costs the consumer 2.00-2.50% a year.............that's a crime..............
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Consult with your own advisor or representative. My thoughts should not be construed as investment advice. Past performance is no guarantee of future results (love that one).......:)
This Thread is USELESS without pics.........:)
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Re: Index Funds Pros and Cons
09-26-2006, 03:11 PM
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#47
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Aug 2006
Posts: 12,483
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Re: Index Funds Pros and Cons
Quote:
Originally Posted by HaHa
I appreciate your honesty on this board because for the most part FPs have a pretty short half life around here.
Ha
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Well, I am different, I got dropped on my head when I was young and have never recovered...........
__________________
Consult with your own advisor or representative. My thoughts should not be construed as investment advice. Past performance is no guarantee of future results (love that one).......:)
This Thread is USELESS without pics.........:)
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Re: Index Funds Pros and Cons
09-26-2006, 07:42 PM
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#48
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Thinks s/he gets paid by the post
Join Date: Feb 2005
Posts: 2,032
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Re: Index Funds Pros and Cons
Quote:
Originally Posted by HaHa
Not that I think you shouldn’t get your fees however you can, but caveat emptor does apply here as in most places.
Ha
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HAHA I work for an advisory firm. Our fee schedule is around 75BPS max and generally head down from there. Our avg account size is in the 7 figures which is why our fees are lower than most firms.
We implement our allocations mostly with ETFs and DFA funds, so say that the max avg would be 1% of total assets. I think you're mistaken in believing that ALL people are getting is investments. Most firms offer planning, advice, meeting with your other advisors,bill payment, liabilities management, insurance analysis etc. I happen to think that our firm is quite good with the services we offer. Many of our clients have are very financially astute, and have zero interest or time to do any of these activities themselves.
I know it's popular here to demonize an entire industry, but the truth is that there are some really good advisors and advisory firms out there.
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Re: Index Funds Pros and Cons
09-26-2006, 07:57 PM
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#49
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Apr 2003
Location: Hooverville
Posts: 22,983
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Re: Index Funds Pros and Cons
Quote:
Originally Posted by saluki9
HAHA* I work for an advisory firm.* Our fee schedule is around 75BPS max and generally head down from there.* Our avg account size is in the 7 figures which is why our fees are lower than most firms.*
We implement our allocations mostly with ETFs and DFA funds, so say that the max avg would be 1% of total assets.* I think you're mistaken in believing that ALL people are getting is investments.* Most firms offer planning, advice, meeting with your other advisors,bill payment, liabilities management, insurance analysis etc.* I happen to think that our firm is quite good with the services we offer. Many of our clients have are very financially astute, and have zero interest or time to do any of these activities themselves.*
I know it's popular here to demonize an entire industry, but the truth is that there are some really good advisors and advisory firms out there.
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Good point, thanks for taking the time to make it.
Ha
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"As a general rule, the more dangerous or inappropriate a conversation, the more interesting it is."-Scott Adams
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Re: Index Funds Pros and Cons
09-26-2006, 08:03 PM
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#50
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Thinks s/he gets paid by the post
Join Date: Dec 2004
Location: Minneapolis
Posts: 4,455
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Re: Index Funds Pros and Cons
Quote:
Many of our clients have are very financially astute, and have zero interest or time to do any of these activities themselves.
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.. so that they can do something else of more importance, e.g., golfing, fishing, biking, hiking.
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Re: Index Funds Pros and Cons
09-26-2006, 08:20 PM
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#51
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jun 2005
Posts: 10,252
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Re: Index Funds Pros and Cons
Quote:
Originally Posted by FinanceDude
True, but I was referring to the fact that people can deduct their management fees on an annual basis on their taxes, what you are saying is true, but happens upon sale, which could be several years out............
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Is it not true that one can deduct only those expenses that exceed 2% of your AGI and then only if you itemize?* *If that's true, I hope I never even come close to paying 2% of AGI in management fees.
And there are some very low expense ratios for some index funds.* For example, in our 529 accounts, we own VIIIX with er of 0.03%.* * VTI, the total stock market index ETF, has an expense ratio of 0.07%.* (Yes, I know there are a bid/ask spread and NAV issues.) It may be better to own VTI instead of a mixture of SPY, MDY, and IWM.
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Re: Index Funds Pros and Cons
09-26-2006, 09:06 PM
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#52
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Recycles dryer sheets
Join Date: Apr 2006
Posts: 147
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Re: Index Funds Pros and Cons
Quote:
Originally Posted by saluki9
I know it's popular here to demonize an entire industry, but the truth is that there are some really good advisors and advisory firms out there.
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In your opinion is Paul Merriman's advisory firm one of the good ones?
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Re: Index Funds Pros and Cons
09-26-2006, 09:12 PM
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#53
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Mar 2005
Location: Chicago
Posts: 13,151
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Re: Index Funds Pros and Cons
Quote:
Originally Posted by saluki9
I know it's popular here to demonize an entire industry, but the truth is that there are some really good advisors and advisory firms out there.
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I suppose there must be somewhere. The problem is sorting through the zillions of duds to find a mediocre one.
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"I wasn't born blue blood. I was born blue-collar." John Wort Hannam
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Re: Index Funds Pros and Cons
09-26-2006, 09:29 PM
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#54
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Aug 2006
Posts: 12,483
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Re: Index Funds Pros and Cons
Quote:
Originally Posted by saluki9
HAHA* I work for an advisory firm.* Our fee schedule is around 75BPS max and generally head down from there.* Our avg account size is in the 7 figures which is why our fees are lower than most firms.*
We implement our allocations mostly with ETFs and DFA funds, so say that the max avg would be 1% of total assets.* I think you're mistaken in believing that ALL people are getting is investments.* Most firms offer planning, advice, meeting with your other advisors,bill payment, liabilities management, insurance analysis etc.* I happen to think that our firm is quite good with the services we offer. Many of our clients have are very financially astute, and have zero interest or time to do any of these activities themselves.*
I know it's popular here to demonize an entire industry, but the truth is that there are some really good advisors and advisory firms out there.
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Very good point, but I believe the reason is MANY people on here have taken a bath working with so-called "advisors" in the past..............
Funny how we never have these discussions about insurance agents or attorneys on here..........I guess those are the "honorable professions"............
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Consult with your own advisor or representative. My thoughts should not be construed as investment advice. Past performance is no guarantee of future results (love that one).......:)
This Thread is USELESS without pics.........:)
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Re: Index Funds Pros and Cons
09-26-2006, 09:38 PM
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#55
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Moderator Emeritus
Join Date: Dec 2002
Location: Oahu
Posts: 26,856
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Re: Index Funds Pros and Cons
Quote:
Originally Posted by LOL!
Is it not true that one can deduct only those expenses that exceed 2% of your AGI and then only if you itemize?* *If that's true, I hope I never even come close to paying 2% of AGI in management fees.
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Keep in mind that the uproar over paying 1% (or more) of your portfolio in management fees occurs when you retire and realize that you're already limiting your withdrawals to 4% (or less).
Your retirement AGI is hopefully a lot lower than your working years.
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Re: Index Funds Pros and Cons
09-26-2006, 10:00 PM
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#56
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Aug 2006
Posts: 12,483
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Re: Index Funds Pros and Cons
Well........depends on what your goals are..........if you earn $70,000 a year before ER, and 4% is $75,000 a year, so be it...........
__________________
Consult with your own advisor or representative. My thoughts should not be construed as investment advice. Past performance is no guarantee of future results (love that one).......:)
This Thread is USELESS without pics.........:)
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Re: Index Funds Pros and Cons
09-26-2006, 10:15 PM
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#57
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Mar 2005
Location: Chicago
Posts: 13,151
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Re: Index Funds Pros and Cons
Quote:
Originally Posted by FinanceDude
Funny how we never have these discussions about insurance agents or attorneys on here..........I guess those are the "honorable professions"............
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Well, you guess wrong.* insurance agent and honorable profession = oxymoron.* Sort of like calling a gas chamber operator an honorable profession.* I'm sure there must have been an honorable gas chamber operator somewhere, but probably not really typical!
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"I wasn't born blue blood. I was born blue-collar." John Wort Hannam
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Re: Index Funds Pros and Cons
09-26-2006, 10:54 PM
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#58
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Aug 2006
Posts: 12,483
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Re: Index Funds Pros and Cons
Quote:
Originally Posted by youbet
Well, you guess wrong.* insurance agent and honorable profession = oxymoron.* Sort of like calling a gas chamber operator an honorable profession.* I'm sure there must have been an honorable gas chamber operator somewhere, but probably not really typical!
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How about attorneys
__________________
Consult with your own advisor or representative. My thoughts should not be construed as investment advice. Past performance is no guarantee of future results (love that one).......:)
This Thread is USELESS without pics.........:)
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Re: Index Funds Pros and Cons
09-26-2006, 10:58 PM
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#59
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Mar 2005
Location: Chicago
Posts: 13,151
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Re: Index Funds Pros and Cons
I'm not going there!* *
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"I wasn't born blue blood. I was born blue-collar." John Wort Hannam
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Re: Index Funds Pros and Cons
09-26-2006, 11:01 PM
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#60
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Aug 2006
Posts: 12,483
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Re: Index Funds Pros and Cons
Quote:
Originally Posted by youbet
I'm not going there!* *
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Why not, afraid to get "sued"
__________________
Consult with your own advisor or representative. My thoughts should not be construed as investment advice. Past performance is no guarantee of future results (love that one).......:)
This Thread is USELESS without pics.........:)
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