Author Topic: Finding a MMM Style Financial Advisor  (Read 4745 times)

GitFrog

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Finding a MMM Style Financial Advisor
« on: September 29, 2012, 06:59:54 PM »
My wife and I live in Toronto. Our financial adviser is associated with our local bank (TD). Over the last year or so, my wife and I have studied up on finance and economics and are looking to move over to ETFs with an appropriate asset allocation strategy.

We informed our financial adviser of our plans, and she was not happy (we are currently invested in TD Mutual Funds). She then informed us that if we moved our money from these mutual funds, she could no longer advise us.

No problem right! We've studied up and we're ready to take this stuff on ourselves. But you know what...it sure would be nice to have a financial adviser in your back pocket when you have questions, or just want a professional to confirm you're on the right track.

Which brings me to my question. I'd love to find a financial adviser who gets the MMM lifestyle. How do I start this search? Does anyone have any recommendations?


arebelspy

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Re: Finding a MMM Style Financial Advisor
« Reply #1 on: September 29, 2012, 07:22:54 PM »
Financial advisors have an inherent conflict of interest: they want to make money off of you.

Why not just post the questions you have here, or on other various knowledgeable forums (early-retirement.org, Bogleheads, etc.)?
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GitFrog

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Re: Finding a MMM Style Financial Advisor
« Reply #2 on: September 29, 2012, 07:31:31 PM »
I knew someone would say that! :)

I find forums are great when you have specific questions, but what do you do when you want to go over your financial life plan? I want to spread out our tables and charts on a desk and dive into them over coffee.

I want to talk to someone when life throws you something unexpected (inheritance, death, promotion, layoff, baby) and how this might alter your current financial path.

Zaga

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Re: Finding a MMM Style Financial Advisor
« Reply #3 on: September 29, 2012, 07:38:40 PM »
Find a fee only financial councilor.  You pay strictly for the advice, they don't get commissions based on what you do with it.

My work offers this as a benefit, it's nice to call and talk to someone about specifics without them selling you anything.

arebelspy

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Re: Finding a MMM Style Financial Advisor
« Reply #4 on: September 29, 2012, 09:40:28 PM »
I knew someone would say that! :)

I find forums are great when you have specific questions, but what do you do when you want to go over your financial life plan? I want to spread out our tables and charts on a desk and dive into them over coffee.

I want to talk to someone when life throws you something unexpected (inheritance, death, promotion, layoff, baby) and how this might alter your current financial path.

I would do the same thing.. Dive in, then post questions. Learning and taking ownership will lead to the most success, IMO.
We are two former teachers who accumulated a bunch of real estate, retired at 29, and now travel the world full time with two kids.
If you want to know more about me, or how we did that, or see lots of pictures, this Business Insider profile tells our story pretty well.
We (rarely) blog at AdventuringAlong.com. Check out our Now page to see what we're up to currently.

inthebiz

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Re: Finding a MMM Style Financial Advisor
« Reply #5 on: October 10, 2012, 10:57:27 AM »
Many people mistakenly think financial advisors are always brokers. This thinking is going back to 80's and early 90's era. Today, you find brokers who aren't advisors and advisors who aren't brokers and you will also find many who are both.  I know, a bit confusing. You want an broker/advisor who will serve as a fiduciary for you and your assets. What does this mean? It means that by law, fiduciaries are to disclose all fees that would be charged to you and investment advice that is not in line with one's own.

It's not a conflict of interest when I want to sell you my professional, credentialed advice. That's why you pay a financial advisor. It's not a one and done deal because 20, 30, 40+ years of investing has so many variables. Let's not even get into the tax complications of different strategies. Okay - I'll step off the podium regarding advisors. Many of us work really hard to help clients achieve FI. The economy and the media aren't always our friends. I concede there are bad apples in my business, but naturally that's where the media gravitates. Can we agree?

To find an financial advisor who lives the Mustachian way, simply reach out and tell them what your goals and ambitions are, if they take you seriously (and they should), ask them what their investment philosophy is to help you get there. There aren't many of us as those that make it in this business usually can't help but chase the ol' might dollar. But you can find them.

rjack

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Re: Finding a MMM Style Financial Advisor
« Reply #6 on: October 10, 2012, 11:25:55 AM »
Find a fee only financial councilor.  You pay strictly for the advice, they don't get commissions based on what you do with it.

My work offers this as a benefit, it's nice to call and talk to someone about specifics without them selling you anything.

You can find fee-only financial advisors here:

http://www.napfa.org/


RadicalPersonalFinance

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Re: Finding a MMM Style Financial Advisor
« Reply #7 on: October 10, 2012, 12:37:54 PM »
You need to understand why you're doing what you're doing.  Why are you moving from mutual funds to ETFs?  Unless you have an advisor who is charging you a fee for their planning services, their compensation comes from the commissions earned on your mutual fund account.  The commission structure is different depending on the class of share you own. 

Why would you expect her to provide you service for no compensation?  You could have gone and purchased no-load mutual funds or you could have purchased your ETFs from a discount broker, but instead, you chose to work with your advisor.  Another example is that you could go online and purchase a will in a box for $20.  But would you then take it to your estate attorney and expect them to stamp it for you without charging you?

Asking your advisor to change your portfolio from commissioned mutual funds to no-load ETFs would be like doing your taxes for free online using a free tax program and then taking your return to your accountant and asking him/her to bless the return and submit it for you for no compensation.

Incidentally, if you don't know the answer off the top of your head, you should ask your advisor what commission structure your mutual funds are in and what the expense ratios are.  If you purchased A shares, it's likely that you have the lowest fees already and you wouldn't be served by transitioning to an ETF if your only reason for transitioning is expenses.

If you want to purchase ETFs through your advisor, she might be able to charge you a fee and handle the transition for you.  Depending on your account size, I would charge a client between 1% to 1.5% of assets to manage their money.  If you want ETFs, ask her if she can move you into a fee-based account and utilize an ETF strategy within the account.

If you want to find a good advisor, it's quite simple.  Talk to a number of them and tell them what you're trying to achieve; also tell them what your biases and philosophies are.  Then, choose the advisor you're most comfortable with. 

If your sole investment goal is to minimize cost, use a discount brokerage and do it yourself.  You don't need our services.  Most of us who are extremely competent at what we do value our service and don't work for free.  We have plenty of people who value our service and are willing to pay.  It doesn't hurt our feelings.

You can indeed choose to work with a fee-only financial advisor.  It's possible that your current advisor can create a financial plan for you in exchange for a fee.  Be prepared to pay a significant fee for someone who is competent; I would charge you between $3,000 and $7,000 to prepare a financial plan for you if you only want to purchase fee-only services. 

Many people who are following a Mustachian approach to early retirement wouldn't need a full-blown financial plan; the average Mustachian's situation that I read here in the forums is quite simple and the complex tax advice and investment advice that we render in exchange for our fees is unnecessary.

inthebiz is right.  Those of us who are advisors have invested years of our lives and many thousands of dollars in our education to become professional, credentialed experts.  We work very hard to help our clients achieve their goals and our clients gain many multiples of value beyond the cost of our fees.

It's possible that your goals don't need our help.  That's fine.  Usain Bolt doesn't have need for a weight loss coach, but that doesn't mean that a weight loss coach doesn't have a role to play in others' lives.  You need to understand what you're trying to hire and then go and find an advisor who will fill that role for you.

I hope that helps...

Kraughmar

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Re: Finding a MMM Style Financial Advisor
« Reply #8 on: October 12, 2012, 08:47:13 AM »
Not exactly answering the question, but since you are already with TD it might make sense to look at their e-series index funds for some of your investing.  They are low MER online-only funds, and they have Canada and US and a few others.

This would also likely cut your adviser out of the loop, but may be easier to transfer to.  They also have fairly easy to set up regular purchase plans, so you can invest small sums each month.  Fees from a discount brokerage make that sort of investing less financially sound.

vwDavid

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Re: Finding a MMM Style Financial Advisor
« Reply #9 on: October 16, 2012, 01:00:45 PM »
There is a MMM style canadian blog (forget the name: maybe lazy investor- strick that couch potato- link below) that highly recommends TD mutual e-series funds in its model portfolios.

http://canadiancouchpotato.com/model-portfolios

I have ditched my IA but picked up friends who are IA by profession to ask questions too...

Self-employed-swami

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Re: Finding a MMM Style Financial Advisor
« Reply #10 on: October 16, 2012, 01:18:14 PM »
I would never recommend going through a Canadian big 5 bank for a financial planner, as they are usually only able to sell proprietary products.  How about an independent financial company, like Edward Jones?