Positive Financial Planner stories

[Bram]

I'd care if it were 9 dimes for a dollar.

[Leonidas]

Quote:

Originally Posted by El Guapo And robert duvall. And unfortunately haley joe osment. But haley doesnt talk much, so its alright.

Yeah, but I still had to see his cherubic little face and it took away from what was an otherwise fun movie.

I started out with the same firm I'm with now, and in the beginning it was because I was just so damn ignorant of all things financial that I knew I had to have some help. But even so, when they offered to make all the decisions I balked and opted to have final authority to decide based on their recommendations. They were very good at giving me decent choices to pick from, and learning how to choose was what started me on the road to being a better investor. While working I just never had to time to really refine my knowledge and get to the point where I felt I could make the decision all by myself. During the last two years I've turned that around to the point where I give them the choices of things I want to do and listen to their feedback. My next step is to take the lump sum portion of my retirement and invest it using a discount brokerage.

There's only been two investments moves that were a disaster and while I blame the firm for decisions the mutal fund managers made, I can't blame my adviser for suggesting the purchase. I said that I wanted to move in a certain direction and he suggested two mutual funds that he thought would accomplish that. I did not do any research and just blindly accepted his recommendations. But when I lost money I had a lot of company, so I just chalked it up as a lesson learned and used the loss to offset the tax on some gains. I failed to complete my responsibilities toward myself when I made that move and it cost me. It won't happen again.

Like I mentioned in the thread started by My Dream, I recognize that while these guys have made me a lot of money and almost always done very well by me, they do have a bias toward decisions that make them money. As I move toward what I think will eventually be a major shift of dollars away from them, that bias comes to light more and more. When I gave them some recent instructions along those lines they freaked out just a little and came back with some alternatives that favored keeping funds where they made money rather than the scenario I had been planning - which would take a chunk of money and put it where someone else was getting a cut. We spent an hour on the phone and I'm finalizing the plans now, but the reality is that some of their suggestions made better sense than some of the things I wanted to do. I'm still doing what is in my best interest, but I liked some of their ideas better and what I'm paying them will be the same or even less than it would if I did the same thing with someone else.

I have good advisers, but I have to remember that not only do I have to watch the money in my pockets, but I need to at least be aware of the money going into their pockets as well.

Modified to add:

Being an informed consumer pays off. In the recent conversations with my investments guys, I had very accurate information on rates for a product that I wanted to add to my portfolio. I knew what their advertised rate was and knew that I could do somewhat better elsewhere - so I pressed for a better deal. In the end they had to admit that although they could offer me a better deal than the advertised special, what I had found elsewhere was still better and they didn't try and push their product after that. They did counter with something really nice as an alternative to something I had wanted to do, and because I had done my research I was able to recognize a good deal when I saw it.

[FinanceDude]

Good thread.............. People look at 5.75% and these big loads, and think of the FP as pocketing basically all of that. Not true, but it is a natural inclination to think that.

Someday I'll dig into that on here if people want..............

[kcowan]

Quote:

Originally Posted by Meadbh ...With this firm I have a balanced portfolio which is currently returning just under 10%. This is my RE portfolio so it has a lower beta than the corporate one. MERs are 1%, which is low for Canada...

How does the 10% return line up with:
1) Your expectations, and
2) Your needs.

What is the equity/fixed allocation?

[justin]

I'd say I had an ok experience with my financial planner. He worked for Edward Jones. He did have me invested in all front load mutual funds (American Funds). When I started investing with him, I was paying 5.75% sales charges. By the time I had a six figure portfolio with him, the sales charge was down to 3.5%. The mutual funds themselves had fairly low expense ratios (around .6%), which included a .25% 12b-1 fee.

He would sit down with me and go over risk tolerance and portfolio allocation and show me where I need to focus on investing going forward. I presented to him my plans to retire early (by age 40 was my plans at the time). We went over different scenarios and "what if's". He was the first to introduce me to the 72(t) provision allowing penalty free early withdrawal from IRA's for anyone without a special reason. That single piece of advice about the 72t rule was extremely valuable to me (even though I would have eventually found out about it on this forum).

The main reason I stuck with him for so long was that American Funds seemed to be a good actively managed fund company that has produced good long term performance results over decades of management. You typically can't get American Funds without paying a load of some sort.

After doing a lot of reading of this forum and other books, I eventually decided that a passive slice n dice portfolio of primarily low cost index funds was the way for me to go. I tried to see what my Edward Jones guy could do for me, and the least expensive way for me to get into index funds would have been to pay a full price brokerage commission on some ETF's (around 1% of the purchase price, if I bought $10,000 worth).

I also didn't like that I couldn't get in touch with my financial planner on weekends or evenings or via the web. This is when I tend to do my investment work, not during the work day. And Edward Jones' web interface was pretty horrible versus Vanguard, fidelity and other "do it yourself" shops. I ditched the FP and went with Vanguard and Fidelity.

Long story short, I can see the benefit of having an FP like mine if you are unable to do the hard work of learning about investing on your own and having discipline to stick to your asset allocation. It is expensive advice, but probably worth the cost if you just won't take care of it yourself.

Maybe like going to a mechanic for car problems instead of doing it yourself. I'm sure I could read a half dozen books on auto repair, hang out in some auto repair forums, network with local mechanics or friends who work on cars, and I'd eventually be extremely proficient at auto repair. However, I choose to outsource that particular expense, and I feel like the few hundred dollars per year I spend on labor for car repairs/maintenance is worth it. Maybe some feel the same way about investing and don't know enough to know any better.

[Meadbh]

Quote:

Originally Posted by kcowan 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]

Quote:

Originally Posted by Meadbh ...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]

Quote:

Originally Posted by ladelfina 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):

Quote:

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]

Quote:

Originally Posted by Empty Pockets 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.