Bogleheads

Dan Kohn · Joined: 26 Jun 2007 Posts: 1504 Location: New York, NY

I'm assuming that IFPS advisors should gross between $50 and $100 per hour. As contractor's, they'll owe their 15% self-employment tax. They'll also be responsible for getting and keeping their Series 65 and AIF certifications. I believe the advising business can be a very profitable sideline for people from many walks of life. Whether it could become a full time job or not depends on our ability to generate a steady flow of new investors.

However, it doesn't make sense to spend too much time discussing this until I get firm pricing on the errors and omissions insurance. That seems like the largest cost the company will face.

mikenz · Joined: 10 Mar 2007 Posts: 747

Derek Tinnin · Joined: 08 Jan 2008 Posts: 710 Location: Cincinnati

peter71 · Joined: 24 Jul 2007 Posts: 3220

Hi All,

I like Alex's car wash analogy, and while I don't doubt that the advising business can be profitable, I'd personally only be interested in something I could explain to people as a Vanguard-like low price alternative to the high fee norm . . . As for the requirements, getting 68% correct on a $120 test shouldn't be too big a problem for people, but I admit that paying the AIF folks $325 a year and taking six hours of continuing education per year on what it means to be a fiduciary would be a big deterrent . . . I know we have a CFP reference book in the library and I'm kind of shocked how much of it is about getting people to increase not just their life but their home and auto insurance, etc., so do people really have confidence in this AIF thing?

http://www.diehards.org/forum/viewtopic.php?t=9204

All best,
Pete

Derek Tinnin · Joined: 08 Jan 2008 Posts: 710 Location: Cincinnati

peter71 · Joined: 24 Jul 2007 Posts: 3220

Hi Derek,

I admit the reference to the relative ease of passing the Series 65 exam was a glib one, so with apologies I'll be a bit more didactic about things Very Happy

I think the fundamental question is how much institutional regulation and certification of individual IFPS advisers makes sense given that IFPS itself would be fully regulated by US and state law (and given the quite extensive internal quality control measures that Dan and Alex seem to envision).

The law requires the Series 65 exam, and I'd actually support something like that even if it didn't.

As for CFP status, I should clarify that I have considerable respect for many of the CFP's on this board, as well as for a personal acquaintance of mine who's a CFP and does fee-only "SRI" planning. That's why I said I was a bit shocked by all the discussion of maxing out insurance in "Personal Financial Planning: A Practitioners Guide" (the, I presume, quasi-official publication in our reference library to which I linked above). Suffice it to say that I do not think Rick Ferri is among those CFP's who "believe [uninsured/underinsured motorist coverage] is so important that they will send clients who won't take the maximum available to purchase the insurance someplace else" (PDF p. 54)

I know much less about the AIF designation but it's not yet clear to me how, particularly given its considerable monetary cost and continuing education requirement, it would enhance the ability of IFPS reps to deliver good service to clients at a good price. Why wouldn't, for example, a more extensive, more relevant and more advanced internal continuing education requirement be more appropriate? (I realize that the CFP is certainly a /marketable/ credential, but with regards to the AIF I'm not even sure about that.)

I'm certainly no expert on these matters, though, so I'm genuinely interested in your and others' perspectives.

All best,
Pete

Dan Kohn · Joined: 26 Jun 2007 Posts: 1504 Location: New York, NY

Pete, I don't consider $1000 for the AIF plus $300 is that much money. I think there's a perception issue if we only require the Series 65 of it being the "minimum" designation. I don't see how CFP is practical for many years, if ever. What I like about AIF is that it is a customer-focused accreditation. Series 65 is about the legal requirements, the Bogleheads investment guidelines are about the policy and process, but AIF is about our responsibility to the investor.

That said, there are an enormous number of possible designations. We're very open to suggestions on alternative processes. Here are a few links:

http://www.investopedia.com/ar....F-AIFA.asp
"Note: In 2006, Financial Planning magazine called the AIF one of the financial field's 10 most-wanted professional designations because it is highly sought-after, requires real effort to attain and displays genuine expertise. The publication ranked the AIF alongside the CPA, CFA and CFP designations. (To learn more about these designations, see Is A Career In Financial Planning In Your Future?, The Alphabet Soup Of Financial Certifications and What Does "CFA" Mean?)"

The Alphabet Soup Of Financial Certifications
http://www.investopedia.com/articles/01/101001.asp

Other lists
http://www.vansonfinancial.com/certifications.html
http://tinyurl.com/2yz4p9

peter71 · Joined: 24 Jul 2007 Posts: 3220

Hi Dan,

For better or worse, it would certainly do more than the Series 65 exam to screen out potential advisers who were only "somewhat serious" as opposed to "extremely serious" about giving advising a try. As for what one should make of it being one of the "top-10 designations," I guess I'm still a bit skeptical, but perhaps a more important question would be what people think of the curriculum -- specifically, the 22 practices in which fiduciaries would be instructed:

http://www.fi360.com/main/foun....visors.jsp

I can't say it much excites me in its own right, but if I could cover, say the A-2-7 material on SRI planning in a class with EmergDoc, that might alone be worth the price of credentialization! Very Happy

All best,
Pete

Derek Tinnin · Joined: 08 Jan 2008 Posts: 710 Location: Cincinnati

The CFA is by far the most demanding designation to obtain. The CFP isn't as difficult a process, it just requires knowledge on a broad range of topics. The CFP will require months out of your life of reasonable study (plus relevant experience and CE requirements), the CFA will require a few years of very intense study.

One thing I will say about designations is that you can definitely go overboard with them. I have a couple I quit using for a variety of reasons and a lot of the designation programs are for-profit ventures that appeal to your desire for more letters behind your name and are very marketing oriented, and they don't add much substance. If you are dedicated to continuous personal development, take the courses for continuing education purposes. If you happen to get a designation along the way, so be it. But don't feel like you need 20 letters behind your name to prove you are legitimate.

The AIF sounds like a good/practical solution for IFPS reps and something that you can promote to the public that will satisfy potential concerns. Maybe I will get the AIF for the heck of it...

Mel Lindauer · Posted: Fri Feb 15, 2008 9:21 pm Post subject:

EmergDoc · Posted: Fri Feb 15, 2008 10:31 pm Post subject:

market timer · Joined: 21 Aug 2007 Posts: 3076 Location: -$70K

I like Howdy's energy. This forum provides valuable information. I expect there will be some interesting future outgrowths. Will anyone pay for what's already being provided for free? I'm still not sold on this business model.

Here is an alternative that is perhaps more in the spirit of this forum: an interactive program where users enter vital stats and receive financial planning advice. It seems like a natural combination of Help and Theory. What goes into the program can be discussed and resolved in Theory. Any troubleshooting would start in Help. I would be very interested to learn how, when, and why users diverge from prescribed paths. If this was public information, maybe investors would realize how widely their concerns were shared, and be more secure in staying the course.

grok87 · Joined: 27 Feb 2007 Posts: 3365

kyuss · Joined: 23 Feb 2007 Posts: 162

I'm not a very frequent poster here, but certainly find value from this board. My personal view is that this idea has some merit but I have many problems with it. First of all, it is clearly is an attempt to capitalize upon the success of the board. With the recent mentions in the mainstream financial press and increasing amount of traffic to the site, I suppose it was only a matter of time.

I am glad to see that the board will not be affiliated with the company, although the fact that some of the frequent posters here may be affiliated is a problem for me. Possibly I'm too much of a skeptic, but at what point will posters be steered toward the company website and not addressed on this site? That can be accomplished quite subtly without violating any non-commercial terms. There is a fine line between self-promotion and helpful advice, and it is crossed many times on this site, for better or worse.

I think it would be a concern to potential clients that their advisor is not a full-time advisor. Not to pick on JH, but the following post that he put up a while back illustrates my point:

This sounds like a neat idea and I hope it works out in some form. I'd be interested in working a few hours a week (at night or on the weekend) doing it, if it isn't too hard to obtain the qualifications. I think it would be a fun way to make some extra cash. My carreer and education have nothing to do with investing. I'm just a DIY'er that has read up on it out of self-interest and curiosity.

I have no doubt that JH would provide fine advice and is a very intelligent person, but if I'm a potential client, that is not the person I want giving me advice. It's a level-of-comfort thing. If I'm spending money for this advice, I want the best regardless of how much I'm investing and how much I'm paying.

Finally, make no mistake, if this thing gets up and running, this board changes forever. I can only speak for myself obviously, but it seems to me that everything about it goes completely against the grain of what this board set out to accomplish.

grok87 · Joined: 27 Feb 2007 Posts: 3365

peter71 · Joined: 24 Jul 2007 Posts: 3220

hi grok,

i personally favor a /very/ low priced service, but i /think the flip-side is that "the board" can't really compete with the average (or worse) planner in the minds of a large segment of the public (including, as i've mentioned, my girlfriend, and i'll throw in my mother too, who won't listen to a word i say about any of this stuff because i'm not a professional). they would certainly both listen to the fine medium-fee planners we have on here, but i haven't yet heard a price lower than $500 for an initial plan and consultation . . . if no one else is stepping in to provide that lower price service and consultation (with the backing of the legal status and having taken the series 65 exam and so forth) it seems the idea is quite like vanguard in fulfilling a need, no? as for damaging the board, it's certainly true that people are more interested in hearing what the "pros" say here than what others say, but in any case don't we already have a mix of amateurs and professionals on here?

all best,
pete

grok87 · Joined: 27 Feb 2007 Posts: 3365

peter71 · Joined: 24 Jul 2007 Posts: 3220

hi grok,

per dan's first post i think vanguard actually charges $1000 though . . . not that there's anything wrong with that, but all else equal lower is better, no?

all best,
pete

tibbitts · Joined: 27 Feb 2007 Posts: 2723

grok87 · Joined: 27 Feb 2007 Posts: 3365

leonard · Joined: 21 Feb 2007 Posts: 1615

Tibbits Wrote:

petrico · Joined: 07 Apr 2007 Posts: 1044

peter71 · Joined: 24 Jul 2007 Posts: 3220

Dan Kohn · Joined: 26 Jun 2007 Posts: 1504 Location: New York, NY

I don't see any contradiction in my quotes that you posted. If you're comfortable on Bogleheads, you shouldn't need to use our services (we're now planning on calling ourselves Index Planners). You will get the same advice here for free that we charge you for. Only if you're not comfortable posting here and dealing with multiple responses should you consider using Index Planners. Having used the paid service, if you then find yourself comfortable enough to get follow-up questions answered here (as we'll encourage you to do), we'll consider that interaction a great success.

In any event, I felt this thread largely played out, and I appreciate all participants (even those who greatly opposed the idea) for sharing their views. I think it's probably more appropriate to continue any conversation about the structuring of Index Planners at our own forum website:

http://forum.indexplanners.com

Also, you can see the investment process we're planning to follow on our wiki:

http://wiki.indexplanners.com

The update, though, is that we are planning on going forward with the business.

Alex Frakt · Posted: Mon Feb 25, 2008 2:05 am Post subject:

Pete -

A lot of people don't want to post their portfolios online. And even more are uncomfortable taking advice from a bunch of anonymous folks on the internet. And even more don't want to put in even the minimal effort to DIY. These people are Dan's potential customers. And they'll be a hell of a lot better served paying a couple hundred bucks to get a total market type portfolio than what they'd get walking into a bank or Raymond James office.

petrico · Joined: 07 Apr 2007 Posts: 1044

SoonerSunDevil · Joined: 19 Feb 2007 Posts: 2001 Location: The desert

I've thought long and hard about posting on this topic, but I'm going to go ahead and express my views despite the fact that I'm in the minority and will probably face some sharp criticism.

Firstly, it's absurd to think that this new for-profit site isn't going to be affiliated with the free site, despite the attempts to limit the scope by the founders of the new site. How many times do we see posters on this site recommend Portfolio Solutions, Buckingham Asset Management, Altruist Financial Advisors, etc.? Alex mentioned previously that the profits (if there are any) from the new site would help fund this site, and I really don't see how anyone, in good conscience, can say that this isn't a conflict of interest.

Additionally, and I mean this with the utmost amount of respect possible, Taylor, Mel, Laura, Alex, etc. are not the only ones who have built this forum into what it has become. There is no doubt in my mind that Taylor and Mel joined forces and transformed a forum at Morningstar into a powerful free advice forum here, but the success of this forum is due to the large quantity of intelligent posters. While I always enjoy reading the posts of the aforementioned individuals, I enjoy reading the posts from TrevH, LH2004, SmallHi, RobertT, Simba, Gummy, mlebuf, JDCPAEsq, rpetrocelli, Valuethinker, PiperWarrior, EmergDoc, market timer, Sunny, Bob U., nitsuj, Kenster1, wagnerjb, sheepdog, grayfox, etc. I'm sure I'm leaving out several other posters that I admire greatly. While there's no question the "Bogleheads" wouldn't exist without Taylor and Mel, I'm quite frankly perturbed at the idea that all of these other posters have donated their time and wisdom only to let someone else piggyback off their work at a profit.

If the new for-profit forum does become successful, does that mean that Taylor, Mel, Laura, and others will stop posting here for free since it will directly conflict with a personal business venture? It's certainly their right to spend their time as they please, but I feel a great sense of betrayal by the leaders of this forum for even considering the thought of using the Boglehead name for profit. You can call the new forum or company whatever you want, but that company will always be associated with the old Morningstar Forum, the current forum we're using, and Jack Bogle in particular. It appears that the success of those two forums and the praise by Jack himself is too lucrative for some to pass up.

As a wise man stated to me off the forum, “This is just reinventing the wheel to capitalize on the Boglehead reputation.”

John

kayman · Joined: 17 Dec 2007 Posts: 162

Apologies if this has already been mentioned, but is there any concern that this project will siphon some of the talent away from this board? The esteemed advisors here can only help so many people in a day, and if they are all busy doing the payed work, couldn't the bogleheads forum suffer?

petrico · Joined: 07 Apr 2007 Posts: 1044

bob u. · Joined: 23 Feb 2007 Posts: 2365

For what (very?) little it's worth, I have come around to OUJohn's articulate statement. I am no longer ambivalent.

Bogleheads is a rich feeding ground for those interested in finance, and many of the best ideas--say discussions of lifecycle finance, Social Security, LTC insurance, tax planning, asset allocation/location, the use of various kinds of annuities--have come from non-specialist posters. If such a business plan is adopted (with a clear linkage with this site), I would have to believe that the many contributions at this site--from specialist and non-specialist alike--might find themselves used in a for-profit setting.

In a way, this proposed business plan has achieved the near-impossible: it has made the Morningstar site look increasingly appealing. Bob U.

Cosmo · Joined: 05 Mar 2007 Posts: 400 Location: Sugar Land, TX

Taylor Larimore

Quote:

If the new for-profit forum does become successful, does that mean that Taylor, Mel, Laura, and others will stop posting here for free since it will directly conflict with a personal business venture?

Perhaps I am naive, but I don't understand why another site that offers a low-cost advisory service based on Mr. Bogle's wisdom is going to deminish this site. It seems to me that spreading the Boglehead message is good for any investor lucky enough to learn about it. I intend to continue posting here (for free) as before.

Best wishes.
Taylor

Dan Kohn · Joined: 26 Jun 2007 Posts: 1504 Location: New York, NY

Guys, I've tried to make clear in the Index Planners info that there is no direct connection to the Bogleheads forum.

http://wiki.indexplanners.com/

I believe this should assuage most poster's concerns. If you want to discuss this further, I'd suggest you do it on our site.

http://forum.indexplanners.com/

But I think it's probably best to let this thread die.

Derek Tinnin · Joined: 08 Jan 2008 Posts: 710 Location: Cincinnati

Alex Frakt

Cosmo · Joined: 05 Mar 2007 Posts: 400 Location: Sugar Land, TX

bob u. · Joined: 23 Feb 2007 Posts: 2365

I read the thread as well, and I find it surprising that a so-called "moderator" could be so immoderate in his assumptions and tactless use of language. Bob U.

Alex Frakt · Posted: Fri Feb 29, 2008 1:34 pm Post subject:

OK Bob. You get the last word.

I'm closing this thread because Dan's proposal no longer has anything to do with this forum. If you want to comment on it further, please do it on his site http://forum.indexplanners.com (free registration required).

If you feel events on indexplanners.com warrant it, you are free to comment on on the appropriate forum here - for example, the Theory forum for discussing their proposed allocation model.