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Old 07-04-2007, 10:06 PM
 
Location: Los Angeles, Ca
2,884 posts, read 5,180,643 times
Reputation: 2731

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Aisa,

I agree 100%.

I don't want to lump all financial advisors, planners, "retirement experts" together, I'm sure there are good ones, but for the most part IMO, it's an industry that's been way over done, its too product driven, too formulaic.

The advisor that didn't know if you should pay off your mortgage or not (keeper), I'm not suprised. Its too formula driven, "man with a hammer syndrome." To the man with a hammer, every problem looks like a nail. To the advisor that knows, stocks, bonds, insurance...every problem can be solved with stocks, bonds, insurance.

Again, its not an indictment of the whole industry, but theres alot more than stocks, bonds, insurance.

-Tackling overspending might be far more useful than any index fund or asset allocation model. Making 10-12% a year in stocks doesn't mean much if you're spending 18 or 22% a year in interest on credit card debt.

-What about career advancement, or learning new skills?

A few years ago, I joined Toastmasters (the public speaking group). Loved the group, I spent a $100 a year on it. If more confidence and better speaking abilities leads to a higher income (more presentations, more sales closures) and you make an extra $3,000 a year on a $100 investment, that crushes any kind of product sold... stocks, indexes, ETF's, whatever it is.

Is a financial advisor going to recommend an investment that will pay a 3,000% return on your money?

I would be cautious. I'd very, very cautious about investing in anything with high annual expenses. What a 2% annual fee does to your money, 20, 30 years out is sickening.
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Old 09-05-2007, 07:39 AM
 
8 posts, read 31,432 times
Reputation: 35
Default Ria?? Lol!!

"For those folks, using a quality advisor who has a [b][i][u]fiduciary duty to the client (an independent RIA for example), "

OK, I think you do not understand what an RIA means.

"I am a Registered Investment Advisor (RIA) with the Securities and Exchange Commission. Are you impressed? Don’t be. Just about anyone can become an investment advisor. Simply send in a form to the state or federal government with a modest filing fee, and you can join the club. You don’t need an MBA or a college diploma to apply. Heck, you could have flunked out of the third grade, gone bankrupt seven times, lost everything you ever owned to a Ponzi scheme, and still make a great living managing
other people’s money.

In this surreal world of investment advice anyone can claim to be an expert and get paid for it. This is why most stockbrokers, financial planners, and insurance agents are in the business, and why accountants, attorneys, and bankers want in as well. The problem is, most investment advisors are borderline incompetent. Thousands of them lack the basic investment skills and knowledge of a first-year business student." - Rick Ferri

And I have found that 'fiduciary duty' means nothing! Thi one surprised even me. A broker does have to keep your best interest in mind when he works up a general plan, but when he puts on his salesman hat, he can sell you anything as long as it's 'suitable' - a long ways from 'best interest'.

If you want to see the soul of an RIA, spend some time on the registered rep forums. Try asking them some honest, hard questions. They call you filthy sexual names and kick you off the forum.
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Old 09-05-2007, 09:26 AM
Status: "0-0-2 Game On!" (set 3 days ago)
 
Location: The beautiful Rogue Valley, Oregon
7,298 posts, read 15,353,559 times
Reputation: 9473
Frankly, I view having a financial planner/investment adviser in about the same category as having a marriage counselor, as my spouse and I have very different views on money, the economy in general, and investment instruments. The adviser is more conservative than I am, but more main-line than the spouse is, so I give him kudos in pleasing both of us with some of the investments and finding that fine balancing line. In the last 6-7 years he's consistently out-performed the market and by quite a bit, and I believe he is very well-positioned to winthstand downturns as well.

He's an independent, simple base fee only adviser (1% for equities and .5% for fixed). Yes, I'm aware that on some funds I'm paying double management (his and the fund's), but he also has a range of investments open to him that wouldn't be open to me as an individual. Plus, I don't enjoy reading the financial pages, and reading the latest CEO follies just annoys the heck out of me. That doesn't mean I'm out of touch with the news, but it DOES mean I don't need to day-to-day micromanage.

We go in for quarterly reports (more frequently if he wants to talk about something major) plus we get a customized weekly email filled with links and discussions.
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Old 09-05-2007, 09:37 AM
 
29,782 posts, read 34,871,258 times
Reputation: 11705
Default Tax Advisor v Financial Advisor

Quote:
Originally Posted by mimi2007 View Post
I've also been doing my own financial planning for years. I may not always have gotten the highest return, but our investments have been safe and we've made a comfortable amount of money. I read financial and investment articles every day and I'm always learning something new. On the few occasions when I have toyed with the idea of using a financial advisor and have interviewed them, only once did one tell me something I hadn't already learned on my own. My husband cannot grasp financial planning and would need some help if something happened to me, but I have already asked one of his brothers (who is pretty good with finances) to guide him if and when the time comes (but I'm working hard at outliving him....hahaha).

One other very important thing to keep in mind besides how to invest your money is how to withdraw your money in retirement. Most people are probably aware of the rule that they should not withdraw more than 4% per year from their retirement savings so they do not outlive their nestegg. But you also need to be aware of which accounts, taxable or non-taxable, to withdraw from first, and how to spread your taxable withdrawals to avoid being bumped into a higher tax bracket. This is a very important part of planning that many people have ignored and it can cost you a bundle if done incorrectly. A tax consultant can help with this if one is unsure of how to plan for withdrawals. I would post the name of an excellent book on this subject but the moderator would probably cut my link to it. If you want the name, please send me a private message. I have nothing to do with the book and, you may even be able to download it for free from your library's website if your library has a download system....my library lends it online for patrons. There is also plenty of information online at various financial sites if you search on "how to withdraw your money at retirement."

I concur with what you say 100%. Tax advisors at key times have great value, where as financial advisors everyday may not.
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Old 09-05-2007, 11:52 AM
 
Location: Northern California
3,681 posts, read 13,165,035 times
Reputation: 1835
I have always handled my own finances and have never used an adviser. Financial advisers usually have products to sell which may not suit your needs but make money for the adviser. Advisers also make money when the "churn" your account (buy or sell something on your behalf). It's not that difficult to learn the ins and outs of financial planning. Yes it does take some work, but what the heck, it's your money we're talking about.
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Old 09-05-2007, 03:56 PM
 
Location: Forests of Maine
30,683 posts, read 49,455,573 times
Reputation: 19134
I was a budget counselor in the Navy. I have attended many courses; both college courses, and Navy sponsored: dealing with budget counseling, credit counseling, investments and tax-planning.

I have been certified by the Navy and the IRS to assist folks in their tax-planning and to assist them in filing their taxes.

I have never charged anyone a dime for those services.

I do have advise though for whenever an 'advisor' approaches you. Ask them three questions.

1- Anytime that anyone offers advise on budgeting, ask them if they have any personal debt.

2- Anytime that anyone offers advise on investments, ask them how their personal investment portfolio has done this past year.

3- Anytime that anyone offers advise on tax-planning, ask them if they paid any taxes this past year.

If they maintain personal debt, tell them to hit the door.
If their investments did worse then your own investments did, ...
If they pay income taxes, then they do not have a clue.

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Old 09-08-2007, 10:49 AM
 
Location: Home is where we park it.
3,098 posts, read 8,350,450 times
Reputation: 3185
My daddy has been a life insurance agent for over 40 years now for a company that has been in business for over 150 years. He's spent his time and energy making sure he's stayed on top of what is best for his clients and his friends. He even took time to go back to school and get his Master's...at the age of 65.

He spends a weekend once a month in a workshop making sure he is up to date in the financial world...he's almost 80.
He's entitled to use these designations after his name:
Quote:
CHFC
Chartered Financial Consultant (ChFC)
A professional designation (achieved by passing a series of examinations) demonstrating the successful completion of financial courses involving insurance, investments, taxation, accounting, estate planning, and more. The ChFC designation indicates a knowledge of financial planning, as well as the features, benefits and uses of various insurance and financial products.
Quote:
CLU
Chartered Life Underwriter (CLU)
A professional designation (achieved by passing a series of examinations) demonstrating knowledge of life insurance products and their potential uses to meet business, estate planning, retirement planning, and other objectives.
He prefers to do more estate planning than investments. He figures it meets his clients best interests in the long run.

Yes, when he first started, he did cold calls but he is so far beyond that now. He doesn't have to work now, he still is an agent because he feels like he is helping people. Liz
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Old 09-08-2007, 02:05 PM
 
51,945 posts, read 41,806,773 times
Reputation: 32407
Anyone that peddals a "everyone should do X" philosophy is missing the boat.

I do most of my own stuff and have a good friend that is an *expert* on financial topics and I'm also capable of doing my own research.

That being said, there are plenty of people out there that SHOULD NOT UNDER ANY CIRCUMSTANCES be allowed to make their own financial decisions. Many athletes and actors\actresses would certainly fall into this category.

Plus it may actually be a collossal waste of someone's time when they can hire and advisor for what is essentially chicken feed to them.

That being said, if you do go the advisor route....pick a good one and find out who is paying them. My friend quit one job over ethics issues where the place he worked had him pushing crappy funds for better commissions etc. and I knew another guy that was a "stock picker" that couldn't pick his nose on a good day. ;-)
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Old 09-08-2007, 02:22 PM
 
Location: Forests of Maine
30,683 posts, read 49,455,573 times
Reputation: 19134
Quote:
Originally Posted by Mathguy View Post
Anyone that peddals a "everyone should do X" philosophy is missing the boat.

I do most of my own stuff and have a good friend that is an *expert* on financial topics and I'm also capable of doing my own research.

That being said, there are plenty of people out there that SHOULD NOT UNDER ANY CIRCUMSTANCES be allowed to make their own financial decisions. Many athletes and actors\actresses would certainly fall into this category.

Plus it may actually be a collossal waste of someone's time when they can hire and advisor for what is essentially chicken feed to them.

That being said, if you do go the advisor route....pick a good one and find out who is paying them. My friend quit one job over ethics issues where the place he worked had him pushing crappy funds for better commissions etc. and I knew another guy that was a "stock picker" that couldn't pick his nose on a good day. ;-)
Good points.

I have certainly known a few advisers whose advise I thought was completely worthless.

Advise needs to come from someone who has mastered the subject matter. Not just gotten a degree. Not just gotten certified. Not just gotten a job giving advice. But who has personally mastered the topic and can show you that he has mastered the topic.
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Old 12-16-2007, 08:56 PM
 
Location: Northwest
8 posts, read 21,984 times
Reputation: 14
Red face Recent experience with a FA-warning!

My husband and I are approaching retirement, have little savings, too many bills, know little about investments, but fortunately have a good income and are attempting to "catch up" in the next 7-9 years. We sought out a financial advisor believing him to be a "flat fee" advisor that did not stand to gain from any investments we made. He seemed to be pushing a purchase of a significantly higher amount of life insurance that we currently have, which I resisted because I felt what we have was adequate. Ironically, at the same time we received a card from the company he represents disclosing that their FA's do receive commissions in addition to the flat fee for selling certain products (insurance in particular).

Needless to say, I would have preferred to have known this BEFORE paying for this company's services, and feel this approach was not ethical. Of course, we will not purchase the life insurance and will take any further "advice" he gives us with a grain of salt. We paid $700 for this year's services, and probably do not have recourse to get our money back. The only thing positive I can say is that I am learning more about investments overall, will listen to what he has to say but do our own research before making any contributions. I WAS able to tweak my 401K at work without purchasing anything extra and have a better understanding of what I am doing. At the end of this year, I will not renew but will seek further self-education.

My recommendation is to ask BEFORE you hire anyone if they stand to gain any commission on any investments their clients make. I feel rather foolish having succumbed to this sales trap, and my hope in posting this is to help others.

Thanks for hearing me out...
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