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One more reminder to stay clear from financial advisers
Old 11-11-2022, 12:47 PM   #1
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One more reminder to stay clear from financial advisers

I believe a lot of us manage our money ourselves but every now and then I see the same question popping up: "should I outsource that to someone else?". I would never but if you're planning to, make sure you know who you're hiring.

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Old 11-11-2022, 01:08 PM   #2
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You never know who u are hiring. Just look at the Bernie M. story.

Where they is money there are crooks.
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Old 11-11-2022, 01:28 PM   #3
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Oh yes. I was closing out a bank account yesterday and had to sit down with the branch manager who was telling me about the amazing 1.2% rates they had and also it got around to talking about retirement accounts and he was saying he pays 2% to an adviser but they are really great and have him invested in some total stock market funds.
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Old 11-14-2022, 01:07 PM   #4
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The last broker who sold me investments which I later found out paid him 10% commissions but that eventually cost me 6 figures in losses ABANDONED his broker's license and now just "consults" on real estate investments.

Looking at his FINRA claims, though, he has still had to pay hundreds of thousands of bucks in settlements to previous clients.
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Old 11-14-2022, 01:12 PM   #5
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There's a guy named Samuel Bankman-Fried, that has some experience in the field and may be looking for new clients to advise and manage their money. Hey he's only 30, went to MIT and is/was a billionaire. This is not a recommendation.


Of course all of his current problems may be just a big misunderstanding.
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Old 11-14-2022, 01:19 PM   #6
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The only time I have ever hired an adviser was when Chase was paying 2k for opening a brokerage account. I wanted to try a bond portfolio but didn't know how to go about buying individual (corporate) bonds so I moved 100k to Chase and for the 1% fee I let the adviser built that bond portfolio. It went up by around 4k in one year - that's in addition of the 2k bonus. The adviser collected his 1k in fees, I thanked him for his services and converted the account to self-directed which allowed me to keep my Private Client status but got rid of the fees. I sat on the bonds for another year and made another 3k but eventually sold all of them and moved to equities. The relationship served its purpose and I was happy about trying it but I was in the driving seat from the beginning.
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Old 11-15-2022, 09:03 AM   #7
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Originally Posted by tenant13 View Post
I believe a lot of us manage our money ourselves but every now and then I see the same question popping up: "should I outsource that to someone else?". I would never but if you're planning to, make sure you know who you're hiring.

https://www.livemint.com/money/perso...906884692.html
"outsource" is the keyword here. Discussion, reading articles written by respected finance authors (Kitces), and sharing ideas on this forum, help us make our own solid financial decisions. I can't imagine any money manager spending nearly enough time deciding what's best for me. Do we really know how or why they make their decisions about our money? I would talk to a financial planner. Would I give him/her my lifetime of saving to control? No way.
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Old 11-15-2022, 09:27 AM   #8
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It was a bit intimidating trying to retire so early, but I knew that no one would care as much about our nest egg as we did, so I worked hard to educate myself. Probably 2 years before retiring and 1 year afterwards I spent a lot of time reading, forums, etc. after that it was just occasional continuing education.

The best part is DH thinks I’m brilliant! But I did at least get him to shut up about me to friends finally convincing him that helping anyone else was waaaaaay too hard.
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Old 11-15-2022, 09:46 AM   #9
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A Financial Advisor is typically a broker who is held only to a “suitability” standard, meaning the recommended investments are suitable for the client. They are not required to act in the best interest of the client. An Investment Advisor is held to a fiduciary standard and is required to act in the best interest of the client.
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Old 11-15-2022, 10:02 AM   #10
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A Financial Advisor is typically a broker who is held only to a “suitability” standard, meaning the recommended investments are suitable for the client. They are not required to act in the best interest of the client. An Investment Advisor is held to a fiduciary standard and is required to act in the best interest of the client.
This is a standard, but does not mean they are honest and getting you the best products at the lowest prices. An investment advisor representative can take the series 65 investment law exam and qualify as a fiduciary. I know of several that have completed that certification and are just selling fixed indexed annuities to their clients. Don't think "fiduciary" lets you drop your guard.
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Old 11-15-2022, 10:11 AM   #11
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This is a standard, but does not mean they are honest and getting you the best products at the lowest prices. An investment advisor representative can take the series 65 investment law exam and qualify as a fiduciary. I know of several that have completed that certification and are just selling fixed indexed annuities to their clients. Don't think "fiduciary" lets you drop your guard.
Yep. There are unscrupulous people in all professions.
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Old 11-15-2022, 10:20 AM   #12
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All financial advisors are not bad.
If one chooses to use one, it is in your best interest to vet them well, make sure they are certified, are a fiduciary, check references.
A one time fee only check can often ease someones mind.
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One more reminder to stay clear from financial advisers
Old 11-15-2022, 10:59 AM   #13
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One more reminder to stay clear from financial advisers

We are very satisfied with Vanguard Professional Advisor Services. We have a dedicated CFP and pay just 30 basis points to have seven figures under their management. I would gladly pay that much for the “mistake-prevention insurance” alone but it has proven to be a massive relief to navigating our money as a couple who have unequal financial interest levels and spending preferences. After trying to do it myself for us both and incurring the marriage tension that entails, I wouldn’t do it any other way now. This way, we both meet our joint and respective spending goals with a professional, neutral partner who shows us both with Vanguard’s powerful, proprietary planning software the limits of what we can spend.

Sweet relief, lol!
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Old 11-15-2022, 11:29 AM   #14
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We are very satisfied with Vanguard Professional Advisor Services. We have a dedicated CFP and pay just 30 basis points to have seven figures under their management. I would gladly pay that much for the “mistake-prevention insurance” alone but it has proven to be a massive relief to navigating our money as a couple who have unequal financial interest levels and spending preferences. After trying to do it myself for us both and incurring the marriage tension that entails, I wouldn’t do it any other way now. This way, we both meet our joint and respective spending goals with a professional, neutral partner who shows us both with Vanguard’s powerful, proprietary planning software the limits of what we can spend.

Sweet relief, lol!
We also use Vanguard’s PAS, but I’m not enamored with the performance. The one thing that has kept me with them is I was panicking as markets tanked during COVID. Our advisor not only talked me into staying the course, he suggested rebalancing and buying into the downtown. That day was the bottom. Having said that, it’s now 2 years in the past and I’m back to making a decision based on performance. My self-managed portfolios are outperforming the so-called VG experts, primarily because of VG’s requirement of a minimum portion of stock funds be allocated to the international market, which has underperformed for 2 decades. We’ve reduced my international exposure to VG’s minimum, but it still irks me that I’m paying 30 basis points on 7 figures to underperform.
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Old 11-15-2022, 11:35 AM   #15
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Oh yes. I was closing out a bank account yesterday and had to sit down with the branch manager who was telling me about the amazing 1.2% rates they had and also it got around to talking about retirement accounts and he was saying he pays 2% to an adviser but they are really great and have him invested in some total stock market funds.
Yeah, there are clueless people in every field. When Dad had a brief career as a financial advisor, one nice older couple came into the office and needed Dad to educate them on stocks, vs. bonds, etc. which Dad did very thoroughly. When he followed up with them, they told him that they were investing their funds with the bank's "financial advisor" but she'd told them to go to major brokerage to learn about the products first. Kinda soured me on the idea of ever investing with a bank.

Having said that- I DO have an advisor and pay less than 1% AUM. I'm glad to see some support for the good ones. The losses I avoided when he advised me to greatly reduce my tech holdings in July were multiples of what I paid in AUM this year.
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Old 11-15-2022, 01:32 PM   #16
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Of course all of his current problems may be just a big misunderstanding.
This made me laugh and brought back memories.

When I began working in the Fraud Section 30 years ago, the classic line uttered by virtually every suspect interviewed was "This is all just a big misunderstanding".

It became the standard office joke.
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Old 11-15-2022, 04:48 PM   #17
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It’s comparatively easy to access resources to self manage these days. Imagine how much harder it was pre-internet. Heck, indexing was just gaining traction at the start of my investing career.
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Old 11-15-2022, 08:09 PM   #18
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We also use Vanguard’s PAS, but I’m not enamored with the performance. The one thing that has kept me with them is I was panicking as markets tanked during COVID. Our advisor not only talked me into staying the course, he suggested rebalancing and buying into the downtown. That day was the bottom. Having said that, it’s now 2 years in the past and I’m back to making a decision based on performance. My self-managed portfolios are outperforming the so-called VG experts, primarily because of VG’s requirement of a minimum portion of stock funds be allocated to the international market, which has underperformed for 2 decades. We’ve reduced my international exposure to VG’s minimum, but it still irks me that I’m paying 30 basis points on 7 figures to underperform.

“Underperform what?” would be my question. A 2 year time sample proves nothing; and it’s not possible to compare one’s VPAS portfolio with a self-managed one in which one did/almost did this and that change and this and that panic move or “optimization”, all amounting to active trading…. Besides, as I said, we enjoy other tangible benefits from VPAS that are hard to put a value on. Good luck!
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Old 11-15-2022, 08:17 PM   #19
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Some people are better off with a financial advisor. I know someone who got pulled into the hype around crypto currency, sunk a large chunk of her savings into it, and is now looking at a huge loss and spoiled hopes of retirement.

So, it depends who you're talking about and what you're comparing the financial advisor to. Some people don't know enough to invest wisely. They make decisions based on what their friends or family tell them, or what the TV guru says, or what the "word on the street" is.

It's easy for us to scoff, but some people can benefit from a financial advisor. I have, in the past. Of course, you should choose your advisor carefully, just like you would choose your doctor or any other provider.
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Old 11-15-2022, 08:27 PM   #20
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Having said that- I DO have an advisor and pay less than 1% AUM. I'm glad to see some support for the good ones. The losses I avoided when he advised me to greatly reduce my tech holdings in July were multiples of what I paid in AUM this year.

I HAD an AUM advisor who charged us 1.25% up to the first million and slightly reduced thereafter… their performance was subpar and when I finally got their 1997 - 2018 performance report it showed that had underperformed the S&P 500 on an annualized basis during those years.

We dumped them earlier this year. They did have us heavily invested in tech because “tech stocks always rip higher after a bear”
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