Financial Advisor Questions/Advice

[conway19145]

Hey everyone!

I have been a long-time lurker and love the information you all have provided. I decided to join, finally, to become more educated but to ultimately, give back what I have learned over my [short] life.

I'm self employed and have ran into a few bucks over the years. I firmly believe in the phrase: the harder you work, the luckier you get.

I currently have accounts with Morgan Stanley and Fidelity but I am extremely unhappy with my financial advisors and am looking to find someone else. My issue is, I want to find someone who genuinely cares. My current FA didn't make any time for me until my account grew - I hate that. They also made many careless mistake, which I attribute to not being a 'whale' of a client.

Do you guys have any good questions to ask FA's? Anything that I should look out for? I've done the whole song and dance before but you guys (And gals) never cease to amaze me with your knowledge! So before I go any further, thank you!

I just bought an engagement ring so a house will follow and the one thing I have always wanted is a boat. So lots of planning needed!

Thank you again! Happy 4th!

 

[nash031]

Not the answer you’re looking for, but no one is going to care about your money as much as you will. That’s why most - not all - here eschew FAs altogether. Educate yourself, consolidate at Fidelity and DIY. Spending the time to educate yourself now while you’re young is one of the best investments you can make.

 

[conway19145]

Not the answer you’re looking for, but no one is going to care about your money as much as you will. That’s why most - not all - here eschew FAs altogether. Educate yourself, consolidate at Fidelity and DIY. Spending the time to educate yourself now while you’re young is one of the best investments you can make.

I totally understand that. For me, though, performance is #1; Customer service is #2. Unfortunately, my finances are quite complex so I am in need of tax and planning professionals.

 

[justlikebike]

I have never found an FA that knew enough about taxes to make me comfortable. Get a good accountant, find our which of your investments you can work yourself, and yes, educate yourself. The easy, "just do this for me" is a path that will leave you in frustration the rest of your career. (I know this from experience and 6 different FAs over 30 years)
as you invest a small portion, you can compare to how an FA is doing and discuss the complex portions with your accountant every year.

 

[Oz investor]

Not the answer you’re looking for, but no one is going to care about your money as much as you will. That’s why most - not all - here eschew FAs altogether. Educate yourself, consolidate at Fidelity and DIY. Spending the time to educate yourself now while you’re young is one of the best investments you can make.

i doubt i could have phrased that better , yes i agree in the broad context

( i live in Australia and can barely differentiate between Fidelity and Fannie Mae .. so you have the edge on me there )

 

[DrRoy]

I have also consolidated at Fido. I have had no problems with the FA there, and other support has been good too (like the bond desk). I do not have any complex taxes like you mentioned. I have had other FA's at a 1% of assets fee, but none of them could earn that fee so I dropped them. As far as interviewing goes, present your situation and ask what they would do for you. Go with the answer you like the best.

 

[Red Badger]

I totally understand that. For me, though, performance is #1; Customer service is #2. Unfortunately, my finances are quite complex so I am in need of tax and planning professionals.

If performance is #1, you're gonna ride the frustration freighter for a long time. There is significant empirical date proving that, over extended time periods, index investing wins. Every time. If you have gambling in your blood, park 90% of your portfolio indexes and play Doc Holiday with the other 10%. FA's will gladly use your $$ trying to beat the market, while happily charging you a premium when eventually, they lose.

If your income side is complex, hire a CPA and be done with it.

 

[samclem]

I totally understand that. For me, though, performance is #1; Customer service is #2. Unfortunately, my finances are quite complex so I am in need of tax and planning professionals.

If you've got a complex tax situation, then you surely need an accountant.
No FA is going to consistently get you market-beating investment results. If they could, they would >not< be selling advice to retail clients, as they could become fantastically wealthy in a few years by investing in leveraged investments. Setting up your own investments (pick an asset allocation, buy low-cost index funds/ETFs to achieve that allocation, leave it alone) is, in many ways, easier than trying to discern if you are being treated fairly by your FA.
It is tough, particularly for entrepreneurs/professionals, to accept that there's no way to buy expert help that can do better than the market averages over time. It is quite counterintuitive.

 

[Oz investor]

If performance is #1, you're gonna ride the frustration freighter for a long time. There is significant empirical date proving that, over extended time periods, index investing wins. Every time. If you have gambling in your blood, park 90% of your portfolio indexes and play Doc Holiday with the other 10%. FA's will gladly use your $$ trying to beat the market, while happily charging you a premium when eventually, they lose.

If your income side is complex, hire a CPA and be done with it.

i choose the other way 90% Doc Holiday ( roughly) 7% index and 3% interest-bearing securities .

when i do beat the market i beat it big time ( you only need a couple of long shots to offset a string of minor place-getters , just need to avoid as many non-finishers as possible )

and yes i used to gamble ( race-tracks etc. ) , but then i bought into the gambling house as a core investment and now invest in a wide range of risk profile companies . ( i still need the asset growth as well as div. income )

as i see it the index fund loses less often against the benchmark index

my best performer is up 4,700% in 7 years and several others are up more than 200% in the same period BUT the important part is they pay DIVIDENDS not just climb the wall of worry .

 

[exnavynuke]

i choose the other way 90% Doc Holiday ( roughly) 7% index and 3% interest-bearing securities .

when i do beat the market i beat it big time ( you only need a couple of long shots to offset a string of minor place-getters , just need to avoid as many non-finishers as possible )

and yes i used to gamble ( race-tracks etc. ) , but then i bought into the gambling house as a core investment and now invest in a wide range of risk profile companies . ( i still need the asset growth as well as div. income )

as i see it the index fund loses less often against the benchmark index

my best performer is up 4,700% in 7 years and several others are up more than 200% in the same period BUT the important part is they pay DIVIDENDS not just climb the wall of worry .

Congrats on not losing... yet. Unfortunately for you, the statistics say there's around a 99.9% probability that you will lose in the long run vs index funds. Would be nice if you understood how dividends and stock prices are related though as you keep mentioning them like dividends are some magic thing that gives you money from nowhere..

 

[exnavynuke]

Hey everyone!

I have been a long-time lurker and love the information you all have provided. I decided to join, finally, to become more educated but to ultimately, give back what I have learned over my [short] life.

I'm self employed and have ran into a few bucks over the years. I firmly believe in the phrase: the harder you work, the luckier you get.

I currently have accounts with Morgan Stanley and Fidelity but I am extremely unhappy with my financial advisors and am looking to find someone else. My issue is, I want to find someone who genuinely cares. My current FA didn't make any time for me until my account grew - I hate that. They also made many careless mistake, which I attribute to not being a 'whale' of a client.

Do you guys have any good questions to ask FA's? Anything that I should look out for? I've done the whole song and dance before but you guys (And gals) never cease to amaze me with your knowledge! So before I go any further, thank you!

I just bought an engagement ring so a house will follow and the one thing I have always wanted is a boat. So lots of planning needed!

Thank you again! Happy 4th!

Rule #1 - never pay any advisor for AUM. If they're taking a % of your portfolio, you're losing.

Rule #2 - active management doesn't work in the long run, and that's your timeline, so don't hire someone to actively manage your portfolio.

Rule #3 - If you then find a fee-only FA, that can invest in passive index funds for less of your time and money than you could learn to do so yourself, feel free to hire them. Given that learning to make a 3-fund portfolio and how to structure that plan in a tax-efficient way etc takes relatively little time and no money, it's tough to find someone that meets that criteria however.

 

[Freedom56]

Hey everyone!

I have been a long-time lurker and love the information you all have provided. I decided to join, finally, to become more educated but to ultimately, give back what I have learned over my [short] life.

I'm self employed and have ran into a few bucks over the years. I firmly believe in the phrase: the harder you work, the luckier you get.

I currently have accounts with Morgan Stanley and Fidelity but I am extremely unhappy with my financial advisors and am looking to find someone else. My issue is, I want to find someone who genuinely cares. My current FA didn't make any time for me until my account grew - I hate that. They also made many careless mistake, which I attribute to not being a 'whale' of a client.

Do you guys have any good questions to ask FA's? Anything that I should look out for? I've done the whole song and dance before but you guys (And gals) never cease to amaze me with your knowledge! So before I go any further, thank you!

I just bought an engagement ring so a house will follow and the one thing I have always wanted is a boat. So lots of planning needed!

Thank you again! Happy 4th!

I'm not a fan of financial advisers, but if you really want to use one, I would go to Morgan Stanley's Menlo Park California branch private wealth management. They have been consistently ranked #1 in the country. My brother uses them and they also manage my nephew's trust fund. Unfortunately you will only get better service if you are one of those "whale" clients no matter where you go.

 

[braumeister]

Do you guys have any good questions to ask FA's? Anything that I should look out for?

To put it in the simplest possible terms, by the time you learn enough to be able to choose a FA, you don't need one.

And the learning curve is not really very steep, as the above posts show.

 

[Jerry1]

Unfortunately, my finances are quite complex so I am in need of tax and planning professionals.

You need a CPA. Also, a CPA will either know a good financial adviser, or help you with some of the complexities of investing, one of the main ones being, at least in the accumulation phase, the tax consequences of buying and selling investments. I would consolidate at Fidelity, have them work up a plan for you, take that to your CPA and make him/her your main advisor.

Couldn’t agree more with the comments about no one carrying about your money as much as you, personally, will. The same goes with your relationship with your CPA (taxes). You have to get educated enough to keep an eye on these people and processes. Plus, you need to appreciate the implications of what you do well enough to know when to seek advice. It’s difficult to impossible to avoid taxes after a transaction has already occurred.

 

[38Chevy454]

Welcome to the forum. You can educate yourself and become self-directed, as your own advisor. From your description, it does seem that you need a good accountant, listen to that person for investment tax concerns. Again there is that educate yourself aspect to learn the tax rules and how it affects your investments.

I would dump Morgan Stanley and put it all with Fidelity. Then pick some good diversified funds to invest in. Don't pay for a FA, Fidelity will give you some advisory help for free. They won't give direct investment choices, but can help you understand the options and choices available. Also be aware of the find costs, index funds are very low fees, active managed funds can be 1% or more. Just remember that all fees you pay are an offset to your gains.

Look at it this way, if you are paying a FA a 1% fee, and you do your own self directed, you can be 1% behind in your returns vs the FA and you will still come out equal. Do less than 1% and you're money ahead!

 

[cooch96]

I totally understand that. For me, though, performance is #1; Customer service is #2. Unfortunately, my finances are quite complex so I am in need of tax and planning professionals.

Sounds like you need a tax accountant, not an FA.

Check out a couple books on this site’s reading list and digest them. This first step took me about 4 months, but most folks are smarter. Pick an Asset Allocation suitable for yourself. Drop your FA and consolidate your investments into Fido or Vanguard accounts that align with your AA. Find a tax accountant.

A couple of months of hard work and self-education will make your finances much luckier. An FA takes out that work, but you’re damning yourself to lower performance. This compounds over the rest of your life, decades, into a fortune of lost opportunity.

 

[scrabbler1]

I can't imagine paying someone 1% of my portfolio to manage it. Even if it were just my non-IRA (taxable) portion, it would amount to $9,000 each year, more than I pay for housing, more than I pay for medical expenses. My annual expenses would rise by 25%! No thanks!


I have a mix of index funds and actively managed funds, but none of them with an expense ratio over 0.9%, with the overall average about 0.5%. It's pretty easy to find decent funds with reasonably low expense ratios.

 

[Oz investor]

exnavynuke ,

early on like my nickname was Lucky , which morphed into Cat ( 9 lives ) , and later into D9 ( will try to bulldoze through anything )

but at 62 i finally got some health issues i couldn't walk away from laughing

and yes the luck was always going run out eventually

the big question is will the financial luck continue for the rest of my life ( which MIGHT exceed another 8 years )

a big catalyst will be the next market downturn ... have i made good choices and will i be able to exploit any opportunities if they appear

only will tell there

 

[target2019]

Do you guys have any good questions to ask FA's? Anything that I should look out for? I've done the whole song and dance before but you guys (And gals) never cease to amaze me with your knowledge! So before I go any further, thank you!

I was fortunate to have relative who was accountant and tax preparer, and helped me over a long period of time to keep self-employment profitable. I always invested in indexed mutual funds, and contributed a max each year to my SEP. My spouse did similar.

What you have is two moving parts (two FAs), some number of investments split between two institutions, self employment accounting and profit, and your knowledge level. All of these are not optimized to work together. Having a question for one FA or the other will get you nowhere (my opinion). Each FA has a script with ready-made answers. You'll retreat and still be unsatisfied.

Step one: Find all of your investments and arrange them in a spreadsheet. Probably helpful to include end of 2017 and Jul 1 balances.
Step two: Calculate your overall AA.
Step three: Ask questions to help you simplify what is held, and eventually ditch the FA aspect.

You didn't mention the fee structure, but include that in the summary you create. Over your lifetime you're giving away money, and creating headwinds to overcome.

 

[conway19145]

Thanks, all! So, common theme is to learn it all and do it myself. As nerdy as I am with business/finance, I am a bit concerned! Maybe I'll set aside 10% and 'play' with it until I get more comfortable.

I had an accountant who made numerous mistakes so I just hired a new one, so we shall see. Right now, my fees at Morgan Stanley are 0.9% and I have been earning on average 20.8% for the past ten years. Making 20% and not having to research, make phone calls, follow the market in-depth and ultimately, buy, is quite nice. I have a small real estate holdings portfolio so that is where I put my time and energy.

My main concern is retirement. I was a poor kid growing up and I NEVER want to be back in that position, and more importantly, I don't want my family to be either.

As I originally mentioned, the only thing that I want is a boat (Which is a very lofty goal). Are there any good excel sheets or calculators that you can recommend for calculating future value of money or retirement yields? Right now, I save about 30% of my paycheck and plan to do so for the rest of my life but I'd like to calculate A) What I will have and when so I know B) When I can make a boat purchase to sustain an upward trend in my portfolio. Unfortunately, my family history is not in my favor as most pass before the age of sixty. So, the sooner I can achieve my goal, the better. I'd like to at least enjoy a little bit of it

Thanks again, everyone!

 

[REWahoo]

So, common theme is to learn it all and do it myself.

Yes, but the secret the financial industry doesn't want you to know is that the "all" you have to learn really isn't much, nor is it difficult to learn.

 

[MBAustin]

While I completely agree with the advice to get educated on your own, there is nothing wrong with consulting professionals for advice. Fee-only planners can help you with asset allocation, general financial strategies, etc.

I find Kiplinger to be an excellent and trustworthy source of general financial advice. Here's an article from them on selecting financial advisors:
https://www.kiplinger.com/article/credit/T064-C000-S001-how-to-pick-a-financial-planner.html

 

[MRG]

Yes, but the secret the financial industry doesn't want you to know is that the "all" you have to learn really isn't much, nor is it difficult to learn.

Ding, ding.

I'm pretty sure Bogle received death threats.

 

[ERD50]

Yes, but the secret the financial industry doesn't want you to know is that the "all" you have to learn really isn't much, nor is it difficult to learn.

And to put a finer point on that, all you need to know is that in the accumulation phase, a reasonably aggressive investor would probably be well served with an 80/20 AA ( 80% equities, 20% fixed income). You can do that with one Total Stock Market Index fund/ETF and one Total Bond Index fund/ETF.

You could get a bit fancier with some Int'l, some REITS, but it probably won't make any big difference in the long run. And that is so easy to DIY, it isn't even funny. Far easier than picking an FA.

Studies show that few FAs beat the market, and you don't know which ones they are in advance, so it's a moot point.

I totally understand that. For me, though, performance is #1; Customer service is #2. Unfortunately, my finances are quite complex so I am in need of tax and planning professionals.

As other's have said, for tax issues you need a tax professional, not an FA.

I'm confused about 'my finances are complex'? If this is due to a business, that's separate from investments. I fail to see how a business would change what you invest in outside that business?

... I just bought an engagement ring so a house will follow and the one thing I have always wanted is a boat. So lots of planning needed! ..

Well, an anchor came with the engagement ring, so you are half-way there! <j/k>

Welcome to the forum, and a Happy 4th to you too! (caught my typo to vs too)

-ERD50

 

[Helen]

Hi Conway19145,

You may find this short book helpful. It goes over all the important points of the three fund index investing approach. It will be well worth your time. The book was just released so it won't yet be in libraries.

Best of luck to you.

https://www.amazon.com/Bogleheads-G...sr=8-1&keywords=three+fund+portfolio+larimore