Certified financial planner or not

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sayhey24

Dryer sheet aficionado
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Any thoughts on using a CFP? The CFP I spoke to said he uses Fidelity for the most part and I should have asked the question while I had him on the phone "why can't I just send the check to Fidelity and save the 1.95% fee you charge"??
I'm embarassed to say I've put several brokers kids through college over the years:blush: and had heard that fee/% based planners were a better way to go. I do enjoy researching stocks and funds although I can't swear I know what I'm doing.

This fourm is the best thing since sliced bread and canned beer:D
 
I agree, if you use a CFP, it's best to go the fee-based route.
 
sayhey24 said:
Any thoughts on using a CFP? The CFP I spoke to said he uses Fidelity for the most part and I should have asked the question while I had him on the phone "why can't I just send the check to Fidelity and save the 1.95% fee you charge"??
I'm embarassed to say I've put several brokers kids through college over the years:blush: and had heard that fee/% based planners were a better way to go. I do enjoy researching stocks and funds although I can't swear I know what I'm doing.

This fourm is the best thing since sliced bread and canned beer:D
Click to expand...

You could spend some time reading the recommended books listed on this Forum and you would be able to send the money to Fidelity and allocate it in a way that made the most sense for you. Unfortunately, you do not know how to (or don't want to) do this so you are looking at paying 1.95% of X to have it done for you.

What is the FP going to do for his fee? Is this a one time fee? Have you looked for someone that charges a flat fee and not a percentage? Within reason its not that much more effort to set up a plan for $250,000 vs $1,00,000 but his fee would be much more.
 
Save the 1.95% and do it yourself. With your interest in researching stocks and funds, thats half the game.
 
Odds are against you (or even the best CFPs) to beat the market. Often the investments they put you in can have high costs associated. On top of that you have to pay the CPF their fee. If you don't feel 100% safe enough managing all your assets yourself, look for a very low fee Registered Investment Advisor like AssetBuilder that have fees of .5% or less. Asset Builder also invests your funds in Dimensional Funds which have an excellent reputation. Dimensional are not quite as cheap as Vanguard.

I'd also start reading Scott Burn's articles, he will quickly educate you on this. Scott Burn's is financial columnist who's been around for ages and started the above Asset Builder based on some simple logic he educates people on through his column. Here is a link to Scott Burns' Articles
 
I would hire a fee-based planner if you want someone to look over your whole situation and get you set on the right path. Don't sign on with someone who charges an annual % in perpetuity. This stuff simply isn't that complicated or requiring of constant fiddling so as to be worth constant fees.
 
I have always been puzzled by the terminology: fee-based, fee-only, AUM-based, commissions, whatever. All advisors charge fees, so they are all fee-based. It turns out that "fee-only" describes advisors who only charge direct fees (in theory) and do not get paid by commissions. But then they can charge a direct fee based on a per-hour basis or on a percentage of Assets-Under-Management (AUM). Fee only means they do not sell investments or insurance. Good luck with that! They seem to tell you what you want to hear.

But here's a neat trick in this week's NYTimes. You want someone to be a fiduciary to you, so get them to sign a piece of paper that says that. Here's the article: Will You Be My Fiduciary? - Bucks Blog - NYTimes.com

But I'm a do-it-yourself investor. With help here and at the Bogleheads site, there should really be no need to pay someone to do this. Even if you have $10 million, you should be able to find an outfit to do this for less than $4000 a year anyways.
 
The fee was 1.95% of total investment per year
thank you everyone,I think I knew what to do before I asked!!!!
I'll start working on the reading asap.
Although I work at trying to make the best decisions I can regarding investments I'm always looking for the magic pill!
Thanks again
 
No wonder those guys drive Ferrari's
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A guy we know through our kids' school activities charges 1 - 2% a year of the total amount in your portfolio (forever) just to find someone to manage your protfolio for you. Then the person he gives your money to (a golf buddy?) charges another percent or two a year a year (forever) to actually manage your money. I almost laughed out loud when he was telling me all this during my "free" financial planning session. After their 4% combined fees, taxes, and inflation I don't see how anyone could ever get ahead, even in times of higher interest rates, investing money with them.

However, the guy has a big office at name brokerage firm and lives in a really nice house, so I assume he is actually making a living at this and finding people to pay his annual fees.
 
brewer12345 said:
I would hire a fee-based planner if you want someone to look over your whole situation and get you set on the right path. Don't sign on with someone who charges an annual % in perpetuity. This stuff simply isn't that complicated or requiring of constant fiddling so as to be worth constant fees.
Click to expand...
I agree, with the caveat that if you do this, make sure upfront that the person you will be hiring has the capacity (including software capacity) to answer your questions. I didn't do so, assuming any competent financial planner would be able to figure out the size of portfolio I'd need for retirement, but because her Monte Carlo software could not accurately model my weird semi-COLA'd pension, I ended up paying a lot of money but not (IMO) getting an accurate answer to my question.
 
A CFP is supposed to look at your entire situation, not just find the right mix of assets. This is the basic list of topics from the CFP Board site:
Insurance planning and risk management
Employee benefits planning
Investment planning
Income tax planning
Retirement planning
Estate planning
Click to expand...

How many of those topics do you want to cover? It might be worthwhile to do an initial "What I would want from you" meeting before deciding.

Certified Financial Planner Board of Standards Inc. - The Education Requirement
 
Bikerdude said:
Bernie Madoff used to.:LOL:
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Bernie Madoff was NEVER licensed as a financial advisor or planner in his entire career. Only right before all heck broke looses did he become licenses a registered investment advisor..........;)
 
Independent said:
A CFP is supposed to look at your entire situation, not just find the right mix of assets. This is the basic list of topics from the CFP Board site:


How many of those topics do you want to cover? It might be worthwhile to do an initial "What I would want from you" meeting before deciding.

Certified Financial Planner Board of Standards Inc. - The Education Requirement
Click to expand...

Quite honestly, most CFP's I know do very little of what the Board of Standards suggests, they use the certification to get clients.......cue Ameriprise Reps.........;)
 
Bikerdude said:
Bernie Madoff used to.:LOL:
Click to expand...
FinanceDude said:
Bernie Madoff was NEVER licensed as a financial advisor or planner in his entire career. Only right before all heck broke looses did he become licenses a registered investment advisor..........;)
Click to expand...
I was paging through the biographical sketches of the Forbes 400 issue last week. I was amused to note that several of them were affected in one way or another by Madoff. We're talking comments like "lost over $100M" or "charitable foundation wiped out".

They're not blissfully-ignorant trust-fund babies who had no idea how their money was being handled by the highly-qualified adviser with all the acronyms after his name. They "knew" or suspected that Madoff was dirty and they were expecting him to make them even more filthy rich than their first billion.

I bet Madoff's really happy that he's safely surrounded by a bunch of convicts. It's the fine upstanding law-abiding pillars of society who he has to watch out for.
 
Nords said:
I was paging through the biographical sketches of the Forbes 400 issue last week. I was amused to note that several of them were affected in one way or another by Madoff. We're talking comments like "lost over $100M" or "charitable foundation wiped out".

They're not blissfully-ignorant trust-fund babies who had no idea how their money was being handled by the highly-qualified adviser with all the acronyms after his name. They "knew" or suspected that Madoff was dirty and they were expecting him to make them even more filthy rich than their first billion.

I bet Madoff's really happy that he's safely surrounded by a bunch of convicts. It's the fine upstanding law-abiding pillars of society who he has to watch out for.
Click to expand...

Ah, yes, those CFP's and/or whatever other letters you want to "Deify" fell for Bernie hook line and sinker. Yep, we should all pay someone to look after our money!
 
brewer12345 said:
I would hire a fee-based planner if you want someone to look over your whole situation and get you set on the right path. Don't sign on with someone who charges an annual % in perpetuity. This stuff simply isn't that complicated or requiring of constant fiddling so as to be worth constant fees.
Click to expand...
Totally agree. This stuff is not rocket science. Never paid 1cent to "advisors" myself. It really helps if you are interested in financial/investment issues. The fact that you are on this forum probably means you are qualified to proceed on your own.
 
I pay .8% for my planner. I review performance on an ongoning basis.

I don't have the time (no RE yet!) to do the research.

He has out performed an index fund mix, NET OF HIS FEES, by 2%.

I would say that given the performance, a 150% ROI, he is worth it.

Seems like the best way to determine if they are worth it or not....
 
I actually track it quarterly, annually and for the life of the relationship (last 6 years). The period of time I was tlaking about was 1/1/2004 to 12/31/2010
60/40 Stock/Bond mix.
20% short term bond
10% intermediate bond
10% lt Bond
10% inflation protected securities fund
20% s&P 500 index
8% extended market
6% emerging
8% european
8% pacific
I'm doing the performance measurement. I'm a Qucken Hound, so I have everything to do the calculations myself. I download index fund histories and use my quicken data to do the statistical analysis myself.

My point was not that using an advisor is right or wrong. My point was that another way to look at it was from a performance return perspective. It is ok to invest the money when the ROI exists. You may not be able to tell in advance however!

Obviously, there is no guarantee on future performance, or that anyone can find someone that can outperform the market, but so far, giving him 8000/yr (.8%) per million has netted an additional 20,000/yr/MM return over a comparable asset allocation strategy & mix in index funds.
 
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