Experiences with financial advisors


Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Jun 25, 2005
I thought that I would start a thread that might eventually make it to "Best of the Boards".  The purpose of this thread is to have folks to post about what their financial advisor has or has not done for them.  There have been recent posts about folks switching from advisor to self-managed investing, but they have been scattered around in various threads. Here is a thread to help collect them all. Thanks for contributions!

I'll start with a story of mine.  Decades ago I was cold-called by a broker.  $30,000 of my money down a hole.  Ouch!
Actually my first financial advisor was not too bad. In 1980 I went with an advisor in Monteray, CA recommended by a Navy friend of mine that specialized in govt/military personnel. They understood the benifits, pay structure and retirement. I paid them all of $250 for life at the time for a plan and it was a decent one. They told me how much car insurance I needed, set up a term life insurance policy which was slightly better than the Govt one. They told me to buy a house and set up a mutual fund. Later they set up my IRA which I paid into only in the years it was pretax (1982-86?). Later they set up a UGTMA fund for my son. The funds they recommended were loaded but gererally not too bad. The original IRA was with Oppenheimer (OPTFX) and an American Funds (ANWPX) and a Education Roth (AGTHX). I did take a beating on one Phoenix fund and as I did more research came to understand that this had been one of those several year outperforming companies which turned into a several year underperforming companies. But there was some logic to the selection beyond the fees involved. I am not sure if I actually lost money but a regular saving account probably would have done better.

Now would I use them again. Well, no, but that is because of my own financial education. And the more recent Govt TSP (401k type) account may be all the investment a young employee may need. I still recommend them to people who can not or will not understand their own financial situation. The cost was lower than me doing nothing.

So I think you can do better on your own and learning to think financially is *priceless* and there are a lot of crooks out there (like the sharks in my wife's 403b system). But it is possible for a financial advisor to help some people past where they would be by on their own but even the best of the advisors would be my second choice. And don't get me started on those 403b sharks....
What a financial advisor did TO me:
1982-- I threw a check at a brokerage and was put into a Paine-Webber bond fund. For a new college graduate with more paycheck than possessions (or money sense). Back then I was earning 10% interest on a bank's checking account, let alone savings or CDs, so let's just say that long-term bonds were taking a beating. I finally cashed out in 1984 after several conversations with Jim Gerow, with a retired Navy quartermaster who was selling insurance and knew about military financial management. I can't remember the name of the Paine-Webber guy but I used to smirk at those "Thank you, Paine-Webber" commercials!

In 1984 I also thought it was a bargin to pay "just" 2-3% to buy Fidelity Equity-Income & Puritan mutual funds. But that DCA program (and a lot of sea duty) laid the ER foundation.

What a financial advisor did FOR me:
In 2001 I was seeking an advisor to look at our Financial Engines numbers, pat me on the head, and tell me everything would be all right. Or at least point out how our mistakes were going to put us back into the workforce in our 70s. I'd developed a routine where I'd e-mail an advisor, eventually provide portfolio details, and arrange a free hour's consultation. After a half-dozen of these it seemed that we were always being nudged toward annuities or other paid portfolio management. So I'll always be grateful for the guy who, without even a consulting fee, said "Looks like the portfolio's big enough to get you to Social Security. Why don't you just see if you can survive on a 3% withdrawal rate?" That led me to the Trinity study, a bunch of books & websites, to Greaney's ER website, and eventually to here.

Where I've found the best financial advisors anywhere...
Thought I would throw my two cents in.  I am leaving Merrill Lynch and am moving my funds to Vanguard.  I have only been "working" for about 18 months as I was in training/school for the last 13 or so.  I really didn't bother to learn about the mutual funds I was picking.  However, when we were going to start some aftertax mutual fund investing and the "advisor fee" was mentioned my ears perked up.  I went home that night and started to learn about the "loads" and "expense ratios" and his 1.25% "advisory fee" to "manage" his picks.  I sent him an email telling him that I was going to do it my self and switch to Vanguard. The "hard sell" to stay has been on since.  I have read Four Pillars and Boglehead's guide.  Both are great and have given me the confidence that my decision is right.  He decided to send me a book by Nick Murray, who I then found out via amazon.com also writes books for Financial Advisors and "Marketing mutual funds" not exactly a non-biases source as to why I would be better off with ML.  Anyway.  It hasn't cost me much yet.  I just need to maximize my new portfolio and transfers to vanguard to minimize costs.

Only had one financial advisor, and that was my first broker at Piper Jaffray. I was about 22 and he gave me a very good start in investing.  Stayed with him for many years until I started enjoying doing it myself, but he always played straight with me.
On the other hand I've reviewed probably 40 or so plans set up by so-called financial advisors and everyone of them had several common denominators:
Over priced insurance as part of the plan, mutual funds that just plain suck, mutual funds that were OK, but the advisor was charging a commission for something available for free simply by dialing an 800 number, and of course the old "I'll be here for you in the future" (think churning for a fee).  In the case of older folks I've seen lots of stuff sold that was just not appropriate for the age group, which doesn't necessarily mean it was appropriate for anyone.
My response in pretty much all of these cases was:
This is the second worst thing you could be doing with your money.
(Their response) What is the worst?
(My response) Doing nothing like you were before. :(

By way of disclosure, I have seem very few plans done by fee only advisors.  These were guys selling the company line, and if you are talking to a Hyundai salesman, it is unlikely you are going to walk away with a Lexus.  (OK, I admit Hyundais are much better these days) :p
My financial advisor, who was a friend, put me in a variable insurance policy. The insurance company ended up going into receivership. Fortunately I got the investment back after some years and rolled it into a Vanguard annuity. The other investments that he recommended were low ranked load funds. I fired him and went to Vanguard. I am sure glad that I found Vanguard.
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