Finding a new financial advisor

[pb4uski]

I decided to tag on to the post instead of stating anew one since I m looking for similar answers.

My wife and I went to a retirement seminar last night. It is a small independent (2 person) office. They did the typical "what happens when the market turns". They feel they have an algorithm that allows them to move in and out of the market before large losses (They agree no one has a crystal ball). We are meeting with them on Monday. If we do decide to use them, it will only be for. portion of our accounts. This portion would normally be 100% in stocks. One question I have for him is When he thinks money needs to come out, where does he put it? I will also find out about fees. Any other questions?

Hopefully not for taxable accounts where their movements in and out might result in bad tax implications or wash sales. I seem to remember a poster using an FA that flipped their taxable portfolio and they ended up with a very nasty tax surprise.

If they really have the magic sauce why do they need to continue to work for fees?

I love the old Fischer Investments addage of "we do better when you do better" referring to AUM fees. What they fail to mention is that " and we do ok even if you lose money".

 

[TripleLindy]

I love the old Fischer Investments addage of "we do better when you do better" referring to AUM fees. What they fail to mention is that " and we do ok even if you lose money".

Yes, I chuckle every time I see that ad. It’s no wonder that there’s not a firm out there that will only make money when we make money.

 

[Stormy Kromer]

My FA had me blindfolded, my fault, and put my taxable account in 20th Century Funds. With a 5% front end load. I just nodded and went along investing for years. Never came close to matching the SP 500 index.

Later on I told him I wasn't going to keep contributing new money to that fund, he suddenly had a better plan. Invest it in another group of mixed up mutual funds. With an AUM of 1.5%. So get this, I already gave up 5% on the way in and as soon as I couldn't send them any new money they started making 1.5% on the same money that they already took 5% off the top of. I got taxed on the way too. Plus these new funds had an internal expense of another 1% or so.


I moved 90% of it to Vanguard a few years ago, put it in a simple index fund (capital appreciation fund) and have absolutely whoooped the FA.

I am a simple dirt farmer and kicked the pants off of an FA. This FA has his own radio show and has written 3 books.

I won't start about the annuities and VUL's he got me in. That is a whole nother thread (or two).

People should learn how to handle their own investments the same day that they learn how to put their own gas in their car.

 

[TickTock]

I won't start about the annuities and VUL's he got me in. That is a whole nother thread (or two).

Sounds like someone in the David McKnight advisor network. Except that now they'd likely recommend large Roth conversions as well.

 

[Buckeye]

I decided to tag on to the post instead of stating anew one since I m looking for similar answers.

My wife and I went to a retirement seminar last night. It is a small independent (2 person) office. They did the typical "what happens when the market turns". They feel they have an algorithm that allows them to move in and out of the market before large losses (They agree no one has a crystal ball). We are meeting with them on Monday. If we do decide to use them, it will only be for. portion of our accounts. This portion would normally be 100% in stocks. One question I have for him is When he thinks money needs to come out, where does he put it? I will also find out about fees. Any other questions?

Run away...quickly!

 

[Sunrise_Ray]

There is a lot of details here about Flat Fee Advisor vs AUM based Advisor. It is clear that %AUM based advisor in a world of AI, Automation, RoboAdvisor, API based automation with Dashboards/Software just does not make sense. There is so much standardization and automation that can be applied, that individualized optimization and automation does not justify the delta in the pricing between Flat Fee $500 per year to $15K per year (regardless of asset size) and then the %AUM based which would start with $5000 per year for a $500K account to $50K for a $5M portfolio, and then keep on growing. By the time year 2 or 3 comes around the %AUM based are just raking in commissions which is how these firms have gotten huge, and the industry has gotten fat with lots of partners / directors / managers / commission-earners.

I have cruised about 60-70 firms to learn the business a bit more since I have been DIY all my life, and now want to get it all organized under a single firm.

Can anyone share if they have just selected a Flat Fee Firm in the last 5 years and are thrilled with them, esp doing Investment Management, Tax Planning/Filing, Estate Planning, Retirement Planning, Roth/MegaRoth Conversion/Subscription, LT Care/Insurance/Medicare, and even Alternative Investing?

Any help or pointers would be appreciated (I have read this entire thread).

Thanks.

SR

 

[racy]

The original post re: Wells Fargo brought back memories of their 2016 scandal where they were opening customer accounts without the knowledge of the clients then charging service and overdraft fees.
Upon hearing this, a guy said, "I don't have to worry; I don't have an account with them". to which a wag replied, "How do you know?"

 

[Lorenzo]

. . . and then the %AUM based which would start with $5000 per year for a $500K account to $50K for a $5M portfolio, and then keep on growing.

Just a nitpick, but some FAs use a graduated scale for their AUM-based fees. For example, a balance up to the first million is charged a 1% fee, then the next 500k is charged .75%, then .5%, etc. It's still a lot of money.

 

[rjsos5]

I am with those who feel do not need advisor. But would here simply caution against advisors or any guru anywhere who likes to churn your portfolio based on their crystal ball on how markets, bond or equity, may move in short to near term.