Positive Financial Planner stories

[Empty Pockets]

I'm new here, and I don't want to shake any trees. I have complete respect for those who can and do manage their own funds successfully.

I started saving in when I was a teen in the 80's and started to invest in 1987. A broker got hold of my name and sold me some closed end funds. I kept on with this broker for a few years, getting churned and paying taxes and I ended up with a whole mess of stocks & funds with no plan other than to buy the next hot one.

I rolled out of this in the early 1990s and went to Charles Schwabb and bought no-load funds on my own. I subscribed to a guru who sent a newsletter every month, and again I ended up with a churned up mess and paid a lot of taxes even when my portfolio was going nowhere.

In 1997 I decided I needed professional help and I interviewed Financial Planners. I knew what I wanted, to retire at 50. I was 32 at the time.

In 1998 I met one I liked and his firm ran a very detailed financial plan for my review. I implemented it and haven't looked back. With steady deposits my accounts have grown from around $200,000 to over $900,000. I worry far less and understand far more. I pay less taxes now and I have a plan on how to distribute the accumulated funds when I do want to withdraw them.

I expect to pay a reasonable fee for his services. I'll give someone dimes all day long if they're making me dollars. The value added excedes the cost that I pay. I pay an annual fee based on the percentage under management, they want to see my portfolio grow as much as I do since that's only going to increase their own revenues.

I would only work with a financial planning firm that has the resources to serve you. When I ask my planner a question on legal issues, he goes down the hall and talks to one of their staff attorneys. When I ask a tax question he calls for one of their CPA's. When I have a Life Insurance question he brings in a CLU. The planner himself has many designations himself and is no dummy, he just values the experience of others on his staff.

I know there are plenty of bad advisors out there, I've left one and interviewed some, and know others. From what I've learned over the past few years I would be able to handle things myself, but then I wasn't. Also, there are many, many more resources available to the do it yourselfer now than there was in 1997.

I guess to summarize, don't feel guilty if you feel the need to get professional help. Interview them & choose carefully. It is possible that they can make your financial life better.

Does anyone else have a positive Financial Planning story ?

 

[ScaredtoQuit]

I'm new to this Board, but I think most of the people here manage their own finances. A fundamental concept of early retirement is saving cash wherever you can. 1 to 2% may not sound like much, but it's actually an enormous load on a portfolio that over time makes a dramatic difference. Consider the impact that 1-1/2% makes on a portfolio where you've limited your withdrawals to the universally accepted safe level of 4%. That gives you only 2-1/2% left after paying your Planner!

It sounds like you have an excellent Planner, however, if you are only even moderately intelligent, you can learn the concepts yourself. Read some of the books recommended here on the site and keep visiting the Board. In the end, NO ONE cares about your well being more than yourself!!

 

[Rich_by_the_Bay]

You can have a better relationship with an FA if you know what you are doing. In a more naive time I hired a planner, got the usual advice and went along. As I got smarter, I called him one day and said, "Brian, it makes no sense to me for you to manage my fixed income at a commission of almost 1.5%. No matter how good you are, you will not beat the index at that rate."

He said I was right, that it was a good idea to do this on my own. Next March, I plan to pull everything else except value stocks, at which his firm excels. I'll give him a couple of years to beat one of the Vgb managed funds net of fees. As long as he does that, it's fine with me.

Wait til he hears me say that I'm not getting enough "alpha."

 

[saluki9]

I'm new to this Board.....

universally accepted safe level of 4%.

You think there is a universally accepted withdrawal rate? That debate is far from being settled.

 

[Brat]

I think Empty Pockets has different financial planning issues than most on the board. Odds are s/he is a high net worth client. Frankly I doubt that many FAs have access to services such as he describes.

For the rest of us we need to be informed consumers of advise.

 

[AlmostDone]

Saluki9, could you expand on that a little? I'm pretty new also, and I thought 4% was considered the safe withdrawal rate.

 

[Nords]

Saluki9, could you expand on that a little?

Try here too, from the "Best of the Boards":
http://early-retirement.org/forums/index.php?topic=5572.0

 

[FinanceDude]

I think Empty Pockets has different financial planning issues than most on the board. Odds are s/he is a high net worth client. Frankly I doubt that many FAs have access to services such as he describes.

For the rest of us we need to be informed consumers of advise.

Some of us do..............or build a network of external referral sources that accomplish the same thing. I have a network external to my firm, as a way to eliminate potential conflicts of interest. Right now, I have two estate planning attorneys, two CPAs, an independent RIA, and a CLU that is one of NML's top people...........so I can help pretty much anyone. I guess I could throw in an equity analyst or two I know for help also.........

 

[mb]

You think there is a universally accepted withdrawal rate? That debate is far from being settled.

ScaredtoQuit's point is still valid if it is 2% or 6% or even higher!

MB

 

[Meadbh]

I have financial qualifications, but I do not have the time or inclination to spend hours daily poring over the markets. While I do maintain a self directed portfolio, and have some alternative investments, this is mainly disretionary investment. For my core portfolios I have two excellent financial planners.

One of them is allied with MD Management, the Canadian Medical Association's financial services firm. She is a CFP, is paid a salary, listens to me, and helped me achieve over 15% tax deferred return last year for my medical corporation. That's going to provide dividends post RE, long term, so its investment can be relatively growth oriented.

After receiving an inheritance, which involved assets spread across several countries, I did a detailed examination of international financial planners. I developed a Balanced Scorecard to evaluate them as follows:

Internal Processes
1 Portfolio performance in recent bear market
2 Morningstar fund ratings
3 Research
4 Institutional buying power
5 Risk Management
6 Accountability
7 Expenses

Customer Value
8 Integrated solutions
9 Listening for customer cues
10 Thoroughness of "know your client" process
11 Timeliness of response and follow up
12 Comprehensiveness of written report
13 Accessibility

Innovation
14 Willing to consider alternative investments
15 Willing to consider leverage
16 Creative ideas presented
17 International investment focus

The Team
18 Management competence
19 Quality of interaction observed
20 Customer feels part of the team
21 Apparent morale of team
22 Advisor financial engagement

For the funds from my inheritance (the key to FI and RE) I chose Scotiabank Private Client Services. I have a personal financial advisor who is a CFP and listens to me. With this firm I have a balanced portfolio which is currently returning just under 10%. This is my RE portfolio so it has a lower beta than the corporate one. MERs are 1%, which is low for Canada. For this I also have a responsive customer relationship manager who has arranged financial planning, estate planning and legal services at no cost to me. For exmple, they flew in a financial planner to meet with me and my FI and develop a comprehensive financial plan, which we will review in a couple of years. It was after this exercise that I discovered I was FI!!! I feel quite comfortable running ideas by my FP even if they relate to outside investments.

I feel I am getting good value for money, good customer service, and am achieving what I wanted at a reasonable cost and risk. At the same time, I am collecting performance information and providing feedback to my financial advisors. They know that I'm being vigilant, and I know that they are meeting targets.

To each her own, eh?

 

[BUM]

Who has a positive financial planner story?...anyone?...anyone?...

 

[F M All]

Who has a positive financial planner story?...anyone?...anyone?...

Well, since it is Thursday..............


A busload of Financial Planners drove off a cliff and everyone was killed.



There wasn't an empty seat on the bus.


OK?

 

[cute fuzzy bunny]

Okay, you went where I was thinking...something along the lines of "He didnt suffer much after I ran him over...thats positive, right?"

Best positive financial planner story comes from the movie "secondhand lions", which if you haven't seen it, its a cant miss. Go rent it. A movie anyone can watch and enjoy.

Basically a couple of old fellas who (rumor has it) have a huge nestegg hidden away on their farm property. They enjoy their mornings on the porch sipping drinks and occasionally firing a few rounds at the never ending "investment advisers" who keep driving up and making pitches.

 

[F M All]

Yes, good movie - it stars Michael Caine - not a lot of people know that

 

[cute fuzzy bunny]

And robert duvall. And unfortunately haley joe osment. But haley doesnt talk much, so its alright.

 

[Empty Pockets]

I know some guys like that, I live in farm country and there are a LOT of millionaires walking around in seed corn hats and coveralls.

Do you really think that they couldn't benefit from a good financial advisor?

From what I've seen, these older do it your selfers either put all their money in CD's from their local bank or keep cash in their mattress. Either way they're loosing earning power every year.

A lot of these folks remember the depression and are deathly afraid of the stock market.

No one can tell me that a well diversified portfolio, designed by a reputable professional, would not benefit them tremendously.

We all hear stories of old people getting swindled by poor financial planners, and I know some that I wouldn't buy snake oil from, but I believe they are the exception. They have to be weeded out.

I knew an old bachelor farmer that invested with a planner since the 1940's and when he died his will went public when he gave some to his church, his investments were worth several million dollars. I seriously doubt he could have come close to this without investing in a diversified portfolio with an advisor.

 

[MasterBlaster]

The question then becomes...

Does the positive effect of having a diversified portfolio devised by a financial planner outweigh the large (perhaps outrageous) fees that they charge ?

For many people the answer to this question may be yes. But for someone with rudimentary or better financial wherewithal the answer may be no.

 

[F M All]

I knew an old bachelor farmer that invested with a planner since the 1940's and when he died his will went public when he gave some to his church, his investments were worth several million dollars. I seriously doubt he could have come close to this without investing in a diversified portfolio with an advisor.

Have you seen the size of the FP's estate yet?

 

[REWahoo]

Do you really think that they couldn't benefit from a good financial advisor?

As always, the devil is in the details...

 

[Empty Pockets]

I hope his financial planner did do well. Who cares ? He clearly added an awful lot of value to this individual's net worth.

"I'll give someone dimes all day, if he's making me dollars"

 

[Bram]

I'd care if it were 9 dimes for a dollar.

 

[Leonidas]

And robert duvall. And unfortunately haley joe osment. But haley doesnt talk much, so its alright.

Yeah, but I still had to see his cherubic little face and it took away from what was an otherwise fun movie.

I started out with the same firm I'm with now, and in the beginning it was because I was just so damn ignorant of all things financial that I knew I had to have some help. But even so, when they offered to make all the decisions I balked and opted to have final authority to decide based on their recommendations. They were very good at giving me decent choices to pick from, and learning how to choose was what started me on the road to being a better investor. While working I just never had to time to really refine my knowledge and get to the point where I felt I could make the decision all by myself. During the last two years I've turned that around to the point where I give them the choices of things I want to do and listen to their feedback. My next step is to take the lump sum portion of my retirement and invest it using a discount brokerage.

There's only been two investments moves that were a disaster and while I blame the firm for decisions the mutal fund managers made, I can't blame my adviser for suggesting the purchase. I said that I wanted to move in a certain direction and he suggested two mutual funds that he thought would accomplish that. I did not do any research and just blindly accepted his recommendations. But when I lost money I had a lot of company, so I just chalked it up as a lesson learned and used the loss to offset the tax on some gains. I failed to complete my responsibilities toward myself when I made that move and it cost me. It won't happen again.

Like I mentioned in the thread started by My Dream, I recognize that while these guys have made me a lot of money and almost always done very well by me, they do have a bias toward decisions that make them money. As I move toward what I think will eventually be a major shift of dollars away from them, that bias comes to light more and more. When I gave them some recent instructions along those lines they freaked out just a little and came back with some alternatives that favored keeping funds where they made money rather than the scenario I had been planning - which would take a chunk of money and put it where someone else was getting a cut. We spent an hour on the phone and I'm finalizing the plans now, but the reality is that some of their suggestions made better sense than some of the things I wanted to do. I'm still doing what is in my best interest, but I liked some of their ideas better and what I'm paying them will be the same or even less than it would if I did the same thing with someone else.

I have good advisers, but I have to remember that not only do I have to watch the money in my pockets, but I need to at least be aware of the money going into their pockets as well.

Modified to add:

Being an informed consumer pays off. In the recent conversations with my investments guys, I had very accurate information on rates for a product that I wanted to add to my portfolio. I knew what their advertised rate was and knew that I could do somewhat better elsewhere - so I pressed for a better deal. In the end they had to admit that although they could offer me a better deal than the advertised special, what I had found elsewhere was still better and they didn't try and push their product after that. They did counter with something really nice as an alternative to something I had wanted to do, and because I had done my research I was able to recognize a good deal when I saw it.

 

[FinanceDude]

Good thread.............. People look at 5.75% and these big loads, and think of the FP as pocketing basically all of that. Not true, but it is a natural inclination to think that.

Someday I'll dig into that on here if people want..............

 

[kcowan]

...With this firm I have a balanced portfolio which is currently returning just under 10%. This is my RE portfolio so it has a lower beta than the corporate one. MERs are 1%, which is low for Canada...

How does the 10% return line up with:
1) Your expectations, and
2) Your needs.

What is the equity/fixed allocation?

 

[justin]

I'd say I had an ok experience with my financial planner. He worked for Edward Jones. He did have me invested in all front load mutual funds (American Funds). When I started investing with him, I was paying 5.75% sales charges. By the time I had a six figure portfolio with him, the sales charge was down to 3.5%. The mutual funds themselves had fairly low expense ratios (around .6%), which included a .25% 12b-1 fee.

He would sit down with me and go over risk tolerance and portfolio allocation and show me where I need to focus on investing going forward. I presented to him my plans to retire early (by age 40 was my plans at the time). We went over different scenarios and "what if's". He was the first to introduce me to the 72(t) provision allowing penalty free early withdrawal from IRA's for anyone without a special reason. That single piece of advice about the 72t rule was extremely valuable to me (even though I would have eventually found out about it on this forum).

The main reason I stuck with him for so long was that American Funds seemed to be a good actively managed fund company that has produced good long term performance results over decades of management. You typically can't get American Funds without paying a load of some sort.

After doing a lot of reading of this forum and other books, I eventually decided that a passive slice n dice portfolio of primarily low cost index funds was the way for me to go. I tried to see what my Edward Jones guy could do for me, and the least expensive way for me to get into index funds would have been to pay a full price brokerage commission on some ETF's (around 1% of the purchase price, if I bought $10,000 worth).

I also didn't like that I couldn't get in touch with my financial planner on weekends or evenings or via the web. This is when I tend to do my investment work, not during the work day. And Edward Jones' web interface was pretty horrible versus Vanguard, fidelity and other "do it yourself" shops. I ditched the FP and went with Vanguard and Fidelity.

Long story short, I can see the benefit of having an FP like mine if you are unable to do the hard work of learning about investing on your own and having discipline to stick to your asset allocation. It is expensive advice, but probably worth the cost if you just won't take care of it yourself.

Maybe like going to a mechanic for car problems instead of doing it yourself. I'm sure I could read a half dozen books on auto repair, hang out in some auto repair forums, network with local mechanics or friends who work on cars, and I'd eventually be extremely proficient at auto repair. However, I choose to outsource that particular expense, and I feel like the few hundred dollars per year I spend on labor for car repairs/maintenance is worth it. Maybe some feel the same way about investing and don't know enough to know any better.