Positive Financial Planner stories

[Meadbh]

What is the equity/fixed allocation?

The portfolio that is returning 10% has two parts: RRSP (60% Fixed Income) and an investment account (47% Fxed Income).

Approximately 20% of my investments are international. All told, the percentage of fixed income in my overall NW (not including real estate) is only ~30%. As I said, I have other investments, including ~5% VC. That segment is riskier but the potential payoff is high.

I am quite aware that some posters on the Financial Webring are claiming astounding returns for 2006. Good for them! My investment mix will guarantee me FI (and RE in under 6 years) provided that I can preserve capital and achieve modest growth adjusted for inflation. Returns over 7% are icing on the cake. Having amassed a decent NW, and given that my pension is defined contribution, I am loath to incur excessive risk. In other words, I'm getting more conservative in my dotage.

And the 1% management fees are tax deductible, too.

 

[kcowan]

...My investment mix will guarantee me FI (and RE in under 6 years) provided that I can preserve capital and achieve modest growth adjusted for inflation. Returns over 7% are icing on the cake. Having amassed a decent NW, and given that my pension is defined contribution, I am loath to incur excessive risk. In other words, I'm getting more conservative in my dotage.

And the 1% management fees are tax deductible, too.

Yes that is what I was getting at. I also have a target of 7% overall. So anything above that is gravy. But then I am aware that there will be years when I don't get 7% in the next 30 so I want to ensure that the good years are good enough to overcome the bad years. I am expecting 2007 to be a modest year in equity returns. By keeping my diversified funds in the RRSPs, I can manage taxes down very low too. This helps a lot with investment growth.

PS I use 4 brokers so I value paying for good advice. But I don't pay them much because I am a buy-and-hold type.

 

[GLM]

Ok my fist post after months of lurking . Guess Mom taught me if you can't say anything nice -don't say anything at all.... (actually I really hate typing)

DH and I have been investing for just over 20 years- started 6 months before the 1987 market tank. Learned the value of diversification early! Have done a decient job of managing the funds dispite the inevatable learning curve.

Last year our estate lawyer/planner offered us a free financial consult with the financial planner firm he is affiliated with. The offer coincided with DH employer going private and a bunch of stock options and grants that were exercized. Looking at a sudden shift in reallocations the "free" offer was too good to resist.

Went into the meeting very organized and expecing the hard sell. Had some quertions I had always wanted to ask a pro .(I had not yet found this knowegable board)

The planner was a pleasant surprise. He asked good questions based on what I told him and caught one area of exposure we might want to address. (Related to uninsured motorists ). The general effect of the meeting reassured me that I have been doing pretty well on my own and we are ontrack.

He offered to manage our non-401K assets but did not hard sell it - or any thing else for that matter. His investment strategy was admiditly more complex than my heavy reliance on no load index funds- but then he has to justify his fees.

At the end of the consultation he took "no thanks for now " gracefully and offered to be there if we changed our minds. If I got tired of it, or if DH does not have me around or the intrest to address it - I would recomend him . (However I am training the kids to invest and diversify in index funds )

 

[ladelfina]

Ok.. I'll chime in with a Positive Broker Story.. (not FP.. since FPs as we think of them now were not really conceived of at the time, but their functions were partially served by a combo of bankers and brokers.. along with maybe tax accountants and attorneys):

My "egg" started out as a few stocks bought by my dad in the '70s under the UGTMA. The "broker" at that time was an important figure, as there wasn't the Internet or the DIY attitude we have now. If "Mr. K" called.. Dad took the call.

"Mr. K" (my dad's broker) --- as with many things about my dad that I rejected out of youthful arrogance -- actually did WAY right by him. I cringe to look at the commissions they paid back then, compared with the $9.95 of today (granted it was all done more or less by hand with the use of teletypes, etc.), but the positive echoes of Mr. K. resound today in my portfolio. TelMex? FAX? ... these were my dad's broker's "hot tips" of the day, and they've done pretty OK by me. TelMex MORE than OK. When I was older and the broker/dad grapevine whispered "APC" in the 1980s, I ignored it, (even tho' we used the "new-fangled" APC back-ups in our office Arrogance! mixed with NIH ..not-invented-here...).

What did I jettison? Anglogold (just before the big rise in gold prices). Fine, because it was a small holding (diversification, dontchaknow?). Still have the utilities (UIL/NU/AEP) that were the Norwegian widow's dream, I guess, back in those inflationary times... Still have the insurance and bank stocks. The more I look at the small, apparently ragtag, portfolio my dad handed over to me, AND the more I read these boards, the more it all makes a LOT more sense than I'd assumed at the start, or even a yeara or two ago... My hybrid portfolio of this stuff plus my own choices up 24% in 2006. Losers still always mostly mine (bond ETfs/Pfizer, etc.). while OTC/pink slip Walmart Mexico was up 56.5+% for 2006...

But the professional ethics of one person in the 1970s and '80s.. pitted against the rapaciousness of the financial industry of the new millenium, with its arsenal of newly-minted (or at least late-'90s-issued) sales people.. ??

Mr. K's calls were few. His advice reasonable and, by objective measures, valuable. He didn't make x% of my family's egg per annum, just his commissions. A bye-gone era.

I'll note one other thing about "Mr. K" that I recall, somewhat vaguely by now.. I think for whatever combination of reasons he either left or got shunted from his brokerage job and was working at Sears. SEARS. Could've been health reasons.. or he may have bailed on his own for other motives. I remember my dad and mom going to his funeral. In the meantime his TelMex tip, to me, by now is worth on the order of $200,000+. To my mom and sis, at least equally as much if they haven't sold. RIP, Mr. K, and I mean that sincerely. Not for the $200k, but just for having been a good guy and not having always put your own interests before your clients', at least based on what I can tell...]

kcowan.. as a certain resuscitated board member likes to say: "ding, ding, ding.. we HAVE a winner!" Buy-and-hold seems to do a world of good. I cringe when I see funds described as having a "low" turnover of 30% p.a. :

 

[Leonidas]

RIP, Mr. K, and I mean that sincerely. Not for the $200k, but just for having been a good guy and not having always put your own interests before your clients', at least based on what I can tell...]

I loved your post. Although I wrote about how I feel that I have to always consider my brokereage's profit motivation when evaluating their recommendations, it's not that I don't trust them. It's just that I have to remember that there is that slight divergence in interests always present in the background. Your fond memories and admiration for the honorable Mr. K made great reading. Maybe maturity allows us to see things in a different light, but in a recent email to my broker and account manager I went out of the way to say thanks for doing a great job (The enjoy their fees, no doubt, but a little gratitude for a job done well is nice also):

Before discussing business, I want to take a moment to wish both of you a Merry Christmas, Happy Holidays and a wonderful New Year. Also, I wanted to express my esteem and appreciation for your diligent efforts in helping me achieve my financial goals. You guys have really been great and I wanted to express my sincere thanks.

 

[cute fuzzy bunny]

From what I've seen, these older do it your selfers either put all their money in CD's from their local bank or keep cash in their mattress. Either way they're loosing earning power every year.

A lot of these folks remember the depression and are deathly afraid of the stock market.

No one can tell me that a well diversified portfolio, designed by a reputable professional, would not benefit them tremendously.

And as a result of their well rooted experiences, they would be deathly afraid of any other investments and sleep like babies with the ones they've made for themselves that they're comfortable with.

A well diversified portfolio designed by a professional, with the proceeds going in full to the investor is a very good thing. Unfortunately with exceptions I dont think it works out that way.

For someone with an enormous portfolio, no interest or idea in financials or investing, and the willingness to pay for the pleasure of never having to learn...a good FP is wonderful.

Other than that, i'll stick with my suggestion of one phone call to vanguard or fidelity to take their 5 question risk/reward quiz, dump it into a lifecycle or lifestrategy or target retirement fund that suits that, and enjoying the benefits of a well diversified, regular adjusted and balanced portfolio created by professionals for a far lower cost and given historic results...better returns.

FP's are just like lawyers, doctors, and the people you work (or worked) with. Some are good, a few are great, a lot just show up and put one foot in front of the other while maintaining their own best interests.