Our CFP results for the year

[Callie]

I know many are very against using brokers/CFPs for good reasons. But I wanted to say that we are very happy with the first year with ours.

She has not tried to sell us anything innapporpriate at all - no annuities, no life insurance. She did present us policies to review for long term care, but we are over 50 so this is pretty normal. She did not *push* on this at all and said it was up to us.

She beat the S&P500 by more than 3 pts, even with her commission (1% of assets). She invested (with our approval) in things we would never have done (too lazy/busy and afraid) - like gold and emerging markets (which totally performed last year).

She has quarterly update meetings with us, talks about her philosophy, makes sure we understand, and tells us about the forecasts.

So there are some good ones out there. We found her by referral from a colleague of mine.

 

[cute fuzzy bunny]

I think that many are against using BAD brokers/cfp's or ones that charge more than the benefit they create.

I think what many are FOR is helping people gain a rudimentary understanding of investing such that they can do as well on their own at a lower cost.

 

[2B]

She beat the S&P500 by more than 3 pts, even with her commission (1% of assets). She invested (with our approval) in things we would never have done (too lazy/busy and afraid) - like gold and emerging markets (which totally performed last year).

I wouldn't fall in love with an advisor that beat the S&P500 by 3 pts in one year. Last year a lot of asset classes significantly outperformed the S&P. That's why people are encouraged to diversify between the major asset classes. There are lots of books on asset allocation. It is really, really easy to do and only takes an hour or so to rebalance.

Multiply the 1% times your assets. If you have $500,000 invested, you are paying her $5,000 for what you could do in an hour. That level of fees will really hurt your longterm portfolio performance.

Scott Burns has a list of possible additions to his Couch Potato portfolio. That's a good place to start. Compare your advisor against his different layers.

http://assetbuilder.com/?p=1058#more-1058

 

[LOL!]

Thanks for posting a positive experience with a CFP.

But I have to agree with 2B that your benchmark is not the S&P500. Your CFP has you in riskier investments, but I guess you know that and only put in the S&P500 note because it's an easy benchmark. I sure hope your CFP did not use the S&P500 as a benchmark for your investments. If she did, then she was disingenuous.

I recall the YTD thread showed that if you were in 33% US large cap, 33% US small cap, and 34% international last year that you got a 19% return. If one added emerging markets and gold, then you should've done even better as the link to the Scott Burns article shows.

Nevertheless, your CFP got you into the right mind set and helped you improve your investing.

 

[Moemg]

I am currently taking a class at the University of South Florida on financial planning .We are doing a complete financial plan plus the instructor is answering all our tax & investment questions .The instructor is a certified financial planner and has said It's hard to find an honest CFP.The cost of the course is $85.00 .I figure I'm saving a big chunk of change !

 

[cute fuzzy bunny]

http://early-retirement.org/forums/index.php?topic=661.0

After reading this, send me your 1% annual fee. I'll let you read it again next year for another 1%.

If that works, I have some Smart Pills available.

Some people dont have the time, inclination or ability to manage their own investments. Finding a good financial planner to help them get started can be a good idea.

 

[2B]

http://early-retirement.org/forums/index.php?topic=661.0

After reading this, send me your 1% annual fee. I'll let you read it again next year for another 1%.

If that works, I have some Smart Pills available.

Some people dont have the time, inclination or ability to manage their own investments. Finding a good financial planner to help them get started can be a good idea.

Callie,

The Four Pillars of Investing has got to be the dullest book ever written. Unless you have insomnia stick with CFB's book report.

People need to learn. That's the point of this forum. Just say, "It is easy. It is easy. It is easy....... "

Just keep repeating that like Dorothy at the end of the Wizard of Oz and you'll soon be there.

 

[cute fuzzy bunny]

Oh come on now, the book is quite intellectually stimul **SNOOOOOOOOOOOORRRRRRRRRRRREEEEE**

 

[Nords]

She beat the S&P500 by more than 3 pts, even with her commission (1% of assets).

Well if you're happy then we're happy for you.

I can't help wondering how much the CFP's rights to 1% of your assets compares to buying Bernstein's "Four Pillars" or otherwise investing in your own financial education. And how much that 1% is when it's expressed as a percentage of your annual spending, not as a percentage of your net worth.

We'd also love to hear about the following situations:
- How much she outperforms the appropriate benchmark when the benchmark is down for the year, and
- How much of her fee she refunds for underperforming that benchmark.

 

[Callie]

> Some people dont have the time, inclination or ability to manage their own investments. Finding a good financial planner to help them get started can be a good idea.

Exactly, my point.

 

[LOL!]

OK, a CFP is good to get started, but can we all agree that if the safe withdrawal rate is about 4% a year and if the CFP takes 1% of assets every year, then paying the CFP is like an extra 25% tax hit on your withdrawals that one can easily avoid with a minor amount of education?

 

[2B]

> Some people dont have the time, inclination or ability to manage their own investments. Finding a good financial planner to help them get started can be a good idea.

Exactly, my point.

So when are you planning to move your money out and manage it yourself?

If that's not your goal, you'll get static on the forum until it is. It really isn't that hard to successfully manage your own money.

Many of us have paid "advisors" and learned to do it ourselves. Many of us have had horrible screw ups that have wacked our net worth and delayed our financial freedom. I don't think any of us just woke up one day and said, "I'm going to start saving and investing for my future and I can do it myself." We all went through some version of what you are doing. Eventually, we all learned that no one cares as much about our money as we do and that an "advisor" adds no financial value.

There are many good investment books to learn how to do simple indexing which has been shown to outperform 90% of all "professionals."

 

[unclemick]

Yep

In many ways - successful investing is an act of faith-

Drum Roll Please:

"God looks after Drunkards, Fools, and the United States of America."
Charles De Gaul - who may have (per Nord's research) filched it from a German.

heh heh heh heh - Target Retirement 2015. After a lot of books, brokers, and other schools of hard knocks - the expensive educational variety, 1966 -


Oh - and so what if Bogart never said "play again Sam." He had the general ider - right?

 

[spideyrdpd]

http://www.aaii.com/includes/DisplayArticle.cfm?Article_Id=1337&digit=227

Nothing wrong with a cfp advising someone to get some term insurance. Depending on their circumstance.

The issue is that 1% or .5% seems like a small number. Yet over time this number has a large effect on how much money you will have.

 

[Sarah in SC]

Hey, I just realized something...I don't really want to get my CFP when I pass (hopefully) the exam in July...what I really want is to have a certification from CFB (Cute Fuzzy Bunny)! So when is the rabbit going to offer online classes in financial management?
I think that would be a lot more useful/entertaining than this #$%^ estate planning stuff I'm learning now!

But seriously, the CFP coursework is one of the best imaginable ways to understand the entirety of financial planning, but it is a huge time committment. I don't actually have any desire to run anyone else's money but our own, and the CFP is just so I'll have all the facts when making financial decisions. I agree that there are good and bad advisors out there, and that there are lots of people who don't want to make decisions on their own.

Sarah

 

[riskadverse]

She beat the S&P500 by more than 3 pts, even with her commission (1% of assets).

The question you should ask yourself is what are you going to do in the year she lags the S&P500 by more than 3 pts, even with her commission (1% of assets).

 

[Callie]

> OK, a CFP is good to get started, but can we all agree that if the safe withdrawal rate is about 4% a year and if the CFP takes 1% of assets every year, then paying the CFP is like an extra 25% tax hit on your withdrawals that one can easily avoid with a minor amount of education?

I had posted when I first joined that this was a short term solution we agreed to - we needed help getting started. In no way would we be doing this in retirement! We will manage our own money in the next couple of years. We plan to ER in about 5, maybe earlier.

I actually plugged the money we had invested into a sample portfolio in the funds we used to have the money in, and she did much better.

Also, alot of our funds are in 401Ks that she is not paid on, but advises us. Her advice has been terrific on everything.

My husband even has some investments for college funds, and she reviewed those, although they are invested somewhere else (no one is paid on this money).

As far as when she doesn't perform, we will decide that when it happens. We were very direct on this with her.

 

[FinanceDude]

> OK, a CFP is good to get started, but can we all agree that if the safe withdrawal rate is about 4% a year and if the CFP takes 1% of assets every year, then paying the CFP is like an extra 25% tax hit on your withdrawals that one can easily avoid with a minor amount of education?

I had posted when I first joined that this was a short term solution we agreed to - we needed help getting started. In no way would we be doing this in retirement! We will manage our own money in the next couple of years. We plan to ER in about 5, maybe earlier.

I actually plugged the money we had invested into a sample portfolio in the funds we used to have the money in, and she did much better.

Also, alot of our funds are in 401Ks that she is not paid on, but advises us. Her advice has been terrific on everything.

My husband even has some investments for college funds, and she reviewed those, although they are invested somewhere else (no one is paid on this money).

As far as when she doesn't perform, we will decide that when it happens. We were very direct on this with her.

It took a lot of guts to post you were working with a CFP on this board...........

However, if YOU are happy with the results, then keep the advisor. It seems the CFP has done things that you were not going to do yourself. Besides, you have a clear exit strategy set up with her if you don't like the way things go.

Good luck.

 

[cute fuzzy bunny]

...what I really want is to have a certification from CFB (Cute Fuzzy Bunny)! So when is the rabbit going to offer online classes in financial management?

Hey, send me ten bucks and I'll send you a certificate. Thats right, eveyones a winner!!

I suppose I *should* offer something, considering I've beaten the s&p 500 for about 12 years running. Looking good for a 13th too.

 

[terminator]

I actually plugged the money we had invested into a sample portfolio in the funds we used to have the money in, and she did much better.

Also, alot of our funds are in 401Ks that she is not paid on, but advises us. Her advice has been terrific on everything.

It's just fine as long as you realize as part of your education that you aren't comparing apples to apples. She moved you into gold and emerging markets which is fine, but it's probably not the same risk profile as you had before. Just keep in mind that there really wasn't any bad advice last year unless someone told you to keep it all in cash. Pretty much every "mainstream" asset class did well last year.

 

[cute fuzzy bunny]

She moved you into gold and emerging markets which is fine.

Pretty much every "mainstream" asset class did well last year.

Ding! Ding! Ding!

Further point that the couple of high risk asset classes mentioned did exceptionally well in the last few years, and that there were few predictors of their doing well. It was dumb luck.

Compare your results with one of the many free asset class slice and dice portfolios, like a coffee house or regular MPT type ports. Bet they did just about as well and would perform more evenly over longer periods of time, with no fees and low cost.

 

[Nords]

I suppose I *should* offer something, considering I've beaten the s&p 500 for about 12 years running. Looking good for a 13th too.

Well, lemme "offer" this thought: Bill Miller was a coin-flipping monkey but bunnies presumably added value to the process?

Oh, wait, you didn't have to contend with fund bloat!

We're all brilliant investors until we've beaten the S&P for at least two decades.

 

[FinanceDude]

Well, lemme "offer" this thought: Bill Miller was a coin-flipping monkey but bunnies presumably added value to the process?

Oh, wait, you didn't have to contend with fund bloat!

We're all brilliant investors until we've beaten the S&P for at least two decades.

Yeah, Bill Miller is a real "monkey", so is that "idiot" Warren Buffet..............

 

[cute fuzzy bunny]

Hey! I'm getting a LITTLE bloat...my wife keeps bringing home more money and I have to find SOMETHING to do with it!

Bunny's are OBVIOUSLY better than monkeys. For a lot of reasons!

 

[clifp]

> OK, a CFP is good to get started, but can we all agree that if the safe withdrawal rate is about 4% a year and if the CFP takes 1% of assets every year, then paying the CFP is like an extra 25% tax hit on your withdrawals that one can easily avoid with a minor amount of education?

I had posted when I first joined that this was a short term solution we agreed to - we needed help getting started. In no way would we be doing this in retirement! We will manage our own money in the next couple of years. We plan to ER in about 5, maybe earlier.

I actually plugged the money we had invested into a sample portfolio in the funds we used to have the money in, and she did much better.

Also, alot of our funds are in 401Ks that she is not paid on, but advises us. Her advice has been terrific on everything.

My husband even has some investments for college funds, and she reviewed those, although they are invested somewhere else (no one is paid on this money).

As far as when she doesn't perform, we will decide that when it happens. We were very direct on this with her.

Considering that at some point I hope to be a CFP, I guess I should take exception to the conventional wisdom, that all financial advisors are at worst case crooks and at best case leeches slowly sucking their victims dry.

It does require a lot of work to become a CFP and by all accounts the test isn't easy. Some of the stuff she has learned is not obvious. If the value of her knowledge is worth 1% of your assets is an open question, but clearly she did ok this year.

Out of curiousity, could you post a bit more information about the portfolio she had you invested in, which mutual funds, individual stocks?, asset allocation, how did she invest in gold, and emerging markets.

I think you are very smart to benchmark her performance vs your previous funds. In fact as long as you are keep close eye on your investments, I think it may make sense for you to keep with her. However at some point, in the next couple of years you should have the discussion with her about switching over to a fee-only based advice. Once she has your portfolio pretty much set, the quarterly tweaking doesn't take a lot of time and paying her a fee as opposed to a 1% expense ratio I think is fairer way of operating.