Do you use a financial adviser?

14 years ago

I am not particularly financially savvy. I know enough to know that I need help with my investments. I'd been using a guy from Merrill Lynch, but everything I read says not to use a broker for financial advice. So, now I found a guy who is a fee-only adviser.

Anyway, what do you do? Do you do do-it-yourself-financial management or do you use an adviser? If you use an adviser, who are they -- I don't mean their name, of course, but are they a broker or a fee-based person, hourly paid or what?

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Comments (20)

mary_c_gw
14 years ago
We use a fee-based advisor, and he's worth his weight in gold. Of course, we researched his credentials before deciding to use him. His business is only advising, and he gets no fee for recommending any stock or fund.

I would never use a broker, or a brokerage firm. They want to make money for their firm, and it's nice if they make money for the clients. Not what I want.

My advisor works on a percentage of what he makes for ME, not some brokerage. His fee is a yearly percentage, which I find quite low and well worth the money.
glenda_al
14 years ago
Had my financial advisor for 27 years and he does the same as mary c's.
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"As I've said in other postings, any advisor that won't give you the names of at least 3 long-time clients to call and talk to, isn't worth considering." The problems are 1) he cherry picks clients and 2) clients have no clue what they are paying or how they are really doing. They just know they 'like' they advisor and he 'seems' to be doing great. The people I have helped all thought initially that their advisor was their dear friend that was doing wonderful things with their money. They would have given glowing recommendations. I think EF Moody said it well: "And that's the same critical problem with referrals as well- and the reason that they are so effectively used in the business. Literally every salesperson is told/taught to get referrals to friends, neighbors, relatives, co-workers, Martians, whoever, since that is a great lead in. Unfortunately, the person getting the referral believes- or wants to believe- that the agent has already been critically and thoroughly analyzed and must be of the highest caliber and competency. Invariably they do NOTHING themselves to check out whether such knowledge or ability exists- and nothing was done before. Then this happens to the next person and the next, ad infinitum, as the referrals continue. It ends up that no one did any checking on anyone at all and then they later wonder how it all went wrong. They end up buying the wrong product at the wrong risk level at the wrong time- and certainly from the wrong person. They get little or ineffectual service, etc. Now referrals may work with physicians and certain other professionals (sometimes with CPA's or attorneys- but not all the time) since they at least have a degree and other background and training. Even here, people are finally recognizing there are problems. But referrals to agents who have essentially nil background (read further) is illogical. It is for these many reasons that I feel that referrals to brokers, insurance agents, financial planners, attorneys and most other entities is a waste of time unless a comprehensive review of the individual is commenced before any product is purchased or any fee paid. And such review is NOT calling the SEC/NASD or your State offices to see if any formal arbitrations or law suits have been instituted. Only an infinitesimal number of agents have ever been sued. That still says NOTHING about competency. You need to do a LOT more to assure yourself of some reasonable competency." "That seems to set you off in a very strident manner." Because I know what a scam these people are probably in for. Unless they find an honest, knowledgable, hourly fee-ONLY planner. I would totally love to see ignorant investors finding good, honest, low-cost advice. I could then turn my attentions to all my hobbies. The fact is, these people need advisors because they are ignorant and have no confidence. Salesmen will snap them up and manipulate them and hurt them. I see this over and over and over. "But any good CFP who has been in business for 10+ years should be able to show a track record of at least 6-8% after expenses." Should, but they don't. Numbers don't lie. "Yes, it is hard to track all expenses (whether you use an advisor or not), but a rough total can be managed by diligent clients and figuring out the ROI is easy after that." First, why should a client have to hunt down elusive fees? Shouldn't a financial ADVISOR (!!!!) be telling the clients all about the fees? This alone is very telling. And I can't even track down all the fees! Fund turnover is not in the prospectus let alone the expense ratio. Take a look at this: "Mercer Bullard, president, Fund Democracy and assistant professor of law at the University of Mississippi, added: "This study demonstrates conclusively what consumer groups have argued for years: fund expense ratios are misleading. Expense ratios exclude portfolio transaction costs that on average equal 43 percent of the total expense ratio. In some cases, hidden portfolio transaction costs are five or six times the total expense ratio. Congress should act promptly to ensure that America's investors are provided with full disclosure about funds' portfolio transaction costs." Even if you find the turnover, figuring out the cost from there is a bear. Can't you see what a problem this is? "People also need to consider that many CFPs offer their clients purchases at NAV and reduced management fees on funds." From the BCT study: "Do advisors help clients find funds that are lower cost (excluding distribution costs)? After analyzing several trillion dollars worth of transactions, the answer is no." "He changed all his clients over to a fee basis " Yes, the new and improved way to get big fees from clients. This is usually more expensive than loads for the client in the long run. Fee basis means he can get commissions (probably from 12b-1 fees) and a percent of the client's assets. That percent of assets gets subtracted from the client's investments year after year after year after year. Never to compound. And for what? "But I don't make the mistake of thinking that everyone enjoys doing this type of thing;" They don't have to. They can buy a target retirement date fund (very low expense ratio, no load, no percent of asset fee, no 12b-1 fee, index funds, automatically rebalanced) or have a salaried Vanguard planner do it (often at no cost) or hire a fee-ONLY planner by the hour to set up a simple portfolio. I am saving amazing amounts of money and spend less that 8 hours a year on my investments. Had I been better able to dig through the industry BS when I first started, I would have been able to set up a great portfolio in a weekend. "In the end, all we are doing here is trading opinions. " Hard numbers are not opinions. This is not an opinion: "the BCT study found that the raw returns of equally weighted mutual funds (net of all expenses) for 1996 to 2002 were 6.626% for the investors working on their own and were 2.924% for funds provided by advisors." I know that I'm passionate about this. It's because I have looked at enough evidence over the years to reach certainty. And, I have seen so many people that have lost years of retirement to fees they were never told about by their trusted financial ADVISOR. Maybe it's just my opinion, but I think that if someone pays for a service he should get a value from that service - not badly hurt. And the worst is that all those clients initially defended their broker like crazy. It was only after I took them out to Morningstar and showed them reality that they started realizing what was being done to them.
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Laurie, while you think everything will work out the way you're both planning.. you should plan for it not. Things happen, I don't like that there is no child support figured out.. what if at some point you & your ex are not so cordial and you have to go back to court? Any clue how expensive it will be to change it? I can tell you it usually costs me $1,000 or more (usual is $2k-$3K) every time we have to go to court. You also should do something in writing about medical for your child. If he ends up fracturing something or falls down the steps like my girl did; you could be left with high medical bills. In the last few years, I've paid over $15,000+ in uncovered medical expenses. He is supposed to reimburse me 75% after the 1st $250 but he does not. Also, he's screwed me with the deductible he picked which is very high - $800 alone just for my daughter. He's also lowered the tier on dental. Please protect yourself/child. Who gets to claim your child on income tax? What we did was my ex claimed her, I would claim head of household. I don't know if that will apply to you. When I remarried we alternated the deduction - odd years me, even years him. Even though your name was not on the deed, it sounds like you lived there for your whole marriage - in NJ the house would be 1/2 yours regardless. The way they figured it out was they went back to when you would have moved in to find a value; then they would figure out how much the house was worth when you moved out, plus deduct what he had already paid on the house before you moved in IIRC. There was a formula used. From things you are writing, it sounds like you are not getting the correct credit. Are you sure your attorney is looking out for your best interests? I'm glad you guys can be so civil right now but make sure you do research to make sure you are getting what you really deserve. I have one more question. I hate to sound naive, but I was a stay-at-home mom for 16 years, so I didn't start earning a paycheck until December, 2007. My husband has always done our taxes. Piece of advice - get copies of all the income taxes that have been filed. You also want a copy of the marriage license and any other documents. Make sure you have his social security number on file.
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azzalea
14 years ago
Mostly, I use my common sense. When I do have a question that's more involved, I check in with my accountant. He's not selling any products, he understands finances and tax liability, so I trust his advice and he hasn't steered me wrong.

I do have a SEP account--which I bought from a so-called 'financial advisor' but I went to him knowing exactly what I wanted to buy, and what I planned to spend--not for his advice on what to do with my money.

DH and I aren't rich, but we have enough that if we had to, we could survive for several years on our savings, even if we had no other income at all. That's more than a lot of people, so guess we haven't done too badly.
ruthieg__tx
14 years ago
Same as with Mary, our advisor is worth every penny he costs us and he makes us good money...
YogaLady1948
14 years ago
Mine is my DH~~~he has set us up very nicely in our retirement. The only outside thing we have ever done is had someone do a family trust for us.
drewsmaga
14 years ago
Our's charges a small yearly retainer and then takes a small percentage of our gains. She has done great for us for a dozen years.
lazypup
13 years ago
Frog is my financial adviser,,every time I want to spend money he gives me hell.
sheilajoyce_gw
13 years ago
My DH does our planning. He was with Merrill Lynch years and years ago and has stayed in the finance industry all these years.
kayjones
13 years ago
Yes - he is another that is worth his weight in gold - he has become like a family member to me - does a really fine job for me. I also have a CPA who does a great job.
fran1523
13 years ago
I've had a fee only financial planner since my mom died and left me some money. I pay my adviser by the hour and not a percentage of my portfolio. Some years it may cost me $800, another year only $200. She's done very well by me. She makes recommendations and I do the actual transactions on line.
dedtired
Original Author
13 years ago
This is so helpful to know. I have been kind of paralyzed about moving forward with making a decision about who to hire.

How did you find your adviser? (Other than those of you whose spouse does the planning, although that might be a romantic story). Were they recommended by someone else?
3katz4me
13 years ago
Yes - same exact arrangement as fran1523; pay by the hour and make the trades myself as recommended by the CFP. My CPA recommended the CFP. Prior to that I interviewed lots of sleazy people with motives other than my financial well being.
maire_cate
13 years ago
Technically - ours is a broker/financial adviser, however we negotiated a flat annual fee. I like the fact that he works for an investment firm and he can offer a wide range of services for us.

dedtired: Do you have an attorney that you can ask? We asked the attorney who did our wills and trusts for us and who specializes in estate planning.
chisue
13 years ago
We used a CFP when liquidating some of our portfolio to build our house (1999-2001). His services were free for one year. We went along with him for another year after we were in our home. Eventually, because our portfolio is SO CONSERVATIVE, we felt we didn't need him. There wasn't a lot of 'managing' to do, and we were paying a percentage of the portfolio.

We are almost entirely in mutual funds now. (And cash.)
elaineinnj
13 years ago
We have never used a financial adviser. Most of our stocks are with the company that my DH worked for, our other stocks are blue chip stocks and we are doing very well with them.
WalnutCreek Zone 7b/8a
13 years ago
I had a financial adviser (from a very highly esteemed nationwide group of advisors) until he lost all of my money. Now I have no advisor and no investment money.
joyfulguy
13 years ago
After I'd taken the course that stockbrokers take, 30 years ago, then sold mutual funds for a year, with a broker that could sell funds offered by various carriers rather than a tied agent that could sell products managed by his/her company only, when a client bought something, I made commission, and would have made trailer fees annually for as long as the client held that mutual fund through my "employer". If no one bought anything, I made zero income ... so I had incentive to sell.

After a year, I'd sold enough to suit my immediate supervisor, but not the guy above him ... so I was "decommissioned".

I enjoyed this game, and worked for a number of years selling no financial products: as I said, "no conflict of interest".

When dealing with the folks who sell stuff, watch their mouth closely, to see whether they're taling out of the side of it that's mainly good for you (darn computer: that was supposed to be "talking")... or mainly good for them.

Don't forget, as well, that they receive differing rates of compensation for different types of investment ... and there may be incentives for making major sales quotas for one type, like seminars in exotic locations, etc.

When I began with the mutual fund broker, one of the newly-minted agents was a fellow who'd been selling no financial products, offering financial advisory only with the client paying a fee for service. He said that was a good way to starve, and I rather agree. People claim that they want unbiased advice ... but don't want to pay for it.

A medical professional asked once why he should pay me for advice, when he could get it for free from the folks selling the products. I told him, that his circumstances being as they were, no doubt the discussion would relate to similar circumstances ... but that recommendations regarding products offered by the sales folks and me could well be quite different.

My current print copy of "Canadian MoneySaver" magazine arrived yesterday (I subscribe to electronic one, as well, which lets me view their archives) and it had an article "Your Financial Planner knows a lot about you - you should know a lot about him/her" and offered a form to fill out, similar to the "Know Your Client" ones that the responsible ones have us fill out.

Enough for now - I had part of this composed earlier ...

... and it disappeared: sometimes my operation on these computers gets dumped, and I have to sign in fresh - and I can't hit "Save".

Good wishes for finding a well-trained, capable and responsible advisor.

ole joyfuelled
drewsmaga
13 years ago
dedtired, we found our advisor when we finally had enough money to invest and it was our son's (and his in-laws) person. Two other sons have also gone to her even though they have way below the minimum money of people she normally takes on as clients. We and (other sons) found her "word-of-mouth" (son's in-laws to son to us to 2 sons.)
susanjf_gw
13 years ago
we belong to a credit union, and have a free advisor there...
chessey24
13 years ago
We have a fee-based FA and have been very happy with her work and the whole organization. It's one of the top ones in the country and they do a very good job

Do you use a financial adviser?

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