Author Topic: Experience with this certain kind of adviser?  (Read 12889 times)

neo von retorch

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Experience with this certain kind of adviser?
« on: July 17, 2014, 07:38:15 PM »
So my friend recommended I meet with her adviser. She knows I can be skeptical and DIY when it comes to finance, but said to give him a shot. So I met with him today. His firm is private and does not work work for banks. He can be paid one of three ways, hourly (discourages this because he wants you to feel comfortable spending time learning and asking questions), percentage of managed assets (discourages because it is a drain on your assets and doesn't motivate the adviser) or he can make commissions if you use a product/service that he recommends.

He looks at your big picture, your goals, income and expenses, insurance, taxes, wills and investments, and then tries to find inefficiencies (wasted money) and make sure you're protected. (It sounds like the big sell will likely be for some insurance for the risk averse and possible some financial products.)

Have you met with someone like this? What are your thoughts?

I think it's probably worth a little investigating. We'd all like to think we can learn everything about anything on our own and not miss anything, but it might not hurt to get some advice from a professional. Theoretically the worst case is that he can't do anything to improve my situation and I've wasted some time but confirmed that I'm making good choices. (Or rather, worst case might be that I make bad financial decisions if his advice is bad, but hopefully I can make intelligent, educated decisions and avoid that.)

gimp

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Re: Experience with this certain kind of adviser?
« Reply #1 on: July 17, 2014, 07:42:38 PM »
Nothing wrong to listening to his bit, but chances are he's great for people who are risk averse and don't want to deal with their money themselves, and less great for you. Two cents.

PeteD01

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Re: Experience with this certain kind of adviser?
« Reply #2 on: July 17, 2014, 07:47:55 PM »
Don't have any experience with this certain kind of advisor and never will because it would just be a waste of time for everybody.

Dodge

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Re: Experience with this certain kind of adviser?
« Reply #3 on: July 17, 2014, 07:58:05 PM »
Would you take the time to talk to a used car salesman, when you have no need for a used car, and in-fact your current car is cheaper & better performing than anything they could ever offer?

Would you take the time to talk to a time-share salesman, when you have no need for a time-share, and in-fact your vacation home is cheeper & nicer than anything they could ever offer?

Then why would you meet with an insurance salesman, when you have no need for insurance (as an investment), and in-fact your investments are cheaper and better performing than anything they could ever offer?

Frankies Girl

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Re: Experience with this certain kind of adviser?
« Reply #4 on: July 17, 2014, 07:59:03 PM »
Nope NOPE No no.... just no.

They recommend stuff that they receive a kickback on? So why on earth would they recommend something that would be a better fit/cheaper expense ratio investment for a client when there is no payola in it for them? Which means that you'd end up in stuff that has higher fees that probably wouldn't be stuff you should be in.

That's like going to a Ford dealership and expecting them to be impartial to all cars.

So yeah, of course they'd "discourage" an hourly fee, but knowing that this adviser also takes kickbacks, I'd run far away. They would just take your money for hourly consulting and recommend the same kickback funds/investments -  a double dip.

If you insist on seeing an adviser, you need an independent fee only type. But you really don't need one if you're just doing passive/index investing. Sure, see a lawyer for estate planning and will making, but you don't need to pay an adviser (and you absolutely will be paying through the nose) to figure out what investments are best for you.

http://jlcollinsnh.com/2012/06/06/why-i-dont-like-investment-advisors/
http://jlcollinsnh.com/2012/03/09/you-too-can-be-conned/

^some thoughts on the subject to mull over


surfhb

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Re: Experience with this certain kind of adviser?
« Reply #5 on: July 17, 2014, 08:10:18 PM »
It only took my one read of the Boglehead wiki to convince me advisers are a waste of my money and time.   

Its up there with the birth of my children as one of the most defining moments of my life

http://www.bogleheads.org/wiki/Main_Page

My favorite quote:

"As Bogleheads author William Bernstein says in reference to the three fund portfolio: "Does this portfolio seem overly simplistic, even amateurish? Get over it. Over the next few decades, the overwhelming majority of all professional investors will not be able to beat it."
« Last Edit: July 17, 2014, 08:13:56 PM by surfhb »

neo von retorch

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Re: Experience with this certain kind of adviser?
« Reply #6 on: July 18, 2014, 07:48:54 AM »
I talked to my friend who referred me to him to find out what changes they made. They are married with a 1 year old.

  • Purchased term life to make sure 1yo is covered if anything happens to one of them
  • Purchased whole life which would also provide for 1yo in event of death, but could also be used for retirement or college
  • Purchased a life insurance policy to cover 1yo
  • Consolidated IRAs into a Roth and started investing $200/month (No 401k at current job)
  • Purchased umbrella coverage in case of being sued

None of these interest me. At best, I just want to make sure I'm following a smart, tax-advantaged investment plan.

I'm now contributing $17,500 to my 401(k) and I'm looking into the tax implications of renting out my house, and whether the additional rent, change in taxes, and additional rent/utilities plus reduction in commuting costs (and time) would be worth getting an apartment right by work. (14 mile commute takes 25-35 minutes.)

matchewed

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Re: Experience with this certain kind of adviser?
« Reply #7 on: July 18, 2014, 08:10:27 AM »
I talked to my friend who referred me to him to find out what changes they made. They are married with a 1 year old.

  • Purchased term life to make sure 1yo is covered if anything happens to one of them
  • Purchased whole life which would also provide for 1yo in event of death, but could also be used for retirement or college
  • Purchased a life insurance policy to cover 1yo
  • Consolidated IRAs into a Roth and started investing $200/month (No 401k at current job)
  • Purchased umbrella coverage in case of being sued

None of these interest me. At best, I just want to make sure I'm following a smart, tax-advantaged investment plan.

I'm now contributing $17,500 to my 401(k)
and I'm looking into the tax implications of renting out my house, and whether the additional rent, change in taxes, and additional rent/utilities plus reduction in commuting costs (and time) would be worth getting an apartment right by work. (14 mile commute takes 25-35 minutes.)

Bolded for emphasis -

There you've done it. You are following a smart tax-advantaged investment plan. Now just make sure you're minimizing fees while maintaining your AA and you won't ever need a financial advisor in your life.

trailrated

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Re: Experience with this certain kind of adviser?
« Reply #8 on: July 18, 2014, 08:26:26 AM »
  • Purchased whole life which would also provide for 1yo in event of death, but could also be used for retirement or college
  • Purchased a life insurance policy to cover 1yo

The other advice wasn't bad, but your friend got screwed here ^^^

Trudie

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Re: Experience with this certain kind of adviser?
« Reply #9 on: July 18, 2014, 08:59:09 AM »
+1 Frankie's Girl

RyanAtTanagra

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Re: Experience with this certain kind of adviser?
« Reply #10 on: July 18, 2014, 09:57:54 AM »
Life insurance on a 1 year old?  We don't have kids yet but I would have never considered taking out life insurance for them.  Is that normal?

neogodless, sounds like you might be better off running your ideas by a tax accountant to make sure your numbers are solid (and for peace of mind)

AH013

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Re: Experience with this certain kind of adviser?
« Reply #11 on: July 18, 2014, 10:02:26 AM »
Ask this guy when he got his CFP?  No?  CFA.  No?  CPA?  No?  Some sort of graduate financial education?  No?  Oh, a state license in insurance!

Yeah, who your friend met with is an insurance salesman.  Not a financial adviser.  He parrots the company line in whole life insurance, annuities, and various you'll-never-need-this insurance policies being the perfect solution for any financial-based goal.  At best in their development they collect a Series 6 along the way, which requires the normal person to read a 150 page book, 100 pages of which have nothing to do with investments and have everything to do with account administration minutia, then score a 70% on a 2 hour MCQ exam.

True financial advisors have qualifications, like those I mentioned, which take years and hundreds of hours of grueling graduate-level education to earn.  The best work hourly, charging to meet with you, prepare an investment policy statement (basically a detailed account of how you'd like to invest, what percent of your money should be in stocks, bonds, etc.), educate you, invest your money, and make sure your goals are on track.

The scum of the earth charge based on commissions*, because they usually pitch it without regard to how it fits into your overall goals and know nothing about the investment except they get 1/2 of the 5% load they're charging you, or 10% of the policy premium you'll pay every year for the rest of your life.  BTW, I didn't make up those numbers -- I know for a fact the average kickback on a loaded fund is 1/2 to the adviser, and the agent who sells you a whole life policy gets 90% of your first year's premium and 10% of every subsequent year as long as they keep the policy active.  When you realize this, you'll take any "advice" from them with a full pound of salt, since their interests are not aligned with yours at all when they benefit disproportionately from pushing you into a 4% loaded product with a 2% annual fee when a no-load / 0.1% fee product would accomplish the same objective.

If you're concerned you're not on track with your goals or you get jittery when the market swings around, meet with someone with a CFP or CFA and pay them $200-$500 to assess your risk tolerance and financial goals, then draft up an investment policy statement.  It will help give you a clear path and save you money long term, since you can hand this over to any true adviser and they can help you manage your money right away without having to get to know you.

*Not saying anyone who charges commissions is scum of the earth, just that those who are scum of the earth predominately charge based on commissions rather than anything else

Trirod

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Re: Experience with this certain kind of adviser?
« Reply #12 on: July 18, 2014, 10:02:57 AM »
  • Purchased a life insurance policy to cover 1yo


Why would you insure a liability?  I thought insurance was for assets?

AssetGrinder

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Re: Experience with this certain kind of adviser?
« Reply #13 on: July 18, 2014, 10:08:11 AM »
Ouchy. This is no financial adviser. This guy is an insurance salesman that gets paid to sell you policies you don't need. He is not looking after your well being but insuring his own. You should blow up his spot and put him on blast.

neo von retorch

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Re: Experience with this certain kind of adviser?
« Reply #14 on: July 18, 2014, 10:12:52 AM »
Thanks everyone. I generally agree with all that has been said. I do think they bought life insurance on themselves to take care of the 1yo in case of their untimely demise, but I agree that it's unnecessary, excessive insurance, and I don't want none, hun!

rocksinmyhead

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Re: Experience with this certain kind of adviser?
« Reply #15 on: July 18, 2014, 10:13:23 AM »
Life insurance on a 1 year old?  We don't have kids yet but I would have never considered taking out life insurance for them.  Is that normal?

neogodless, sounds like you might be better off running your ideas by a tax accountant to make sure your numbers are solid (and for peace of mind)

yeah I can't even think of why you would need that. replacing his income? LOL

good to hear your recommendation of a tax accountant because that is what I have been thinking I need as well. just to run my strategy by them to make sure I'm not missing anything or doing my math super wrong.

AH013

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Re: Experience with this certain kind of adviser?
« Reply #16 on: July 18, 2014, 10:32:53 AM »
Life insurance on a 1 year old?  We don't have kids yet but I would have never considered taking out life insurance for them.  Is that normal?


Unfortunately yes.  It serves minimal to no practical purpose, but earns commissions for the agent (I will continue to refuse to call him an adviser) all the same.

The way it is typically positioned is "What if your kid died?  A funeral costs $25k (or some other BS inflated number)...how would you afford that?  For about $1 a day you can give yourself the peace of mind that you can provide proper arrangements should the worst happen to your son/daughter.  And of course if your kid doesn't die, all the money you're paying can be used to help fund their college expenses (less all the mortality charges, administrative charges, and a hefty surrender charge that has been assessed), so it doesn't really cost anything."

I had a very short stint at an insurance firm, and one guy was known as the squirrel hunter, because there wasn't a pair of parents to whom he couldn't sell a $20k life insurance policy (small dollars, aka "squirrels") on their kids.  All you have to do is tug on the heartstrings a little ("You wouldn't want your little angel to be forgotten after they're gone, would you?") and you just bagged yourself like $50/yr for the rest of your life.

TreeTired

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Re: Experience with this certain kind of adviser?
« Reply #17 on: July 18, 2014, 10:38:35 AM »
There are reasons to have insurance on a young child. This couple in Atlanta had two insurance policies on their child.  Then they left him in a hot car all day to die. 

http://www.dailymail.co.uk/news/article-2679782/Father-left-toddler-die-sweltering-SUV.html

gimp

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Re: Experience with this certain kind of adviser?
« Reply #18 on: July 18, 2014, 11:10:14 AM »
I take back my response. Don't do it.

TheSimpleLife

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Re: Experience with this certain kind of adviser?
« Reply #19 on: July 18, 2014, 11:45:57 AM »
The best work hourly, charging to meet with you, prepare an investment policy statement (basically a detailed account of how you'd like to invest, what percent of your money should be in stocks, bonds, etc.), educate you, invest your money, and make sure your goals are on track.

A good overall post, but the bolded portion above simply isn't true. Charging hourly is great if you have people lined up begging for your services, but that just isn't the case in modern day professional services.  Charging hourly also causes your clients (or potential clients) to not call/set up a service agreement because they don't like the idea of paying a professional $150+ an hour.

Nothing wrong with educating the public about the need for fee-only, objective, fiduciary rolls within professional services.  But charging by the hour is the quickest way in the world to go broke.  The Garrett Planning Network is a great idea, but get to know some of the planners and you'll see they ain't exactly making bank.

To provide personal financial and investment advice that the public actually NEEDS, the advisor has to make a living.  Hourly just won't cut it long term mainly because financial advise is sold not bought (unlike tax or audit services).  In other words, people are not forced to hire a planner, they must be sold on the idea. 

I'm no fan of AUM either, but I think a retainer reviewed yearly by advisor and client is the best approach to a fiduciary, professional relationship.

TheSimpleLife

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Re: Experience with this certain kind of adviser?
« Reply #20 on: July 18, 2014, 11:53:54 AM »
It only took my one read of the Boglehead wiki to convince me advisers are a waste of my money and time....

"As Bogleheads author William Bernstein says in reference to the three fund portfolio: "Does this portfolio seem overly simplistic, even amateurish? Get over it. Over the next few decades, the overwhelming majority of all professional investors will not be able to beat it."

Funny that you quote Bernstein who thinks fiduciary, fee-only advisors are ABSOLUTELY CRITICAL to long term financial success.  http://www.efficientfrontier.com/ef/103/probable.htm

The Bogleheads and Mustachians are .000001% of the total population.  Truth be told, just read the threads here on the MMM forum and you'd quickly see that many Mustachians need A LOT of help.  I'm all for DIY, but the great majority of the world could actually use a fiduciary financial advisor.

usmarine1975

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Re: Experience with this certain kind of adviser?
« Reply #21 on: July 18, 2014, 12:15:19 PM »
I would look for a fee only adviser or an hourly paid adviser.  Commission based encourages the sale of certain products over others. 

disclosure  I work for a fee only adviser but used to work on the commission side.

Doing it yourself is not a bad option but it also doesn't hurt to have someone else look at what your doing to evaluate and make recommendations that you may not think of.  Sadly most Financial Advisers do not have an adviser themselves and that to me screams not eating your own cooking.  I have another adviser look at my holdings.

PeteD01

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Re: Experience with this certain kind of adviser?
« Reply #22 on: July 18, 2014, 12:43:14 PM »
Truth be told, just read the threads here on the MMM forum and you'd quickly see that many Mustachians need A LOT of help.

Most definitely true.

The "Investor Alley" section should be a link over to the Bogleheads forum/wiki and nothing else ----- just kidding, but only a little.

But seriously, all one needs to know about the details of self directed investing can be found at Bogleheads and the forum even provides some hand holding during difficult times.
 

TheSimpleLife

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Re: Experience with this certain kind of adviser?
« Reply #23 on: July 18, 2014, 12:48:15 PM »
But seriously, all one needs to know about the details of self directed investing can be found at Bogleheads and the forum even provides some hand holding during difficult times.


Scroll back to some topics from 2008.  Not much hand holding with posters screaming the sky was falling.  I'm just not convinced the majority of folks do better with a DIY strategy, regardless of knowledge, skill, ability, etc.  The emotional fortitude is the missing ingredient IMHO.

I do completely agree that all the 'mental knowledge needed' can be found over at the Bogleheads forum.  Great forum with great people/posters.

solon

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Re: Experience with this certain kind of adviser?
« Reply #24 on: July 18, 2014, 01:27:01 PM »
  • Purchased a life insurance policy to cover 1yo
Why would you insure a liability?  I thought insurance was for assets?

This is a very modern concept. I my world, a child is an asset.

PeteD01

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Re: Experience with this certain kind of adviser?
« Reply #25 on: July 18, 2014, 01:27:58 PM »
But seriously, all one needs to know about the details of self directed investing can be found at Bogleheads and the forum even provides some hand holding during difficult times.


Scroll back to some topics from 2008.  Not much hand holding with posters screaming the sky was falling.  I'm just not convinced the majority of folks do better with a DIY strategy, regardless of knowledge, skill, ability, etc.  The emotional fortitude is the missing ingredient IMHO.

I do completely agree that all the 'mental knowledge needed' can be found over at the Bogleheads forum.  Great forum with great people/posters.

I guess one needs to know the posters worth listening to well before things become interesting.
In any case, I didn't know the Bogleheads in 2008/9 (although I always invested like they do) so I do not know how it went down over there. It may be better to ignore them just like the rest of the chorus during interesting times and ride it out on autopilot.

Cwadda

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Re: Experience with this certain kind of adviser?
« Reply #26 on: July 18, 2014, 01:31:38 PM »
The only advice I would ever listen to and spend money on is a fiduciary - someone who is required by law to act in your best interest.
« Last Edit: July 18, 2014, 01:38:36 PM by Cwadda »

brewer12345

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Re: Experience with this certain kind of adviser?
« Reply #27 on: July 18, 2014, 01:37:34 PM »
I had a very short stint at an insurance firm, and one guy was known as the squirrel hunter, because there wasn't a pair of parents to whom he couldn't sell a $20k life insurance policy (small dollars, aka "squirrels") on their kids.  All you have to do is tug on the heartstrings a little ("You wouldn't want your little angel to be forgotten after they're gone, would you?") and you just bagged yourself like $50/yr for the rest of your life.

Ugh.  As an enthusiastic real life squirrel hunter (as in I hunt, kill and eat squirrels and am tanning several hides) and a CFA charterholder, I am doubly offended and disgusted.

solon

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Re: Experience with this certain kind of adviser?
« Reply #28 on: July 18, 2014, 01:40:25 PM »
I had a very short stint at an insurance firm, and one guy was known as the squirrel hunter, because there wasn't a pair of parents to whom he couldn't sell a $20k life insurance policy (small dollars, aka "squirrels") on their kids.  All you have to do is tug on the heartstrings a little ("You wouldn't want your little angel to be forgotten after they're gone, would you?") and you just bagged yourself like $50/yr for the rest of your life.

Ugh.  As an enthusiastic real life squirrel hunter (as in I hunt, kill and eat squirrels and am tanning several hides) and a CFA charterholder, I am doubly offended and disgusted.

Ha :)

TheSimpleLife

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Re: Experience with this certain kind of adviser?
« Reply #29 on: July 18, 2014, 02:29:20 PM »
It may be better to ignore them just like the rest of the chorus during interesting times and ride it out on autopilot.

Right, and if putting investing and financial planning on autopilot was as easy as you and many others make it sound, I really would advocate DIY for most everyone.  Every credible study shows the opposite, though.  People don't possess the ability to put all four parts together that Bernstein discussed in the link above.

We might all wish they did, but they don't.  So that leaves 3 options:

1.  Continue DIY and keep under-performing market returns (due to lack of knowledge and selling low and buying high).
2.  Hire a salesman/broker and lose even more money.
3.  Hire a fiduciary.

AUM may suck as a business model, but it is still better than the other two alternatives above.  I'm hoping the retainer model continues to gain a voice/popularity.  I also wish more in this community and other early retirement venues would recommend fiduciaries, but I don't see that trend changing any time soon.

matchewed

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Re: Experience with this certain kind of adviser?
« Reply #30 on: July 18, 2014, 02:35:49 PM »
It may be better to ignore them just like the rest of the chorus during interesting times and ride it out on autopilot.

Right, and if putting investing and financial planning on autopilot was as easy as you and many others make it sound, I really would advocate DIY for most everyone.  Every credible study shows the opposite, though.  People don't possess the ability to put all four parts together that Bernstein discussed in the link above.

We might all wish they did, but they don't.  So that leaves 3 options:

1.  Continue DIY and keep under-performing market returns (due to lack of knowledge and selling low and buying high).
2.  Hire a salesman/broker and lose even more money.
3.  Hire a fiduciary.

AUM may suck as a business model, but it is still better than the other two alternatives above.  I'm hoping the retainer model continues to gain a voice/popularity.  I also wish more in this community and other early retirement venues would recommend fiduciaries, but I don't see that trend changing any time soon.

No that trend won't change any time soon because we are advocates that 1 is wrong by a bad assumption you have. That assumption being that people can't learn and can't divorce emotion from investing. People are capable of it. Many of them are on this board. We'll continue to advocate that as the best option for an individual to take. But we will always talk about those risks you bring up.

You're missing the badassity portion of the slogan when you pull out the complainypants portion of your points. ;)

brewer12345

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Re: Experience with this certain kind of adviser?
« Reply #31 on: July 18, 2014, 02:37:45 PM »
It may be better to ignore them just like the rest of the chorus during interesting times and ride it out on autopilot.

Right, and if putting investing and financial planning on autopilot was as easy as you and many others make it sound, I really would advocate DIY for most everyone.  Every credible study shows the opposite, though.  People don't possess the ability to put all four parts together that Bernstein discussed in the link above.

We might all wish they did, but they don't.  So that leaves 3 options:

1.  Continue DIY and keep under-performing market returns (due to lack of knowledge and selling low and buying high).
2.  Hire a salesman/broker and lose even more money.
3.  Hire a fiduciary.

AUM may suck as a business model, but it is still better than the other two alternatives above.  I'm hoping the retainer model continues to gain a voice/popularity.  I also wish more in this community and other early retirement venues would recommend fiduciaries, but I don't see that trend changing any time soon.

WTF?  Anyone with an ounce each of sense and discipline can dispense with all of this nonsense.  Buy a balanced or target date fund, regularly add to it, get on with life.  It ain't rocket science.

As for the idea of everyone getting a fiduciary, its a pipe dream.  Ain't happening in my adult lifetime.

TheSimpleLife

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Re: Experience with this certain kind of adviser?
« Reply #32 on: July 18, 2014, 04:01:13 PM »
WTF?  Anyone with an ounce each of sense and discipline can dispense with all of this nonsense.  Buy a balanced or target date fund, regularly add to it, get on with life.  It ain't rocket science.

As for the idea of everyone getting a fiduciary, its a pipe dream.  Ain't happening in my adult lifetime.

Wasn't saying everyone needs a fiduciary or that it is going to happen.  Just saying it is a better alternative that what most think is available.  But due to a limited advertising budget and a lack of national presence, most RIAs only reach a very small pool of potential clients.

I've read a lot of your posts and respect your knowledge and opinion, but a few years of experience dealing with actual clients shows that it is indeed rocket science to the majority of our country. 

My main point wasn't directed at the MMM crowd or Boglehead crowd, but for many that I come in contact with on a daily basis just like OP who get suckered into crap products all day every day.

TheSimpleLife

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Re: Experience with this certain kind of adviser?
« Reply #33 on: July 18, 2014, 05:14:07 PM »
No that trend won't change any time soon because we are advocates that 1 is wrong by a bad assumption you have. That assumption being that people can't learn and can't divorce emotion from investing. People are capable of it. Many of them are on this board. We'll continue to advocate that as the best option for an individual to take. But we will always talk about those risks you bring up.

You're missing the badassity portion of the slogan when you pull out the complainypants portion of your points. ;)

I guess I should have been more clear about who my posts were directed at.  I'm not talking about Mustachians who have their collective shit together, invest in low cost index funds, and are aiming for FI at an early age.

I'm talking about the other 99.9% of the population.

The people who have absolutely no desire nor ability to comprehend this stuff.

People who are Mustachian in their savings rates but have no clue about tax planning, retirement planning, low cost indexing, risk management, estate planning.

There are many boomers reaching retirement age that fit the above demographic.  I have quite a few as clients that absolutely refuse DIY even after I suggest books to read, strategies to implement, etc.

Also, research supports point one whether you or anybody else agrees with it or not.  Unless of course you consider less than 1% of folks as all that matter.  People need help and they aren't getting solid, fiduciary help.  That is really my only point.  Please don't stone me because I don't think DIY is for everyone :)

brewer12345

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Re: Experience with this certain kind of adviser?
« Reply #34 on: July 18, 2014, 07:57:38 PM »
WTF?  Anyone with an ounce each of sense and discipline can dispense with all of this nonsense.  Buy a balanced or target date fund, regularly add to it, get on with life.  It ain't rocket science.

As for the idea of everyone getting a fiduciary, its a pipe dream.  Ain't happening in my adult lifetime.

Wasn't saying everyone needs a fiduciary or that it is going to happen.  Just saying it is a better alternative that what most think is available.  But due to a limited advertising budget and a lack of national presence, most RIAs only reach a very small pool of potential clients.

I've read a lot of your posts and respect your knowledge and opinion, but a few years of experience dealing with actual clients shows that it is indeed rocket science to the majority of our country. 

My main point wasn't directed at the MMM crowd or Boglehead crowd, but for many that I come in contact with on a daily basis just like OP who get suckered into crap products all day every day.

Meh, I have managed something north of 5MM for years now, most of which is not mine (family money).  My "clients" (hah! all pro bono) range from paranoid about money and do not want to know anything, to my dad who watches CNBC long enough to freak out on down days and give me a panicky phone call.  A solid half the population will never have its shit together and is hopeless.  The rest of them are fully capable, but need to be educated.  Some few do this for themselves as adults, but the bulk could more effectively reached if we included personal finance at the high school and college levels as required curriculum.  Not holding my breath on that one.

I have the qualifications and knowledge to do the RIA thing very easily, but I will not.  Two reasons:

- Liability.  No matter how careful you are, someone will eventually sue you.

- The biggest liar usually wins the business.  I will not play that game and know very well I would be at a massive disadvantage to the sleazebags.

PeteD01

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Re: Experience with this certain kind of adviser?
« Reply #35 on: July 19, 2014, 05:42:30 PM »
No that trend won't change any time soon because we are advocates that 1 is wrong by a bad assumption you have. That assumption being that people can't learn and can't divorce emotion from investing. People are capable of it. Many of them are on this board. We'll continue to advocate that as the best option for an individual to take. But we will always talk about those risks you bring up.

You're missing the badassity portion of the slogan when you pull out the complainypants portion of your points. ;)

I guess I should have been more clear about who my posts were directed at.  I'm not talking about Mustachians who have their collective shit together, invest in low cost index funds, and are aiming for FI at an early age.

I'm talking about the other 99.9% of the population.

The people who have absolutely no desire nor ability to comprehend this stuff.

People who are Mustachian in their savings rates but have no clue about tax planning, retirement planning, low cost indexing, risk management, estate planning.

There are many boomers reaching retirement age that fit the above demographic.  I have quite a few as clients that absolutely refuse DIY even after I suggest books to read, strategies to implement, etc.

Also, research supports point one whether you or anybody else agrees with it or not.  Unless of course you consider less than 1% of folks as all that matter.  People need help and they aren't getting solid, fiduciary help.  That is really my only point.  Please don't stone me because I don't think DIY is for everyone :)

You certainly mean well. On the other hand, this place is about taking an unflinching look at personal financial behavior and how it determines the degree of autonomy one can achieve in living the life one wants to live. Investing is certainly an important part in the whole scheme of things, but it most definitely comes after having conquered the demons that keep so many involuntarily with their nose to the grinding wheel. Educating people about investing before dealing with the demons of consumerism won't work simply because any market move is instantly interpreted in terms of spending power by the consumer.
Without consciously being a member of the owning class, the capital markets will simply be a source of terror or euphoria. In that sense, educating people about the, rather simple, optimal strategies in owning productive assets cannot be successful on its own. Not that it's not necessary to know something about the nuts and bolts, but without an assessment of fundamental values and a personal commitment to belong to the owning class, simply knowing what's right is not enough.
Again, you certainly mean well but this place is about evaluating values and when that is done, self directed investing is not just optional but follows naturally after a sufficient number of face punches.
Your unspoken charge is obviously that all this is elitist and does not help the masses. You are right in that. On the other hand, anyone can walk in here and receive as many face punches as desired, so it seems not to be that elitist.
The problem is that you appear to think there could be a way to bring salvation to the masses by some sort of intervention which somehow circumvents the necessity of taking a hard look at what rules their lives and how to change it: just invest right with some help (incidentally, another product one can pay for) and things will work out.
The pessimistic message is that things will never work out for the masses on that basis.
The optimistic message is that anyone who is willing to question fundamental beliefs is free to do so and the particulars of investing will turn out to be a simple matter after that is done.

Man, this post got really out of hand. Here is the short version:
It is unmustachian to pay someone for a service one can learn to do oneself and it is particularly unmustachian if that service is only required in order to be able to otherwise maintain a consumerist attitude.

usmarine1975

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Re: Experience with this certain kind of adviser?
« Reply #36 on: July 20, 2014, 01:40:25 PM »
Then it must be Un mustachian to be paid to do any job if it is so to pay to have a job done. You should then tell your boss if you work that will henceforth be working for free. Because anything you are paid to do those you are doing it for should be face punched because frankly as you stated they could do it themselves.

usmarine1975

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Re: Experience with this certain kind of adviser?
« Reply #37 on: July 20, 2014, 01:41:07 PM »
No that trend won't change any time soon because we are advocates that 1 is wrong by a bad assumption you have. That assumption being that people can't learn and can't divorce emotion from investing. People are capable of it. Many of them are on this board. We'll continue to advocate that as the best option for an individual to take. But we will always talk about those risks you bring up.

You're missing the badassity portion of the slogan when you pull out the complainypants portion of your points. ;)

I guess I should have been more clear about who my posts were directed at.  I'm not talking about Mustachians who have their collective shit together, invest in low cost index funds, and are aiming for FI at an early age.

I'm talking about the other 99.9% of the population.

The people who have absolutely no desire nor ability to comprehend this stuff.

People who are Mustachian in their savings rates but have no clue about tax planning, retirement planning, low cost indexing, risk management, estate planning.

There are many boomers reaching retirement age that fit the above demographic.  I have quite a few as clients that absolutely refuse DIY even after I suggest books to read, strategies to implement, etc.

Also, research supports point one whether you or anybody else agrees with it or not.  Unless of course you consider less than 1% of folks as all that matter.  People need help and they aren't getting solid, fiduciary help.  That is really my only point.  Please don't stone me because I don't think DIY is for everyone :)

You certainly mean well. On the other hand, this place is about taking an unflinching look at personal financial behavior and how it determines the degree of autonomy one can achieve in living the life one wants to live. Investing is certainly an important part in the whole scheme of things, but it most definitely comes after having conquered the demons that keep so many involuntarily with their nose to the grinding wheel. Educating people about investing before dealing with the demons of consumerism won't work simply because any market move is instantly interpreted in terms of spending power by the consumer.
Without consciously being a member of the owning class, the capital markets will simply be a source of terror or euphoria. In that sense, educating people about the, rather simple, optimal strategies in owning productive assets cannot be successful on its own. Not that it's not necessary to know something about the nuts and bolts, but without an assessment of fundamental values and a personal commitment to belong to the owning class, simply knowing what's right is not enough.
Again, you certainly mean well but this place is about evaluating values and when that is done, self directed investing is not just optional but follows naturally after a sufficient number of face punches.
Your unspoken charge is obviously that all this is elitist and does not help the masses. You are right in that. On the other hand, anyone can walk in here and receive as many face punches as desired, so it seems not to be that elitist.
The problem is that you appear to think there could be a way to bring salvation to the masses by some sort of intervention which somehow circumvents the necessity of taking a hard look at what rules their lives and how to change it: just invest right with some help (incidentally, another product one can pay for) and things will work out.
The pessimistic message is that things will never work out for the masses on that basis.
The optimistic message is that anyone who is willing to question fundamental beliefs is free to do so and the particulars of investing will turn out to be a simple matter after that is done.

Man, this post got really out of hand. Here is the short version:
It is unmustachian to pay someone for a service one can learn to do oneself and it is particularly unmustachian if that service is only required in order to be able to otherwise maintain a consumerist attitude.


Then it must be Un mustachian to be paid to do any job if it is so to pay to have a job done. You should then tell your boss if you work that you will henceforth be working for free. Because anything you are paid to do those you are doing it for should be face punched because frankly as you stated they could do it themselves.


PeteD01

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Re: Experience with this certain kind of adviser?
« Reply #38 on: July 20, 2014, 04:45:08 PM »
Then it must be Un mustachian to be paid to do any job if it is so to pay to have a job done. You should then tell your boss if you work that you will henceforth be working for free. Because anything you are paid to do those you are doing it for should be face punched because frankly as you stated they could do it themselves.

No, there are jobs which are better left to the experts because one can not easily learn to do them oneself (appendectomies and such come to mind). Investment advice is not one of those jobs a Mustachian could not easily pick up.

« Last Edit: July 20, 2014, 04:47:21 PM by PeteD01 »

usmarine1975

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Re: Experience with this certain kind of adviser?
« Reply #39 on: July 20, 2014, 04:57:49 PM »
My only reply is that Vanguard is not the holy grail of funds its the one point in which I am proud to be un mustachian in. Better and comparable funds do exist as well as worse funds. The fee one pays should not be the only consideration when investing. It is important but I digress and will cease my interactions on this post. My only advice is make the best decisions for yourself.  Good luck with all your endeavors.  Good day.

PeteD01

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Re: Experience with this certain kind of adviser?
« Reply #40 on: July 20, 2014, 05:03:26 PM »
My only reply is that Vanguard is not the holy grail of funds its the one point in which I am proud to be un mustachian in. Better and comparable funds do exist as well as worse funds. The fee one pays should not be the only consideration when investing. It is important but I digress and will cease my interactions on this post. My only advice is make the best decisions for yourself.  Good luck with all your endeavors.  Good day.

How did you get involved in financial product sales? That's you, right?

Link removed at posters request
« Last Edit: July 20, 2014, 05:37:07 PM by PeteD01 »

usmarine1975

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Re: Experience with this certain kind of adviser?
« Reply #41 on: July 20, 2014, 05:29:10 PM »
I would appreciate it if you remove the link to my profile!

Since you have found the profile you should see my work history.  I have always had an interest in the financial world.  When I came home from overseas or Iraq I got burnt out and tired of my current occupation at that time it was as a self employed carpenter.  I used the GI bill to get an education a bachelors degree and then had to decide what to get into.

Three things interested me about the financial world.  First helping people, second investing, third keeping control of my schedule and not having a 9 to 5 job.

I started with #1 company and wasn't happy with my manager simply put a lot of things were stated that I found to not be true.  I then hired on at company #2 as a commissioned financial adviser.  I enjoyed working with clients and helping them understand the products they had and offering them options depending on their situation.  I can honestly say at no time did I give incorrect information and at no time did I use pressure techniques to get clients to do what I felt was in their interest or mine.  I came to the place after about 2 and a half years in which I felt the commission structure put the adviser at odds with their clients best interest and felt a better model had to exist.  So I started looking.

I found my current job posted applied and got hired.  We are a fee based advisor we utilize a third party to house the funds and we are a fiduciary.  I am not the advisor, My role is to manage the office, the paperwork, and to assist the advisor in any way possible.  I get paid a salary.  It's a role that I am comfortable in and I work with an advisor that in my opinion does a great job of monitoring and interacting with our clients.

Again I would ask that you remove the link to my profile.

I didn't hide it as you found it but I don't need it broadcasted.

PeteD01

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Re: Experience with this certain kind of adviser?
« Reply #42 on: July 20, 2014, 05:31:31 PM »
I would appreciate it if you remove the link to my profile!

Since you have found the profile you should see my work history.  I have always had an interest in the financial world.  When I came home from overseas or Iraq I got burnt out and tired of my current occupation at that time it was as a self employed carpenter.  I used the GI bill to get an education a bachelors degree and then had to decide what to get into.

Three things interested me about the financial world.  First helping people, second investing, third keeping control of my schedule and not having a 9 to 5 job.

I started with #1 company and wasn't happy with my manager simply put a lot of things were stated that I found to not be true.  I then hired on at company #2 as a commissioned financial adviser.  I enjoyed working with clients and helping them understand the products they had and offering them options depending on their situation.  I can honestly say at no time did I give incorrect information and at no time did I use pressure techniques to get clients to do what I felt was in their interest or mine.  I came to the place after about 2 and a half years in which I felt the commission structure put the adviser at odds with their clients best interest and felt a better model had to exist.  So I started looking.

I found my current job posted applied and got hired.  We are a fee based advisor we utilize a third party to house the funds and we are a fiduciary.  I am not the advisor, My role is to manage the office, the paperwork, and to assist the advisor in any way possible.  I get paid a salary.  It's a role that I am comfortable in and I work with an advisor that in my opinion does a great job of monitoring and interacting with our clients.

Again I would ask that you remove the link to my profile.

I didn't hide it as you found it but I don't need it broadcasted.

The link to your profile is in your forum signature. You remove it and I will remove it in my post.


Ok, link removed.
« Last Edit: July 20, 2014, 05:36:21 PM by PeteD01 »

matchewed

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Re: Experience with this certain kind of adviser?
« Reply #43 on: July 21, 2014, 06:04:28 AM »
A) If you're going to claim there are better investment options outside of Vanguard I'm all ears. Remember better = better performance with factoring in fees. While I'm sure there are some specific funds which will match that criteria, will they be available for everyone, is their management which has brought upon this success going to stay consistent for the next 30+ years, and do they have a proven track record at this success beyond a small time frame?

B) The fact that you are a fee only fiduciary financial advisor has a direct conflict with your ability to say whether it is better for someone to have a fee only fiduciary financial advisor or not. If one felt that their financial plan was complex enough or if they weren't educated enough and decided not to be more educated then yes, I agree. But if any of the legs on that particular table are shorter then the table doesn't stand.

usmarine1975

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Re: Experience with this certain kind of adviser?
« Reply #44 on: July 21, 2014, 11:03:34 AM »
Because of my position and the licenses I hold I am not free to speak specifically regarding funds on any forum.  Sorry.  Your going to have to look for them.

All the points you made about any other fund are very valid.  My point is that the fee alone is not the only factor in deciding what funds are the best.  If both fund's perform the same and have the same timeline etc... the lower fee would be the factor in making the decision.  But if one fund outperformed by as little as 3 or more percentage points paying a fee wouldn't necessarily be the deciding factor.  You would then have to know the consistency of the fund, if the management of the fund has changed and how long they have been providing said return.  Fee alone should not be the only consideration.  Yes it should be a part of the equation.

I am employed by a fee only fiduciary adviser.  I am not the Adviser, I am the Client Services Manager.  My job is to assist the adviser.  And yes it does lend to me having a Bias in regards to my opinion.  I believe my statement was basically I felt it was the better of the other compensation models available.  Again that is my opinion.  I worked in the commission side and would be the first to say that some commission based advisers act in the best interest of their client.  In my opinion that Model does not as a whole serve the clients the best.  Even the fee based adviser could be said to have a bias to the model that suits them. 

 I recently bought a camera for my wife one of those fancy ones in which lenses can be switched out etc...  I am a point and shoot camera guy.  I have no idea when it comes to brand, type, what lens, how much to pay etc...  I initially did some online research attempting to DIY but found it to be a daunting task and because I happen to know quite a few people who have business's taking photo's I reached out to get an expert opinion on the matter.  (I didn't pay for this advice) it was free.  But I was able to purchase a camera for my wife that was in line with what she was looking for and pick a lens that fit the use that she would most likely be able to use thanks to a friend willing to give me some advice.  We have paid to have photo's taken in the past so I guess in some sense she has been compensated but not directly.  Again not everyone wants to be involved in the research and management of their portfolio's.  I didn't want to learn the in's and outs of every Camera that exist or the price differences.  I also do not have an interest in learning about the different lenses available and the plus's and minus's of each one.

My initial point was only that DIY is not necessarily for everyone or even all Mustachians.  Granted it's my opinion and I may have a bias based on my position but then who doesn't?  Anything that I write is simply my opinion from what I have learned, experienced, or researched.  Take it or leave it and decide for yourself what you want to do.  That to me is being very Mustachian taking control of your own life and your own circumstances and making decisions that suit you. 

I enjoy these post because it helps me to see other points of view, and to learn and question my own thinking.  Again good luck with all your endeavors.  May the face punching commence.

TheSimpleLife

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Re: Experience with this certain kind of adviser?
« Reply #45 on: July 21, 2014, 03:51:22 PM »
You certainly mean well. On the other hand, this place is about taking an unflinching look at personal financial behavior and how it determines the degree of autonomy one can achieve in living the life one wants to live. Investing is certainly an important part in the whole scheme of things, but it most definitely comes after having conquered the demons that keep so many involuntarily with their nose to the grinding wheel. Educating people about investing before dealing with the demons of consumerism won't work simply because any market move is instantly interpreted in terms of spending power by the consumer.
Without consciously being a member of the owning class, the capital markets will simply be a source of terror or euphoria. In that sense, educating people about the, rather simple, optimal strategies in owning productive assets cannot be successful on its own. Not that it's not necessary to know something about the nuts and bolts, but without an assessment of fundamental values and a personal commitment to belong to the owning class, simply knowing what's right is not enough.
Again, you certainly mean well but this place is about evaluating values and when that is done, self directed investing is not just optional but follows naturally after a sufficient number of face punches.
Your unspoken charge is obviously that all this is elitist and does not help the masses. You are right in that. On the other hand, anyone can walk in here and receive as many face punches as desired, so it seems not to be that elitist.
The problem is that you appear to think there could be a way to bring salvation to the masses by some sort of intervention which somehow circumvents the necessity of taking a hard look at what rules their lives and how to change it: just invest right with some help (incidentally, another product one can pay for) and things will work out.
The pessimistic message is that things will never work out for the masses on that basis.
The optimistic message is that anyone who is willing to question fundamental beliefs is free to do so and the particulars of investing will turn out to be a simple matter after that is done.

Man, this post got really out of hand. Here is the short version:
It is unmustachian to pay someone for a service one can learn to do oneself and it is particularly unmustachian if that service is only required in order to be able to otherwise maintain a consumerist attitude.

I think you completely missed the point, Pete.  I won't spend time arguing with you.  We don't agree and I don't think it would be productive.  Outside of your ideas for the Mustachian bad ass utopia, I do have one question:

Have you spent time with clients looking to you for advice in these exact scenarios?  If so, I would have a hard time believing you've come away with the above opinion.  And if so, you are indeed a more optimistic person than I am!

Some people have conquered the consumerism demons as you put it, and still want unbiased help.  Or at least that is what my experience tells me.

I, too, used to think everyone could learn all there is to know about personal finance, financial planning, investing (put it under whatever umbrella you like), but I just don't see it that way anymore.  Nothing wrong with agreeing to disagree.

TheSimpleLife

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Re: Experience with this certain kind of adviser?
« Reply #46 on: July 21, 2014, 04:02:15 PM »
Meh, I have managed something north of 5MM for years now, most of which is not mine (family money).  My "clients" (hah! all pro bono) range from paranoid about money and do not want to know anything, to my dad who watches CNBC long enough to freak out on down days and give me a panicky phone call.  A solid half the population will never have its shit together and is hopeless.  The rest of them are fully capable, but need to be educated.  Some few do this for themselves as adults, but the bulk could more effectively reached if we included personal finance at the high school and college levels as required curriculum.  Not holding my breath on that one.

I have the qualifications and knowledge to do the RIA thing very easily, but I will not.  Two reasons:

- Liability.  No matter how careful you are, someone will eventually sue you.

- The biggest liar usually wins the business.  I will not play that game and know very well I would be at a massive disadvantage to the sleazebags.

Agree with your two points (even though I don't think that should stop you if you want to provide the service) and I'll add one more:  Most have absolutely no intention of learning or educating themselves, so financial markets and personal financial planning will constantly be a form of magic.  When times are good, you will be the hero.  When bad, you'll be fired (or potentially sued).  If the insurance salesman's product happens to outperform during a certain period, it won't matter what you explain to them. 

People are very strange when it comes to their money.  Most aren't like that with tax planning and compliance.  It isn't as emotional and the answer is always (usually) yes or no, leaving less room for interpretation.

PeteD01

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Re: Experience with this certain kind of adviser?
« Reply #47 on: July 21, 2014, 05:15:43 PM »
You certainly mean well. On the other hand, this place is about taking an unflinching look at personal financial behavior and how it determines the degree of autonomy one can achieve in living the life one wants to live. Investing is certainly an important part in the whole scheme of things, but it most definitely comes after having conquered the demons that keep so many involuntarily with their nose to the grinding wheel. Educating people about investing before dealing with the demons of consumerism won't work simply because any market move is instantly interpreted in terms of spending power by the consumer.
Without consciously being a member of the owning class, the capital markets will simply be a source of terror or euphoria. In that sense, educating people about the, rather simple, optimal strategies in owning productive assets cannot be successful on its own. Not that it's not necessary to know something about the nuts and bolts, but without an assessment of fundamental values and a personal commitment to belong to the owning class, simply knowing what's right is not enough.
Again, you certainly mean well but this place is about evaluating values and when that is done, self directed investing is not just optional but follows naturally after a sufficient number of face punches.
Your unspoken charge is obviously that all this is elitist and does not help the masses. You are right in that. On the other hand, anyone can walk in here and receive as many face punches as desired, so it seems not to be that elitist.
The problem is that you appear to think there could be a way to bring salvation to the masses by some sort of intervention which somehow circumvents the necessity of taking a hard look at what rules their lives and how to change it: just invest right with some help (incidentally, another product one can pay for) and things will work out.
The pessimistic message is that things will never work out for the masses on that basis.
The optimistic message is that anyone who is willing to question fundamental beliefs is free to do so and the particulars of investing will turn out to be a simple matter after that is done.

Man, this post got really out of hand. Here is the short version:
It is unmustachian to pay someone for a service one can learn to do oneself and it is particularly unmustachian if that service is only required in order to be able to otherwise maintain a consumerist attitude.

I think you completely missed the point, Pete.  I won't spend time arguing with you.  We don't agree and I don't think it would be productive.  Outside of your ideas for the Mustachian bad ass utopia, I do have one question:

Have you spent time with clients looking to you for advice in these exact scenarios?  If so, I would have a hard time believing you've come away with the above opinion.  And if so, you are indeed a more optimistic person than I am!

Some people have conquered the consumerism demons as you put it, and still want unbiased help.  Or at least that is what my experience tells me.

I, too, used to think everyone could learn all there is to know about personal finance, financial planning, investing (put it under whatever umbrella you like), but I just don't see it that way anymore.  Nothing wrong with agreeing to disagree.

I don't think we disagree at all about investing advice because we both think very much that self directed investing does not work for the uneducated masses who are not even willing to make an effort. I simply do not care what people I don't even know are doing with their investments and you do care, probably because you have made it your job to care. Nothing wrong with that but I'm not entirely sure how the troubles of investment advisors fit into this little community. And that's where we have a mild disagreement - but not about investment strategies and advisor issues. After all, this is a place for people who are willing to make an effort. And for them, the single best way to get the most out of one's limited investment funds is to get educated and and do it without paying anyone else and that doesn't have to wait for an utopia to materialize. It just takes a rather moderate commitment of time and effort which a lot of people are not willing to do and therefore have to pay through their nose and will have to work a few more years - so what.