Author Topic: Financial advisors: those 1% fees!  (Read 4896 times)

Telecaster

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Re: Financial advisors: those 1% fees!
« Reply #50 on: June 05, 2018, 05:28:57 PM »

That was the conclusion of a study by the investment giant Fidelity, according to a 2014 article on Business Insider. The article relayed the transcript of a Bloomberg program in which the well-known money manager Jim O’Shaughnessy said that people who had forgotten that they had accounts outperformed everyone else.

Fidelity, which has received inquiries about the study ever since, without knowing why, told me this week that it had never produced such a study.

https://mobile.nytimes.com/2016/08/06/your-money/401k-retirement-plan-investment-stock-markets.html

Aw damn.  It was such a great story too. 

EricL

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Re: Financial advisors: those 1% fees!
« Reply #51 on: June 05, 2018, 06:05:13 PM »
I used a Fidelity financial advisor for a few years.  It was a debacle.  The funds slogged their way up each stock market rally like a tortoise on prozac, always arriving last at the summit.  When the markets tanked they dropped like said tortoise from the clutches of a bird of prey hoping to crack its shell. 

I finally got a clue and went solo.  I've made some grievous mistakes over the years but overall it went well and I FIRE'd.  And if nothing else when I fucked up it was a lot easier to kick the ass of the person responsible. 

h82goslw

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Re: Financial advisors: those 1% fees!
« Reply #52 on: June 05, 2018, 06:39:04 PM »

Radagast

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Re: Financial advisors: those 1% fees!
« Reply #53 on: June 05, 2018, 07:00:25 PM »
I have read from sources I believe that many people can't or won't manage their own money even though they have lots. But in those cases the way to go is to pay by the hour or a flat rate, and not AUM. If you pay like that at least you know exactly what you pay and what you get.

Interesting Fact: Wealthy clients pay LESS to hire a financial planner and buy the individual securities in the index, than to buy an index ETF or mutual fund. That's right, they are paying less than investors holding an S&P500 Index Fund.
Hmmm what is the least amount you'd have to pay someone for this? I guess $40k/year. VTSAX costs 0.04%, $40k/0.0004 = $100,000,000. So let's say you'd need to have about $300,000,000 for a "three-fund" managed portfolio that is similar to and cost competitive with Vanguard and attempts to track an index. Even then you'd more likely be looking at 500 securities in each rather than thousands.

I have heard this as a compelling DIY option though. Buy 100 shares of every company in the S&P and live only off the dividends forever without touching anything again (you may be down to only 100 companies or so after 50 years). No costs, and no advisor needed.

TheWifeHalf

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Re: Financial advisors: those 1% fees!
« Reply #54 on: June 06, 2018, 09:54:47 AM »
TheWifeHalf: another way to think of it is that you are doing your charity now. You just happen to be donating large sums of money to a white-collared professional. :)
If I do my online interest calculator correctly, if you moved from Fidelity to Vanguard’s managed account service at 0.3% fees instead of 1%, you could save $300k over the next 20 years. That is a lot of money you could give to a true charity, if you were interested.

This is exactly how we look at it. F obviously hires younger white professionals that come from farmland. They are kids my kids went to school with, some with parents I went to school with.  That says a lot to us.
We have a 'buy American' and 'buy local'  way of purchasing anything of substantial value if possible.  Sure, we might pay a little more, but we sleep well at night doing what we feel is our obligation to paying back the good fortune we've had in the car accident we were in 10 years ago.

I am going to show TheHusbandHalf all the info in this thread, but will wait until after he retires in January. F has our 'Personal Financial Power of Attys' on file, something I learned by reading this forum. 70% of our assets are with F, 70% of that in THH's name, so that info was very helpful.

Since the kids moved out 8-9 years ago, we have tried to simplify our lives a bit. THH's employer must have some deal with F, everything seems to go there. They even have a separate page, in THH's name, for his pension. I think it would not be 'simplifying' to change all that now.

Scandium

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Re: Financial advisors: those 1% fees!
« Reply #55 on: June 06, 2018, 12:01:35 PM »
F obviously hires younger white professionals that come from farmland.

woah, back up. They do? Why is this obvious?? And why are they white? Or do you mean their collars?
It sounds like you wouldn't mind if someone stole your car every month either, after all you'd be supporting a young, local professional..

boarder42

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Re: Financial advisors: those 1% fees!
« Reply #56 on: June 06, 2018, 12:38:36 PM »
F obviously hires younger white professionals that come from farmland.

woah, back up. They do? Why is this obvious?? And why are they white? Or do you mean their collars?
It sounds like you wouldn't mind if someone stole your car every month either, after all you'd be supporting a young, local professional..

this is why this site needs a like button.  man that was great!  only they're probably stealing more than the value of the car each month with the management and expense ratios.  THIS IS NOT THAT FUCKING HARD PEOPLE .... all you have to do is listen to the  most brilliant investor of all time


Telecaster

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Re: Financial advisors: those 1% fees!
« Reply #57 on: June 06, 2018, 01:28:44 PM »
THH and I have talked about some of the issues that have been mentioned. One of the things we talked about was having money left to give to a charity, to our kids, or having little left. The way we looked at it, sure, they're making $ from us, but we are happy with the amount.  Helping to pay people that lived around here when they were younger, and I'm sure others from little towns, so they are employed vs a charity when we die? It's one of the choices we made. We have a few charities mentioned in our will, if there's ANYTHING LEFT.

Fidelity CEO Abigail Johnson is worth an estimated $16.8 Billion.  I'm sure she appreciates your sacrifice to keep her in the lifestyle to which she has become accustomed. 

https://www.forbes.com/profile/abigail-johnson/

boarder42

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Re: Financial advisors: those 1% fees!
« Reply #58 on: June 06, 2018, 01:32:04 PM »
you can cut your lifestyle as much as you want and live on rice and beans but if you're paying 1% of your stashe to an advisor man you're just missing the lowest hanging fruit - shit anything more than .1% to an advisor and you're really missing the low hanging fruit. 

TheWifeHalf

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Re: Financial advisors: those 1% fees!
« Reply #59 on: June 06, 2018, 01:50:39 PM »
F obviously hires younger white professionals that come from farmland.

woah, back up. They do? Why is this obvious?? And why are they white? Or do you mean their collars?
It sounds like you wouldn't mind if someone stole your car every month either, after all you'd be supporting a young, local professional..

2 that work for F in Cincinnati went to school with my kids (same school I, and my Dad, went to) and when we went up to the F office in Michigan, the man we talked to was from the next school system over, same county. The first 2, my sons told me where they worked, I went to school with their Moms (one Mom was a preschool teacher for all 3 of my kids) and one Dad was a year ahead of me in the same school. Their employment was verified by their Facebook pages. I believe them, don't if you don't want to. So, to me, it is obvious.

I meant their collars,  I didn't even think of another definition.

If what I typed sounded like that, I suggest you get a hearing test, because I think maybe you're assuming things that are just not true. 

TheWifeHalf

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Re: Financial advisors: those 1% fees!
« Reply #60 on: June 06, 2018, 01:54:28 PM »

Hmm... I could be wrong, but I think that @ysette9 was poking fun and being facetious. 


Maybe, but it IS how we think

boarder42

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Re: Financial advisors: those 1% fees!
« Reply #61 on: June 06, 2018, 02:08:48 PM »
F obviously hires younger white professionals that come from farmland.

woah, back up. They do? Why is this obvious?? And why are they white? Or do you mean their collars?
It sounds like you wouldn't mind if someone stole your car every month either, after all you'd be supporting a young, local professional..

2 that work for F in Cincinnati went to school with my kids (same school I, and my Dad, went to) and when we went up to the F office in Michigan, the man we talked to was from the next school system over, same county. The first 2, my sons told me where they worked, I went to school with their Moms (one Mom was a preschool teacher for all 3 of my kids) and one Dad was a year ahead of me in the same school. Their employment was verified by their Facebook pages. I believe them, don't if you don't want to. So, to me, it is obvious.

I meant their collars,  I didn't even think of another definition.

If what I typed sounded like that, I suggest you get a hearing test, because I think maybe you're assuming things that are just not true.

you clearly missed the joke about the car - he was saying just the fees you're paying them make them criminals on the level of someone stealing your car every month.  i'm all for the to each their own do what works for you thing but when it comes to paying someone over 1% of your money its just the worst possible thing you can do in life - and then to consistently defend it likes its no big deal when its clearly been shown to not be a big deal but a HUGE deal is just like putting your head in the sand and saying i dont hear you. 

ysette9

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Re: Financial advisors: those 1% fees!
« Reply #62 on: June 06, 2018, 02:37:14 PM »

Hmm... I could be wrong, but I think that @ysette9 was poking fun and being facetious. 


Maybe, but it IS how we think
Guilty as charged. I am an engineer so I was speaking literally there, though the intended tone was gentle ribbing.

I think your goal of giving back to the local community and supporting people you know finding productive careers, TheWifeHalf. I just wonder if there aren’t more effective ways of doing it for the same money. Just some random ideas, but what about a small scholarship or paying tuition for kids in junior college? Paying living expenses for unpaid summer internships for underprivileged youth? Jobs training program, apprenticeships, school supplies, cash grants to homeless shelters, battered women shelters, food banks....

Anyway, I’ll stop. We are all free to do whatever we want with our money. It is just the nature of the beast (this forum and my engineering training) to want to find the optimized path of achieving a stated objective.

TheWifeHalf

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Re: Financial advisors: those 1% fees!
« Reply #63 on: June 06, 2018, 02:42:53 PM »

you clearly missed the joke about the car - he was saying just the fees you're paying them make them criminals on the level of someone stealing your car every month.  i'm all for the to each their own do what works for you thing but when it comes to paying someone over 1% of your money its just the worst possible thing you can do in life - and then to consistently defend it likes its no big deal when its clearly been shown to not be a big deal but a HUGE deal is just like putting your head in the sand and saying i dont hear you.

We do not pay 1%
The totals they list are already with the fees subtracted from it. We are happy, which I guess was the reason for my original post in this thread. I am happy that all our accounts are figured into the lower fee, even though mine is so small..

The way I look at it, F employees went to school to learn, and paid for that. We have met with financial planners, not managers, who list all these letters behind their names, but when we ask, very little schooling. And their fees are over 1 %. I really don't know if that's possible or not.

To put it in a way that is relative to me - I used to  work for a vet. Right about that time there were schools opening up that one could go to to get a vet tech degree. I was grandfathered in, no schooling, just on the job training. Now, all vet techs have school  and degrees, if I was still working, I would be paid less, and should be.  (in my brain that story is related)

I do not consider the people we deal with at F to be criminals. We were told, before they got one penny of our money, what their fees would be. A criminal would have not told us, or told us a lie.

I am only defending what works for me, I am not defending it as a way for everyone. I am reading this forum to learn. As is my usual way, I read, take in the info, put it in the same pot as the things that we are doing, make a decision to use it or not, and then keep reading. As I said before, I will show all this to THH after he retires.

Scandium

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Re: Financial advisors: those 1% fees!
« Reply #64 on: June 06, 2018, 02:47:02 PM »
F obviously hires younger white professionals that come from farmland.

woah, back up. They do? Why is this obvious?? And why are they white? Or do you mean their collars?
It sounds like you wouldn't mind if someone stole your car every month either, after all you'd be supporting a young, local professional..

2 that work for F in Cincinnati went to school with my kids (same school I, and my Dad, went to) and when we went up to the F office in Michigan, the man we talked to was from the next school system over, same county. The first 2, my sons told me where they worked, I went to school with their Moms (one Mom was a preschool teacher for all 3 of my kids) and one Dad was a year ahead of me in the same school. Their employment was verified by their Facebook pages. I believe them, don't if you don't want to. So, to me, it is obvious.

I meant their collars,  I didn't even think of another definition.

If what I typed sounded like that, I suggest you get a hearing test, because I think maybe you're assuming things that are just not true.

I just find this "logic" baffling. It can be used to defend any spending if the money goes to people who went to the same school as you. Which I find a bizarre way to determine who's worthy of support as well. There are children dying of malaria in africa I've never seen, but I'd rather help them than anyone who went to my school.. Maybe I'm weird.

I hope you don't run into someone from your school who's selling drugs, or you'd have a pretty good argument to take up a coke habit to support their business (though to be fair that would probably cost you less than the 1% fee over time:D

boarder42

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Re: Financial advisors: those 1% fees!
« Reply #65 on: June 06, 2018, 03:07:29 PM »

you clearly missed the joke about the car - he was saying just the fees you're paying them make them criminals on the level of someone stealing your car every month.  i'm all for the to each their own do what works for you thing but when it comes to paying someone over 1% of your money its just the worst possible thing you can do in life - and then to consistently defend it likes its no big deal when its clearly been shown to not be a big deal but a HUGE deal is just like putting your head in the sand and saying i dont hear you.

We do not pay 1%
The totals they list are already with the fees subtracted from it. We are happy, which I guess was the reason for my original post in this thread. I am happy that all our accounts are figured into the lower fee, even though mine is so small..

The way I look at it, F employees went to school to learn, and paid for that. We have met with financial planners, not managers, who list all these letters behind their names, but when we ask, very little schooling. And their fees are over 1 %. I really don't know if that's possible or not.

To put it in a way that is relative to me - I used to  work for a vet. Right about that time there were schools opening up that one could go to to get a vet tech degree. I was grandfathered in, no schooling, just on the job training. Now, all vet techs have school  and degrees, if I was still working, I would be paid less, and should be.  (in my brain that story is related)

I do not consider the people we deal with at F to be criminals. We were told, before they got one penny of our money, what their fees would be. A criminal would have not told us, or told us a lie.

I am only defending what works for me, I am not defending it as a way for everyone. I am reading this forum to learn. As is my usual way, I read, take in the info, put it in the same pot as the things that we are doing, make a decision to use it or not, and then keep reading. As I said before, I will show all this to THH after he retires.

pretty sure your fees assumptions were already shown to be incorrect by someone with actual knowledge of how Fidelity works and who also understands finances.  What you're paying is high way robbery that fact that youre acknowledging and sticking your head in the sand about it is ignorance for the sake of ignorance. 

and WTF would you wait til he retires when people typically get more nervous about money .. instead of defending crazy spending levels which is what this is go read this and come back with questions.  Why can YOU be the one who understands the money if he doesnt want to learn b/c of all his plumbing knowledge.  There is no knowledge in the world more important than understanding how and why indexing works so you feel confident managing your own money. 

http://jlcollinsnh.com/stock-series/

OurTown

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Re: Financial advisors: those 1% fees!
« Reply #66 on: June 06, 2018, 03:08:11 PM »
My MIL has a financial advisor, who takes "good care" of her.  She has more money now than when her husband died, and it's all because of good ole "Ruthie."  Yup, what would we do without Ruthie?

The first thing I am going to do when W inherits that account (hopefully far off in the future!) is roll that sucker over into Fidelity.  "But what about poor old Ruthie?," you may be wondering.  We will send her a nice thank you card.   Maybe even some flowers.  Then we will commence saving 1% per year on fees.

pdxbator

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Re: Financial advisors: those 1% fees!
« Reply #67 on: June 06, 2018, 03:12:12 PM »
My MIL has a financial advisor, who takes "good care" of her.  She has more money now than when her husband died, and it's all because of good ole "Ruthie."  Yup, what would we do without Ruthie?

The first thing I am going to do when W inherits that account (hopefully far off in the future!) is roll that sucker over into Fidelity.  "But what about poor old Ruthie?," you may be wondering.  We will send her a nice thank you card.   Maybe even some flowers.  Then we will commence saving 1% per year on fees.

Same goes for my parents. My dad has a financial advisor that he went to high school and college with. He's a nice guy. I've met him. He is now semi retired living in a gated community near Phoenix. My dad feels that this man has really helped him out with figuring out investments. Well, yes he has, at 1% a year, that has helped him buy that big house in AZ. My parents have done well financially, and they are in their 70s so they are pretty set in their ways and won't change now. But that will certainly change in the future in what I see with those investments.

tomsang

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Re: Financial advisors: those 1% fees!
« Reply #68 on: June 06, 2018, 03:54:56 PM »
I never once mentioned the AUM model of fees when explaining the difference between investment management and financial planning, but you happily grasped on that fact as if it was set in stone. Are you aware of something called fee-for-service?

The title is about paying 1% AUM.  I think many have agreed that it is ok to pay a fixed amount for advice or a double check. The big issue is paying 1% for a number that continues to grow.  The firms also tend to have you buy their proprietary funds that are more challenging to move to another institution.  Paying 1% when you have $10k is not a bad deal.  When the numbers are getting into the millions,  the amount of service you receive to the fees that you are paying are not in your favor.  If you are locked in with proprietary funds, then it is expensive to move your money.

To be honest, your further replies aren't worth a response. It's clear you or someone you know has dealt with an 'Advisor' who was NOT a fiduciary in the past because YES THEY ARE REQUIRED TO GIVE HOLISTIC ADVICE ON YOUR WHOLE PORTFOLIO REGARDLESS OF WHAT % IS BEING MANAGED !

This does not make sense. So you are saying that you can have $5 million invested elsewhere.  Go to your advisor and deposit $10k and they are required to provide you advice on the full $5 million.  I don't think that is accurate.  Do you have any support for that?  They are there to make money.

And lastly, the fact about wealthy clients paying less than index fund holders is 100% true and is proven by mathematics. If you really want to dispute that, you are essentially disagreeing with a calculator :)

This does not make sense at all.  Do you have support for this?  Can you show me the mathematics? Are you including the salaries, commissions, and other fees to manage this portfolio.  Vanguard is the most efficient as they have trillions invested and they focus on low fees.  I can't believe that they can compete with the scale. 

I have met with a lot of advisors over the years.  What I have found in my sample is that they were all salespeople.  They had access to their investment advisors who would send out recommended purchases.  Their credentials were not in higher level degrees in finance.  No one had a masters and most of them had degrees that were not finance related. They were salespeople.  Now that research and information is readily available, I think the value of engaging investment companies becomes less and less. 

Goldielocks

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Re: Financial advisors: those 1% fees!
« Reply #69 on: June 07, 2018, 01:00:53 AM »
Tomsang.... I have received my license and have started a finacial planning consulting buisness.   It is absolutely true that you pay a financial advisor to give advice on the whole picture -- need to design an asset strategy that includes all accounts, your home, your estate planning, tax planning, whether you have business or a blended family with elder care, that sort of thing.

Financial planners spend time on what to invest in as only 20% of their work.  The rest is creating a life strategy to meet a financial goal (like retirement, but could be parental leave, etc).  They may not tell you specifics stock strategies for the investments outside of them, but they should use it to influence the recommendations.. eg., if you have all your other savings in municipal bonds, maybe having more than usual of the money with the advisor in international equities is merited.

Note -- I do not sell investment products or insurance.  I am only fee for service, like a lawyer, engineer or accountant.

boarder42

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Re: Financial advisors: those 1% fees!
« Reply #70 on: June 07, 2018, 04:28:18 AM »
Tomsang.... I have received my license and have started a finacial planning consulting buisness.   It is absolutely true that you pay a financial advisor to give advice on the whole picture -- need to design an asset strategy that includes all accounts, your home, your estate planning, tax planning, whether you have business or a blended family with elder care, that sort of thing.

Financial planners spend time on what to invest in as only 20% of their work.  The rest is creating a life strategy to meet a financial goal (like retirement, but could be parental leave, etc).  They may not tell you specifics stock strategies for the investments outside of them, but they should use it to influence the recommendations.. eg., if you have all your other savings in municipal bonds, maybe having more than usual of the money with the advisor in international equities is merited.

Note -- I do not sell investment products or insurance.  I am only fee for service, like a lawyer, engineer or accountant.

How hard/expensive was that to get?  And how are you going about setting up your own shop.  This is one thing i plan to do in FIRE and as i think its actually a beneficial service for many plus i can convert some people to FIRE
« Last Edit: June 07, 2018, 06:12:06 AM by boarder42 »

FreshPrincess

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Re: Financial advisors: those 1% fees!
« Reply #71 on: June 07, 2018, 05:07:34 AM »
Series 6, 63 and 65 securities licensed here.  Send me all your money, I will happily manage it for a fee. /s

In truth, I passed the tests.  But I know more now after joining this site than I ever did after passing those tests and working in the industry. I worked in the private sector retirement plans industry for years and just about anyone can pass those tests and become an "advisor".  I left the industry, but still today am horrified by some of the idiots who are trusted with retirees accounts and fund selections. 

Most of the time they are sales people who happened to pass some fancy tests. That's what I was.  Thankfully, I worked WITH the advisors, I wasn't one.  So, I wasn't given the chance to handle anyone's account directly.  I thank the good Lord for that every day.  I'm more confident in my ability to do that today than I was when I had the opportunity even though I had all the licensing and street cred required to get it done.

They're typically not worth their price tag. No matter how nice they are.

tomsang

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Re: Financial advisors: those 1% fees!
« Reply #72 on: June 07, 2018, 09:26:11 AM »
Tomsang.... I have received my license and have started a finacial planning consulting buisness.   It is absolutely true that you pay a financial advisor to give advice on the whole picture -- need to design an asset strategy that includes all accounts, your home, your estate planning, tax planning, whether you have business or a blended family with elder care, that sort of thing.

I suppose that does not mean that they need to take you on as a client.  The ones that I know, require you to move at least a million into their domain.  Otherwise, everyone would just dump $5k in an account that they manage, pay them the $50 a year and get all the information for the other $50 million.

OzzieandHarriet

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Re: Financial advisors: those 1% fees!
« Reply #73 on: June 07, 2018, 11:54:57 AM »
OP here ... for the record, we decided to pass on using this type of service. I already thought it was too expensive but posted here to see if there was something I was missing. Guess not!

Vanguard does offer a once-a-year consultation if you have assets with them over a million dollars, so we are going to do that, but I think the advice will be mostly to keep doing what we're doing, and by the way, for .30% we can manage your money for you. Cheaper than 1%, but still kind of a lot.

Goldielocks

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Re: Financial advisors: those 1% fees!
« Reply #74 on: June 07, 2018, 12:31:21 PM »
Tomsang.... I have received my license and have started a finacial planning consulting buisness.   It is absolutely true that you pay a financial advisor to give advice on the whole picture -- need to design an asset strategy that includes all accounts, your home, your estate planning, tax planning, whether you have business or a blended family with elder care, that sort of thing.

Financial planners spend time on what to invest in as only 20% of their work.  The rest is creating a life strategy to meet a financial goal (like retirement, but could be parental leave, etc).  They may not tell you specifics stock strategies for the investments outside of them, but they should use it to influence the recommendations.. eg., if you have all your other savings in municipal bonds, maybe having more than usual of the money with the advisor in international equities is merited.

Note -- I do not sell investment products or insurance.  I am only fee for service, like a lawyer, engineer or accountant.

How hard/expensive was that to get?  And how are you going about setting up your own shop.  This is one thing i plan to do in FIRE and as i think its actually a beneficial service for many plus i can convert some people to FIRE
The US system is a bit different.
I am getting my CFP - certified financial Planner, and currently have the level one licenses with FPSC.
There is a competitor designation, mainly used by bank employees, but the CFP is the most widely recognized / used in general.  Here it is administered by FPSC. (Financial Planning Standards Council).  This is not the securities government body, but it is a widely recognized licensing* body.  (*Note, I may be using the term license incorrectly, I am not sure what the underlying legislation is, perhaps "certifying" is a more accurate term).

If you are not a CPA already,  or with extensive related work experience, and need to take it from start ---

EDUCATION: there were 5 university level classes, each with exams, a comprehensive final exam to get the education component.  Each course is between 100 hours and 150 hours of study, plus self study and homework.

Then I wrote an industry certifying FPSC comprehensive exam, level one.

Then I took a capstone course that combines all the classes into a case study that mimics real life and had to create a financial plan (mine was over 40 pages), that I had to defend at an interview with a CFP / CPA type.

The final two hurdles are to write one more CFP final exam with FPSC (why after I have already written two, I don't know), and to get 3 years full time of Financial Planner work experience, while paying the annual registration dues to FPSC during this time.

The biggest hurdle really is getting the work experience without getting employment with a AUM type firm.
If you don't get hired to assist an independent CFP, then you start your own practice, and getting the insurance can be a challenge.

Oh -- and fee only (hourly no percentage) does not make very much money compared to the AUM model.

In addition, most financial planners get insurance or mutual fund licenses, and securities license, to permit product sales and stock selection advising.  These are much easier to get than the CFP designation.  With the CFP I can not recommend a specific fund or stock, but need to stick to asset allocation and the class of ETF or mutual fund recommended, etc.

Goldielocks

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Re: Financial advisors: those 1% fees!
« Reply #75 on: June 07, 2018, 12:36:45 PM »
Tomsang.... I have received my license and have started a finacial planning consulting buisness.   It is absolutely true that you pay a financial advisor to give advice on the whole picture -- need to design an asset strategy that includes all accounts, your home, your estate planning, tax planning, whether you have business or a blended family with elder care, that sort of thing.

I suppose that does not mean that they need to take you on as a client.  The ones that I know, require you to move at least a million into their domain.  Otherwise, everyone would just dump $5k in an account that they manage, pay them the $50 a year and get all the information for the other $50 million.
Yeah,  a service that charges you by the hour (like a lawyer or CPA), does not need you to move money to them to give you comprehensive advice.

I actually try to get my clients into couch potato and bond ladder portfolios that they "manage" (look at and adjust twice a year).

Most people that try the small portfolio method you describe for the advice find that it is huge hassle after a year or two.  The advisors allow it at first, because it is a great tatic to sell their services. If they do well, they know they will get the larger portion after a while.


TheWifeHalf

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Re: Financial advisors: those 1% fees!
« Reply #76 on: June 07, 2018, 04:15:31 PM »
I hope you don't run into someone from your school who's selling drugs, or you'd have a pretty good argument to take up a coke habit to support their business (though to be fair that would probably cost you less than the 1% fee over time:D

Hey, I got that joke! (it was a joke, right?)

TheWifeHalf

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Re: Financial advisors: those 1% fees!
« Reply #77 on: June 07, 2018, 05:55:26 PM »

and WTF would you wait til he retires when people typically get more nervous about money .. instead of defending crazy spending levels which is what this is go read this and come back with questions.  Why can YOU be the one who understands the money if he doesnt want to learn b/c of all his plumbing knowledge.  There is no knowledge in the world more important than understanding how and why indexing works so you feel confident managing your own money. 

http://jlcollinsnh.com/stock-series/

I am waiting until he retires because he works 12 hour shifts, in front of 5 (or 6?) computers, relaying messages, responding to buzzes and bells. I always felt one of my jobs at home was to make it a soft place to land. I know him, I know this info would cause more stress, and I won't do that. I am learning, and the source of the info I am learning, though not necessarily retaining, will be given to him to explore on his own, when he retires.

We are NOT typical, we are not nervous about money. You’re going to hate this, but I remember telling someone, I think the F guy, that if the account grew enough to pay the fees, and keep up with inflation, that would make it worth the fees. Really, we have enough. We just can’t sign up for ‘whoever has the most money when he dies, WINS!!!!” game. Every year, the F accounts are worth more on Dec 31 than they were on Jan 1, and that’s after subtracting our contributions.

He definitely has never given me an indication that he does NOT want to learn. Just to describe him a bit, he is very intelligent. And the person you would want to be in charge in the case of an emergency.
I never do anything with our money because I do not have the mental capacity needed to do so. But, we do discuss it, and I learn a bit.
Some people just want to hire a capable person to manage their money for them. That’s us.

I've been known to say "What's his is mine, and what's mine is mine." We both know it's a joke, because in truth, what there is, is ours.  I know enough to know I do not have the ability to comprehend all the investing stuff, but every once in a while, info gets put in the right cubicle in my brain, and I think., "Hey THH would like to read this."
I know our lives are hard to understand, but we do what we have to do.

Thank you for your opinions, I am glad for everyone that gives theirs too.

” There is no knowledge in the world more important than understanding how and why indexing works so you feel confident managing your own money.  “
I disagree.

boarder42

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Re: Financial advisors: those 1% fees!
« Reply #78 on: June 07, 2018, 07:28:40 PM »
So let me get this straight you stay at home all day while he works 12 hour shift work and I just don't even know what to type here anymore. You completely passed on the point I made that you could learn. Putting all this on the guy working 12hour shifts who could have quit 10 years ago were it not for the fees you've been paying.

Saying you don't have the mental capacity is an excuse. You have the resources you're ignoring them and putting it on him.

MDM

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Re: Financial advisors: those 1% fees!
« Reply #79 on: June 07, 2018, 08:00:42 PM »
I know our lives are hard to understand, but we do what we have to do.
Not hard to understand at all - I think.  If you are assuming you have "enough", then by definition you don't need more.  And that's a pretty good place to be.

Now, paying the high(? - have you calculated just how much you are paying each year, compared with doing your own Three-fund portfolio or similar with Fidelity's or Vanguard's lowest cost funds?) fees to the F guy may still be something that you could stop. But if it takes some time to work through that, no huge harm done. 

Good luck!


not_a_trex

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Re: Financial advisors: those 1% fees!
« Reply #80 on: June 07, 2018, 10:22:13 PM »
The thing that I find strange has nothing to do with paying an excessive fee but that when if comes to the decision making for finances you seem to be at least aware of other strategies listed here and your husband does not.

I never do anything with our money because I do not have the mental capacity needed to do so.

I know him, I know this info would cause more stress, and I won't do that.

You claim that you don't know enough to be able to make financial decisions, yet you are making the decision to withhold information from him about finances (ie these other strategies). That's indirectly influencing your finances and doing so as "the one that doesn't make the decisions" just seems hypocritical to me.

To address the point about it being stressful to learn the advisor isn't necessary, it doesn't have to be stressful. I don't understand why it's stressful in the first place if you as a couple aren't nervous about money. But if you think moving away from the advisor would be stressful for your husband, I would present the strategies others have mentioned as alternative opportunities. They aren't other horses in some hypothetical race towards retirement.

If the source of the stress is regret over past decisions, what I think the worst case scenario is would be you wait until he retires to review these other options, you (royal you) decide to forgo the advisor, and then you conclude you could have done without the advisor all this time. That sounds like the big opportunity for regret.

The other strategies are just options going forward. And hey, it may be that out of the options presented in this thread you both decide that the advisor is the best option for you. But by reviewing the other options now at least the two of you would be going that direction on the same footing.

rxmurphy

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Re: Financial advisors: those 1% fees!
« Reply #81 on: June 08, 2018, 08:09:32 AM »
We are NOT typical, we are not nervous about money. You’re going to hate this, but I remember telling someone, I think the F guy, that if the account grew enough to pay the fees, and keep up with inflation, that would make it worth the fees. Really, we have enough. We just can’t sign up for ‘whoever has the most money when he dies, WINS!!!!” game. Every year, the F accounts are worth more on Dec 31 than they were on Jan 1, and that’s after subtracting our contributions.

Just my opinion, but barring a huge market downturn, this is typical, and not because you are paying fees to F. The same would happen if you did this yourself, though the returns would be higher.

Scandium

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Re: Financial advisors: those 1% fees!
« Reply #82 on: June 08, 2018, 08:26:21 AM »
if the account grew enough to pay the fees, and keep up with inflation, that would make it worth the fees.

Really, we have enough. We just can’t sign up for ‘whoever has the most money when he dies, WINS!!!!” game.

This is everyone's problem with your lack of logic. It's not "worth the fees", because the fees don't cause the performance! You would have gotten the same (or better) performance without them. The fees (i.e. manager) don't do anything! Hence my joke about having your car stolen; you give away value for nothing. Pointing to your account growing which would have happened in a 3-fund portfolio anyway does not justify the fees.

"Put money in vanguard target date fund. let it sit". That's all the management you'd have to do to get the same performance. Yet on a $1 mill account you're paying an extra $10,000/year to gain nothing beyond that?

I also have plenty of money, but that doesn't mean I feel good about having it stolen by already highly paid charlatans. Then I'd rather keep it and give it to someone more deserving (regardless of which school they went to). And if you have "enough" why is your poor husband working 12 hours days??!! Then give the poor man a break!

ysette9

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Re: Financial advisors: those 1% fees!
« Reply #83 on: June 08, 2018, 08:35:36 AM »
I interpreted TheWifeHalf’s comments to mean that she doesn’t make unilateral decisions about there money, and something as significant as changing advisors would be a joint decision. But maybe I am protecting my own situation on hers.

In our case I have the interest in learning (as evidenced by how much time I waste on this site during the day) and so I educate myself. I then share bits and pieces with my husband, including my proposals for what we do. We talk about big picture goals together and he does some reading that I feed to him when we make big decisions. Mostly I put together a draft proposal, he reads it and some supporting documents (articles online), and then we jointly decide what to do.

I have an idea. What if you talked to a Vanguard financial advisor about their management services, and asked them to build you the business case on why you should switch to them, what your Fidelity fees are actually costing you, and how much you could save by switching? I can’t guarantee they would bite, but that should be up their alley. That is a compromise solution that still gives you hand-holding, but at a significantly lower rate. Then you can spend your time deciding what kind of charitable donations you want to do to improve your community with the $17k or whatever per year you will be saving.

OurTown

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Re: Financial advisors: those 1% fees!
« Reply #84 on: June 08, 2018, 09:34:16 AM »
I have an even better idea.  Get out of the active management at Fidelity.  Invest everything in a three fund portfolio.  Here, I will show you exactly what I, personally, have invested in my very own Rollover IRA:

FSGDX  Fidelity Global Ex-US Index (ER 0.1%)
FSITX  Fidelity US Bond Index (ER 0.045%)
FSTVX  Fidelity Total Market Index (ER 0.035%)

Set your asset allocation.  If you don't know what to do, put 1/3 in each.  Then forget it.  Live life.  Enjoy your returns.  You need no other special knowledge.  These are Fidelity funds.  By doing this, you will save a small fortune in fees over the balance of your lifetimes.

 

boarder42

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Re: Financial advisors: those 1% fees!
« Reply #85 on: June 08, 2018, 10:09:43 AM »
I have an even better idea.  Get out of the active management at Fidelity.  Invest everything in a three fund portfolio.  Here, I will show you exactly what I, personally, have invested in my very own Rollover IRA:

FSGDX  Fidelity Global Ex-US Index (ER 0.1%)
FSITX  Fidelity US Bond Index (ER 0.045%)
FSTVX  Fidelity Total Market Index (ER 0.035%)

Set your asset allocation.  If you don't know what to do, put 1/3 in each.  Then forget it.  Live life.  Enjoy your returns.  You need no other special knowledge.  These are Fidelity funds.  By doing this, you will save a small fortune in fees over the balance of your lifetimes.

 

this it really is that simple thats why everyone here is like HOLY SHIT what are you doing.  and the education is reading the jlcollins stock series i posted above.

desert_phoenix

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Re: Financial advisors: those 1% fees!
« Reply #86 on: June 11, 2018, 10:46:51 AM »
TheHusbandHalf and I, (62, 60) 9 years ago hired Fidelity to take care of things. It's under 1% but I don't know off hand what the fee is.  He handled stuff up until then. He can do many things well, carpentry, plumbing, HVAC, electrical. siding, etc, almost to the expert level, but he is no where near that level taking care of our money. Plus, he does not have the time to learn to the level a professional does.

We thought, one wrong move we made would more than be worth the pay they get. Their fee goes lower as our money goes higher. We have been very happy with them.

Bullshit

Taking care of retirement investments is way easier than electrical, plumbing, brushing your teeth or tying your shoes.  Look to Fidelity's own study of it's 401k holders.  They wanted to know what things those with the best outcomes (most gain) over time did.  Those with the absolute gains........were dead.  You don't think your husband can act like a dead person and just leave the investments alone?  Ok then.....pay money for some clown to pick out his next BMW that you'll be paying for.


Sorry for such a rant, but the whole thought that managing money is this big complicated thing is just so wrong.  I'm no financial wizz (I'm an engineer), and the only things I needed to know was to look at the expense ratios, decide what asset allocation I wanted and then place investments appropriately (aka, you put bonds and international in tax advantaged accounts and equities in taxable).  If you want, rebalance to your AA once a year.  That's all of 15 minutes.  Or do nothing.  And when I die?  My instructions to my wife are:  When you need money, take it out of whatever account you want.  Take RMDs as the institutions' letters tell you to.  The end.  It's not optimal, but who cares.  Even if she takes money out of the worst possible accounts, it's cheaper than hiring a clown to "manage" (steal) your money.

Bonds in tax advantaged, I agree with.

I think when you say equities, you are meaning US index funds like VTSAX?  If so, I agree on that in taxable.

But why international in tax advantaged?  With the foreign tax credit, I don't think it is so cut and dry.  But I am open and willing to learn if you have a compelling reason why :)

Car Jack

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Re: Financial advisors: those 1% fees!
« Reply #87 on: June 11, 2018, 10:59:09 AM »
A story referencing the Fidelity study finding that those who were dead (or forgot about their accounts) did better than anyone else.  I'll look more....I remember someone linking the original Fidelity study in another forum when I mentioned that I could not find it.

https://twocents.lifehacker.com/the-best-investors-literally-forget-about-their-portfol-1782581085

Car Jack

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Re: Financial advisors: those 1% fees!
« Reply #88 on: June 11, 2018, 11:00:54 AM »
Another story written about the study that Fidelity supposedly didn't do.....

http://theconservativeincomeinvestor.com/2015/05/26/fidelitys-best-investors-are-dead/

Goldielocks

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Re: Financial advisors: those 1% fees!
« Reply #89 on: June 11, 2018, 09:33:40 PM »
I came across an interesting fact.  The average investment advisor "team" (typically a senior person, an analyst or two and a admin person) has over 521 clients, averaging about $1million in assets each.

Whoa.   521. How can they spend any time on each person?

RWD

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Re: Financial advisors: those 1% fees!
« Reply #90 on: June 12, 2018, 07:05:45 AM »
I came across an interesting fact.  The average investment advisor "team" (typically a senior person, an analyst or two and a admin person) has over 521 clients, averaging about $1million in assets each.

Whoa.   521. How can they spend any time on each person?

Wow, four people managing ~$521 million at 1% fees? Assuming 40 hours/week they are each making an average of $626/hour!