financial advisors ? who to use

[John23]

Financial advisors are mostly salesmen.

I knew a financial advisor/wealth planner (whatever they call themselves), he was on the Wealth Magazine list of the top 100 Planners in the country. And he's been quoted in the press, in newspapers and in magazines.

A few years ago...didn't think there was a real estate bubble in California. This was like, 2004. When 2% of the population could afford a home.

I think part of the financial services industry's job is to make investing much more complicated and confusing than it really is. Like annuities, they create stuff that confuses people. They frame investing in a way, where they're the only ones who can help you.

-What's your risk tolerance?
-What's your asset allocation?

"I don't know." Well, let me show you these charts. And they steer you into what they want to sell you.

I think trust in investing is hollow...look at the sophisticated and rich people duped by madoff (speilberg's charty, etc).

[TennisDD]

Annuities are not "ponzi schemes." There are good and bad to everything you invest in.

If you get, say a 5 year annuity, right now rates are paying at around 4-4.5% tops. The bad is you have a 5 year surrender. The good being you have tax deferral, can take out 10% a year on many, have piece of mind of not going below 4%. The bad, if the market picks up you are stuck in the 4%.

Looking back, a whole bunch of these fixed annuities and Universal Life products giving you a 4-6% return now look golden compared to having it invested in stocks. In the next 10 years they could look poopy.

The answer to your question, get an advisor who you trust and represents mulitple carriers so you get a good rate. Those who say that annuities are the best, CDS, stocks, mutual funds are full of you know what. No one knows, the last few months should have shown everyone this.
My father has an annuity that killed the market the last 10 years mainly because of this year. The annuity was his low risk "safe" investment, getting a 6% return over 12 years. So who knows?

The downfall on annuities are surrender charges and MVA's. To some if up, if you are not going to touch the money in the next 5-10 years and want it to grow tax deferral getting a modest return, go with an annuity. If you need liquidity in 3 years or less, avoid an annuity.

[DCguy03]

I agree that you should take control and manage your retirement by yourself. Pick up a few books-- my favorites are:

• A Random Walk down Wall St.
• The Smartest Investment Book You'll Ever Read
• The Little Book of Common Sense investing (by John Bogle).

But if you still feel like you can't make these types of decisions on your own yet, what you should do is to see a fee-based financial planner.

There are 2 types of financial "planners"/advisors:

1) The salesmen, who let you see them for free, with the trick being that they get to take a huge chunk of your $$ as a commission. These guys are basically out to sell you over-priced, cost-heavy junk that you don't need...whatever makes them a fat commission they'll sell you.

2) Planners who charge you a flat, or hourly fee, to see them. They don't make any commission off of what they sell you, so it is in their best interest to act in your best interest. If you do go to a financial planner/adviser, this is the only kind worth going to.

For some good un-biased information on investing, you should also read some of the articles at FINRA.org. It stands for "Financial Industry Regulatory Authority"

Good luck! --oh wait, you don't need luck in this situation!

[dsnellen]

Originally Posted by nj relocating

looking to retire & invest my pension money, its hard enough to retire at this time but then you have to decide what to do with the money, any reasons to go with a big firm like ubs or smith & barney,or is it better to go with independent advisors who has no ties with anyone. I've met with about 3 firms & 3 independants, & they all sound good & have they're own ways of doing things & they sound good because they're good salesman. at this point I'm totally confused, a couple push for annuitys which have higher fees but secure income for life,I would never have considered one but nowadays it might make ya sleep better at night. I'm leaning to maybe 25% in a annuity,. any suggestions would be great...thanx

I have ignored the posts from the others as it has been my experience that a large majority of the posters here do not know enough to know what they don't know.....

To address your question Nj Relo, you are doing the right things. Interview the advisors and find one you are comfortable with and who understands & shares your investment goals. Look for qualifications and education. Use the FINRA site (FINRA - FINRA BrokerCheck) to check any initials behind their name. Be very warily of titles that include the word "Senior". Most are bogus.

You will probably do better with a fee based independent advisor. If they are a Registered Investment Advisor, they will have a fiduciary responsibility and provide you with a ADV Part II form that outlines services, fees and expenses. Don't expect them to work for free although the initial consultation should be. Often they will charge you for an investment plan, but rebate it back if they assume management of your money. Then they will charge between 1% - 2% per year on assets under management. The folks who charge commisions do not have an obligration to recommend products/solutions that are in your best interest. The FINRA site also has ideas to assist in the advisor selection process.

An annuity, like all investment solutions, have pros and cons. Be sure you understand the purpose of an annuity. Remember, life insurance is used to create an estate. An annuity is used to liquidate an estate. Most pension plans offer an annuity as one of the redemption options. This should be weighted against rolling over the funds and trying to beat what the annuity would have paid. Tax issues, life expectancy and martial status must be considered. All available options should be compared side-by-side as a part of the due diligence of an investment plan. All investment vehicles have fees and expenses. Its what you get in return for those fees that determine if a particular vehicle is worth the cost. Its for the investment plan and implementation that you pay a fee to an advisor. You can't learn this on Google...... I could go on but this answers your question. Besides, I need to get my flax jacket and helmet ready and crawl under my desk before I hit the "Submit Reply" button. My 2cts worth.

[thecapitalistpig]

The Philadelphia Inquirer suggested this site:

Financial Advisor Scam

[nj relocating]

Originally Posted by thecapitalistpig

The Philadelphia Inquirer suggested this site:

Financial Advisor Scam

thanx for the info I found that site very interesting, I'm trying to educate myself so I know what to do, even if I go to an advisor for some of the money,I'll know what I'm talking about

[maggiekate]

I would first read lots b4 you trust an advisor with your money. Until you understand what you will
need put the money into cd at least they are safe. Vanguard and fidelity have low fees, and you
can invest in some mutual funds to spread your risk. Wellington is a stable fund but you need to understand the Risk. Brokers make there money off what they sell you. There are many good magazines you can read and learn from, then decide your risk factor. Who ever would have thought GM would be selling for dollars now, or ever GE? Also don't have all the money in one sector as Financials etc.

[John23]

A few other points..

-I would be very leery of accepting the conventional wisdom that stocks are for the long run, stocks go up 8-10% a year, stocks are for retirement. That's been true in the past in bull markets, but prices have flat lined and gone nowhere for years.

Don't let financial advisors, experts tell you that stocks are always the place to be. When a simple chart of the dow or s&p over the last 75-100 years proves otherwise. When you buy is more important than...stocks go up 10% a year.

True, they'll say, this period is an anomoly, then go right back to the charts, statistics, tables, dollar cost averaging tables. Dollar cost averaging won't do you much good if you keep averaging in at lower and lower prices (starting at a high plateau and going lower). You can still be underwater.

Basically, the last 25 years, everything has been built around stocks (50,000 stock mutual funds, cnbc, wall street journal, etc). The industry only knows stocks. But we may be in for a major sea change, where stocks give way to other investments (whether its commodities, hard assets, precious metals, bonds, etc). The underlying conditions that support stocks can change. But its hard for people who have only known a bull market to see that (look at the denial in 99/00 over dot coms, and the denial thats dragged on in 00's over holding stocks).

Then there's this layer of experts that spring up in big bull markets (from hedge funds, private equity, financial media...all the way down to the financial advisor recommending stocks and bonds). They all see things the same way, but other investments can significantly outperform...and they all miss the boat...i.e, commodities in the last 10 years have far outproduced stocks, even though commodities crashed in 08.

And don't believe all this stuff about timing, no one can time the market. That's broker talk that keeps the broker in control of steering the ship. "Well, if I can't time the market, I guess I'll hand to the broker/advisor" (insert sarcasm). Common sense is the best timing tool. If you're in home building stocks, and prices just hit $700,000 for a tiny 2 bedroom house...maybe its time to take some money off the table.

[Fat Freddy]

The question is not "Who do you use?"
It's "Who do you allow to use you?"