Commission only fiduciary planner

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Pdub
Posts: 65
Joined: Sat Oct 21, 2017 6:10 am

Re: Commission only fiduciary planner

Post by Pdub » Tue Oct 24, 2017 8:50 pm

afan wrote:
Tue Oct 24, 2017 4:10 pm
It is possible Vanguard may have changed policies as they emphasize PAS, but I have received a free financial plan from them without being a PAS client.

The plan was not what I would call a full plan. Rather, it was a plan of how to invest marketable securities. There was nothing about life insurance, disability risk and insurance, Social Security planning, Roth conversions, estate planning, or the many other topics that one might look for expert help with.

As an investment and retirement plan, it was fine. Nothing I did not do for myself routinely, but perfectly fine. No crazy schemes, no unrealistic promises of investment returns.

I have also used the "ask a CFP" feature that, at least in the past, Vanguard offered for free to customers. I have done this several times to see whether their advice is as good as what I get from Bogleheads. The answer is "no". The advice tends to be amazingly vague. The CFP's seem to have little idea about things outside of index investing. I don't think I will try them again, since they seem so weak.

Since, as far as I know, the CFPs with whom I have spoken are the same as those who advise people as part of PAS, I doubt one would find the noninvestment advice useful at all.

But if you really don't want to manage your money yourself, Vanguard PAS is low cost compared to the competition and does not claim to have some secret sauce to beat the markets.
Thank you,

After doing some research it does seem like the plan the PAS would come up with would be pretty similar to something like a 3 or 4 fund option. We should be ok doing that ourselves.

Pdub
Posts: 65
Joined: Sat Oct 21, 2017 6:10 am

Re: Commission only fiduciary planner

Post by Pdub » Tue Oct 24, 2017 9:01 pm

Ok so the meeting went well. The advisors were, as expected very friendly, personable, charming and charismatic. They gave us ice water and fresh baked chocolate chip cookies when we got there (which was great as I had forgotten to eat a snack and I could feel my blood sugar dropping).

We discussed all our paperwork, 401k. IRA, taxable accounts, social security, estate and trusts and future goals.

We did talk about their fee schedule. So they have 2 ways they generate income...1. They use a seperate securities firm to handle all the stocks..the firm charges a percent and they do as well *I think* adding up to .5 to 2% a year. 2. The get paid by the funds they handle - in which case the client does not pay them. They do utilize an endowment model, so I am going to guess that the people I know who use them must not be invested in any stocks at all, thus they are not paying any fees. Instead they are likely invested in resources, funds, real estate etc...

So I am happy with the answer they gave and feel like they did not deceive those people that I know, which was what I wanted to find out from the meeting.

That being said....you were right. We did decide to join with them as their presentation seemed top notch.

...just kidding!

Afterwards my wife and I went out to dinner and discussed our options and have decided that this is indeed aomething we can manage on our own. We will continue to research, plan and seek advice prior to transferring and investing, but we will do it ourselves and claim the responsibility.

Thank you to this great community for your feedback and support. I'm sure I will be asking more questions in the following weeks.

birdy
Posts: 317
Joined: Sun May 02, 2010 7:31 pm

Re: Commission only fiduciary planner

Post by birdy » Tue Oct 24, 2017 9:24 pm

Pdub:

Why are you working so hard to convince us they are working for YOU??? I also suggest you not go to the meeting as you will only be met with a sales pitch that sounds good but ends up MAKING NO SENSE for you. Commission = Sales. Even though some friends have told you this company is the one they use, that doesn't mean your friends haven't been suckered into something by their not understanding personal finance! Pay attention to the Wiki to gather more knowledge about personal finance. You not knowing what to ask this group of sales persons shows that you do not have the knowledge to understand what they are really trying to do to you........which is make your money THEIR MONEY. I am sure you are an intelligent person (after all, you found the Bogleheads!). With everyone on this site telling you not to pull the trigger on this transaction, maybe you should heed the advice from people who have nothing to gain from you on this forum. The people here only have your best interest in mind. We have made our share of mistakes over they years and only want to share our experience so you will be successful.

birdy

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EyeYield
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Location: Extremistan

Re: Commission only fiduciary planner

Post by EyeYield » Tue Oct 24, 2017 9:57 pm

Pdub wrote:
Tue Oct 24, 2017 9:01 pm
Ok so the meeting went well. The advisors were, as expected very friendly, personable, charming and charismatic. They gave us ice water and fresh baked chocolate chip cookies when we got there (which was great as I had forgotten to eat a snack and I could feel my blood sugar dropping).

We discussed all our paperwork, 401k. IRA, taxable accounts, social security, estate and trusts and future goals.

We did talk about their fee schedule. So they have 2 ways they generate income...1. They use a seperate securities firm to handle all the stocks..the firm charges a percent and they do as well *I think* adding up to .5 to 2% a year. 2. The get paid by the funds they handle - in which case the client does not pay them. They do utilize an endowment model, so I am going to guess that the people I know who use them must not be invested in any stocks at all, thus they are not paying any fees. Instead they are likely invested in resources, funds, real estate etc...

So I am happy with the answer they gave and feel like they did not deceive those people that I know, which was what I wanted to find out from the meeting.

That being said....you were right. We did decide to join with them as their presentation seemed top notch.

...just kidding!

Afterwards my wife and I went out to dinner and discussed our options and have decided that this is indeed aomething we can manage on our own. We will continue to research, plan and seek advice prior to transferring and investing, but we will do it ourselves and claim the responsibility.

Thank you to this great community for your feedback and support. I'm sure I will be asking more questions in the following weeks.
Congratulations, you're going to be fine. Please do find some time to read some of the books on the recommended list. It will reinforce your decision by learning about the great minds that have gone before us and paved the way.
"The stock market is a giant distraction from the business of investing." - Jack Bogle

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Taylor Larimore
Advisory Board
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Location: Miami FL

"The Three-Fund Portfolio"

Post by Taylor Larimore » Tue Oct 24, 2017 10:02 pm

Pdub:

Consider The Three-Fund Portfolio and save the cost of advisors.

Best wishes
Taylor
"Simplicity is the master key to financial success." -- Jack Bogle

Nate79
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Location: Portland, OR

Re: Commission only fiduciary planner

Post by Nate79 » Tue Oct 24, 2017 11:24 pm

Pdub wrote:
Tue Oct 24, 2017 9:01 pm
Ok so the meeting went well. The advisors were, as expected very friendly, personable, charming and charismatic. They gave us ice water and fresh baked chocolate chip cookies when we got there (which was great as I had forgotten to eat a snack and I could feel my blood sugar dropping).

We discussed all our paperwork, 401k. IRA, taxable accounts, social security, estate and trusts and future goals.

We did talk about their fee schedule. So they have 2 ways they generate income...1. They use a seperate securities firm to handle all the stocks..the firm charges a percent and they do as well *I think* adding up to .5 to 2% a year. 2. The get paid by the funds they handle - in which case the client does not pay them. They do utilize an endowment model, so I am going to guess that the people I know who use them must not be invested in any stocks at all, thus they are not paying any fees. Instead they are likely invested in resources, funds, real estate etc...

So I am happy with the answer they gave and feel like they did not deceive those people that I know, which was what I wanted to find out from the meeting.

That being said....you were right. We did decide to join with them as their presentation seemed top notch.

...just kidding!

Afterwards my wife and I went out to dinner and discussed our options and have decided that this is indeed aomething we can manage on our own. We will continue to research, plan and seek advice prior to transferring and investing, but we will do it ourselves and claim the responsibility.

Thank you to this great community for your feedback and support. I'm sure I will be asking more questions in the following weeks.
You had me at chocolate chip cookies. I had to clean the drool off my screen.

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sergeant
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Re: Commission only fiduciary planner

Post by sergeant » Wed Oct 25, 2017 12:16 am

So, are you going to the follow up meetings? I sure hope not. Also, Your friends are paying fees. Your explanation of the presenters explanation doesn't make sense.
Lincoln 3 EOW!

GmanJeff
Posts: 149
Joined: Sun Jun 11, 2017 7:12 am

Re: Commission only fiduciary planner

Post by GmanJeff » Wed Oct 25, 2017 7:56 am

Pdub wrote:
Tue Oct 24, 2017 8:49 pm
GmanJeff wrote:
Tue Oct 24, 2017 2:04 pm
Pdub wrote:
Mon Oct 23, 2017 7:06 pm
GmanJeff wrote:
Mon Oct 23, 2017 5:55 pm
While periodic consultations with a fee-only planner has been suggested, perhaps consider as another alternative something like Vanguard's Personal Advisor Service, a low-cost hybrid robo service.

For someone who would prefer to not completely manage their own investments, whether for lack of time, interest, knowledge, advancing age, lack of confidence, or for any other reasons, PAS can be a viable option. The cost is low enough that if PAS is able to help you be even a little more tax-efficient, or achieves a somewhat better asset selection and allocation and corresponding risk/reward profile than you might manage on your own, you're probably going to recoup the fee in the form of improved net after-tax performance while also having had ready access to financial planning advice when desired (unlike a full robo service). You only need to do a little better with PAS than you would on your own to justify the relatively modest fee, whereas with the higher fees charged by traditional advisors you have to outperform much more substantially before you do better than you might have done on your own.

Thank you,

I had read that Vanguard offers advising, but had not looked too much into it. I will do so. Do they offer one time services as well or only ongoing management?
Vanguard does offer advice on-demand for customers who are in certain service tiers by virtue of their account sizes. Beginning when you have $500K - $1M with Vanguard, when you're considered to be a "Voyager" client, one of the services available at those service levels is access to a Vanguard Certified Financial Planner (CFP) from the PAS business segment who can answer specific questions for you as they arise. If you want ongoing advice and portfolio management from a dedicated advisor through PAS, you have to enroll in the service. I don't believe you'll be able to get a complete financial plan through a one-off consultation with a PAS CFP, but you do get one as a proposal if you are contemplating enrolling in the service. That is, if you'd like to see what PAS would recommend for you if you were to enroll, a PAS advisor will prepare an initial financial plan for you to discuss, to see if you believe it's suitable for your situation and requirements. That is free, and you have no obligation to proceed further. If you enroll in PAS thereafter, the plan is reviewed with you quarterly, and is updated generally annually or when a material change to your situation occurs (e.g., you retire from employment, win the lottery, etc). In between the quarterly program reviews and plan updates, you can reach out to your assigned advisor any time with questions.

The hybrid robo nature of PAS does result in plans which are generally aligned with Vanguard's asset allocation models and investment selections for your age and risk tolerance; the plans will not be highly customized outside those general parameters. They are, however, intended to be highly tax-efficient and to take advantage of modern portfolio theory to (hopefully) maximize your returns in view of your risk tolerance.

PAS has a minimum account size requirement of $50K, and the annual cost is .30% of assets under management for the first $5M, plus the expense ratios of the underlying investments. Those are low-cost index funds with low expense ratios. The annual management fee declines progressively for account balances over $5M.
Thank you for taking the time to write such detailed and thorough response. Certainly something to think about. The advice on demand option may work out on occasion. The only difficulty is that I really like research the people I use for any services prior to using them, and it sounds like you get who ever they offer you in that situation.
I believe you're correct in assuming that when you call on a one-off basis for advice, you're likely to get a different advisor each time. With PAS, you have a dedicated POC with whom you can correspond or who you can call directly.

GmanJeff
Posts: 149
Joined: Sun Jun 11, 2017 7:12 am

Re: Commission only fiduciary planner

Post by GmanJeff » Wed Oct 25, 2017 8:13 am

Pdub wrote:
Tue Oct 24, 2017 8:50 pm
afan wrote:
Tue Oct 24, 2017 4:10 pm
It is possible Vanguard may have changed policies as they emphasize PAS, but I have received a free financial plan from them without being a PAS client.

The plan was not what I would call a full plan. Rather, it was a plan of how to invest marketable securities. There was nothing about life insurance, disability risk and insurance, Social Security planning, Roth conversions, estate planning, or the many other topics that one might look for expert help with.

As an investment and retirement plan, it was fine. Nothing I did not do for myself routinely, but perfectly fine. No crazy schemes, no unrealistic promises of investment returns.

I have also used the "ask a CFP" feature that, at least in the past, Vanguard offered for free to customers. I have done this several times to see whether their advice is as good as what I get from Bogleheads. The answer is "no". The advice tends to be amazingly vague. The CFP's seem to have little idea about things outside of index investing. I don't think I will try them again, since they seem so weak.

Since, as far as I know, the CFPs with whom I have spoken are the same as those who advise people as part of PAS, I doubt one would find the noninvestment advice useful at all.

But if you really don't want to manage your money yourself, Vanguard PAS is low cost compared to the competition and does not claim to have some secret sauce to beat the markets.
Thank you,

After doing some research it does seem like the plan the PAS would come up with would be pretty similar to something like a 3 or 4 fund option. We should be ok doing that ourselves.
PAS placed me in 6 different low-cost index funds, across taxable and retirement accounts, allocated in line with their models to, in theory, achieve and maintain an optimized asset allocation. My advisor has visibility into my non-PAS accounts both at Vanguard and elsewhere, so their nature can be considered in the construction of the managed portion of the portfolio. It would be entirely possible to do this on your own, as it's not terribly complicated, but it does require that you design your portfolio to achieve your desired risk-reward profile and that you periodically make adjustments to consistently maintain that profile. Once you start to draw on the portfolio for retirement income or other purposes, you'll need to also be mindful of maintaining the ideal asset allocation and sensitive to structuring your transactions to minimize tax consequences.

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ruralavalon
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Location: Illinois

Re: Commission only fiduciary planner

Post by ruralavalon » Wed Oct 25, 2017 9:08 am

That you for the update on your experience in the meeting.

Pdub wrote:
Tue Oct 24, 2017 9:01 pm
Ok so the meeting went well. The advisors were, as expected very friendly, personable, charming and charismatic. They gave us ice water and fresh baked chocolate chip cookies when we got there (which was great as I had forgotten to eat a snack and I could feel my blood sugar dropping).

We discussed all our paperwork, 401k. IRA, taxable accounts, social security, estate and trusts and future goals.

We did talk about their fee schedule. So they have 2 ways they generate income...1. They use a seperate securities firm to handle all the stocks..the firm charges a percent and they do as well *I think* adding up to .5 to 2% a year. 2. The get paid by the funds they handle - in which case the client does not pay them. They do utilize an endowment model, so I am going to guess that the people I know who use them must not be invested in any stocks at all, thus they are not paying any fees. Instead they are likely invested in resources, funds, real estate etc...

So I am happy with the answer they gave and feel like they did not deceive those people that I know, which was what I wanted to find out from the meeting.
I am glad to hear the sales pitch is honest and not deceptive, and they are not taking undue advantage of your friends.

Not all commission based "advisors" are dishonest or unethical, it's very important to be extremely careful about conflicts of interest, but sometimes we can be too cynical about this.

Pdub wrote:That being said....you were right. We did decide to join with them as their presentation seemed top notch.

...just kidding!
It's good to see a sense of humor even about serious issues :) .

Pdub wrote:Afterwards my wife and I went out to dinner and discussed our options and have decided that this is indeed aomething we can manage on our own. We will continue to research, plan and seek advice prior to transferring and investing, but we will do it ourselves and claim the responsibility.
Great decision in.my opinion :happy :happy :happy .
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started

Pdub
Posts: 65
Joined: Sat Oct 21, 2017 6:10 am

Re: Commission only fiduciary planner

Post by Pdub » Wed Oct 25, 2017 10:56 am

EyeYield wrote:
Tue Oct 24, 2017 9:57 pm
Pdub wrote:
Tue Oct 24, 2017 9:01 pm
Ok so the meeting went well. The advisors were, as expected very friendly, personable, charming and charismatic. They gave us ice water and fresh baked chocolate chip cookies when we got there (which was great as I had forgotten to eat a snack and I could feel my blood sugar dropping).

We discussed all our paperwork, 401k. IRA, taxable accounts, social security, estate and trusts and future goals.

We did talk about their fee schedule. So they have 2 ways they generate income...1. They use a seperate securities firm to handle all the stocks..the firm charges a percent and they do as well *I think* adding up to .5 to 2% a year. 2. The get paid by the funds they handle - in which case the client does not pay them. They do utilize an endowment model, so I am going to guess that the people I know who use them must not be invested in any stocks at all, thus they are not paying any fees. Instead they are likely invested in resources, funds, real estate etc...

So I am happy with the answer they gave and feel like they did not deceive those people that I know, which was what I wanted to find out from the meeting.

That being said....you were right. We did decide to join with them as their presentation seemed top notch.

...just kidding!

Afterwards my wife and I went out to dinner and discussed our options and have decided that this is indeed aomething we can manage on our own. We will continue to research, plan and seek advice prior to transferring and investing, but we will do it ourselves and claim the responsibility.

Thank you to this great community for your feedback and support. I'm sure I will be asking more questions in the following weeks.
Congratulations, you're going to be fine. Please do find some time to read some of the books on the recommended list. It will reinforce your decision by learning about the great minds that have gone before us and paved the way.
Will do, thank you for all your input throughout the thread.

Pdub
Posts: 65
Joined: Sat Oct 21, 2017 6:10 am

Re: "The Three-Fund Portfolio"

Post by Pdub » Wed Oct 25, 2017 10:56 am

Taylor Larimore wrote:
Tue Oct 24, 2017 10:02 pm
Pdub:

Consider The Three-Fund Portfolio and save the cost of advisors.

Best wishes
Taylor
Thank you for the link Taylor. I have been steadily working my way through it.

Pdub
Posts: 65
Joined: Sat Oct 21, 2017 6:10 am

Re: Commission only fiduciary planner

Post by Pdub » Wed Oct 25, 2017 10:58 am

GmanJeff wrote:
Wed Oct 25, 2017 8:13 am
Pdub wrote:
Tue Oct 24, 2017 8:50 pm
afan wrote:
Tue Oct 24, 2017 4:10 pm
It is possible Vanguard may have changed policies as they emphasize PAS, but I have received a free financial plan from them without being a PAS client.

The plan was not what I would call a full plan. Rather, it was a plan of how to invest marketable securities. There was nothing about life insurance, disability risk and insurance, Social Security planning, Roth conversions, estate planning, or the many other topics that one might look for expert help with.

As an investment and retirement plan, it was fine. Nothing I did not do for myself routinely, but perfectly fine. No crazy schemes, no unrealistic promises of investment returns.

I have also used the "ask a CFP" feature that, at least in the past, Vanguard offered for free to customers. I have done this several times to see whether their advice is as good as what I get from Bogleheads. The answer is "no". The advice tends to be amazingly vague. The CFP's seem to have little idea about things outside of index investing. I don't think I will try them again, since they seem so weak.

Since, as far as I know, the CFPs with whom I have spoken are the same as those who advise people as part of PAS, I doubt one would find the noninvestment advice useful at all.

But if you really don't want to manage your money yourself, Vanguard PAS is low cost compared to the competition and does not claim to have some secret sauce to beat the markets.
Thank you,

After doing some research it does seem like the plan the PAS would come up with would be pretty similar to something like a 3 or 4 fund option. We should be ok doing that ourselves.
PAS placed me in 6 different low-cost index funds, across taxable and retirement accounts, allocated in line with their models to, in theory, achieve and maintain an optimized asset allocation. My advisor has visibility into my non-PAS accounts both at Vanguard and elsewhere, so their nature can be considered in the construction of the managed portion of the portfolio. It would be entirely possible to do this on your own, as it's not terribly complicated, but it does require that you design your portfolio to achieve your desired risk-reward profile and that you periodically make adjustments to consistently maintain that profile. Once you start to draw on the portfolio for retirement income or other purposes, you'll need to also be mindful of maintaining the ideal asset allocation and sensitive to structuring your transactions to minimize tax consequences.
Thank you for that. I had thought about rebalancing as the weighting changed, but for whatever reason had not thought about it in terms of after taking out funds as well. Thanks.

Pdub
Posts: 65
Joined: Sat Oct 21, 2017 6:10 am

Re: Commission only fiduciary planner

Post by Pdub » Wed Oct 25, 2017 10:59 am

ruralavalon wrote:
Wed Oct 25, 2017 9:08 am
That you for the update on your experience in the meeting.

Pdub wrote:
Tue Oct 24, 2017 9:01 pm
Ok so the meeting went well. The advisors were, as expected very friendly, personable, charming and charismatic. They gave us ice water and fresh baked chocolate chip cookies when we got there (which was great as I had forgotten to eat a snack and I could feel my blood sugar dropping).

We discussed all our paperwork, 401k. IRA, taxable accounts, social security, estate and trusts and future goals.

We did talk about their fee schedule. So they have 2 ways they generate income...1. They use a seperate securities firm to handle all the stocks..the firm charges a percent and they do as well *I think* adding up to .5 to 2% a year. 2. The get paid by the funds they handle - in which case the client does not pay them. They do utilize an endowment model, so I am going to guess that the people I know who use them must not be invested in any stocks at all, thus they are not paying any fees. Instead they are likely invested in resources, funds, real estate etc...

So I am happy with the answer they gave and feel like they did not deceive those people that I know, which was what I wanted to find out from the meeting.
I am glad to hear the sales pitch is honest and not deceptive, and they are not taking undue advantage of your friends.

Not all commission based "advisors" are dishonest or unethical, it's very important to be extremely careful about conflicts of interest, but sometimes we can be too cynical about this.

Pdub wrote:That being said....you were right. We did decide to join with them as their presentation seemed top notch.

...just kidding!
It's good to see a sense of humor even about serious issues :) .

Pdub wrote:Afterwards my wife and I went out to dinner and discussed our options and have decided that this is indeed aomething we can manage on our own. We will continue to research, plan and seek advice prior to transferring and investing, but we will do it ourselves and claim the responsibility.
Great decision in.my opinion :happy :happy :happy .
The more we learn the more confidence we have in our decision. Thanks for your all your help and support through the thread.

NotWhoYouThink
Posts: 2045
Joined: Fri Dec 26, 2014 4:19 pm

Re: Commission only fiduciary planner

Post by NotWhoYouThink » Wed Oct 25, 2017 11:08 am

So what do they mean by "endowment model?" What does that have to do with fees? Sounds like mumblyspeak.

Edited to add:
Oooohh, here's a great description from Fuller Investments of their Fuller Endowment Model (FEM)
The FEM approach was specifically designed to best achieve our clients’ return objectives. It largely focuses on portfolio construction and risk management to achieve risk and return objectives. The use of alternative investments complements and enhances an existing risk-adjusted performance profile, which helps manage volatility through all market cycles. This process-driven investment approach leads to the most repeatable and reliable delivery of the targeted risk and return outcomes.
Wow, such nice impressive sounding buzzwords for actively managed portfolios that include "alternative investments." Your friends are paying them somehow, whether they know it or not.

dbr
Posts: 27207
Joined: Sun Mar 04, 2007 9:50 am

Re: Commission only fiduciary planner

Post by dbr » Wed Oct 25, 2017 3:30 pm

Pdub wrote:
Tue Oct 24, 2017 9:01 pm

We did talk about their fee schedule. So they have 2 ways they generate income...1. They use a seperate securities firm to handle all the stocks..the firm charges a percent and they do as well *I think* adding up to .5 to 2% a year. 2. The get paid by the funds they handle - in which case the client does not pay them. They do utilize an endowment model, so I am going to guess that the people I know who use them must not be invested in any stocks at all, thus they are not paying any fees. Instead they are likely invested in resources, funds, real estate etc...
So you still don't actually know what investing through these people costs the client do you?

You "think" they add .5 to 2% a year. Even the smallest of those numbers is outrageous and that is just the beginning of all the possible costs. Did you mean that for both firms or is the real number 1%-4% a year?

Do you even understand what "get paid by the funds they handle" means? Whose money finances that do you think? You could start with 12b-1 fee, for example, and the concept that "The 12b-1 fee is considered to be an operational expense and, as such, is included in a fund's expense ratio." https://www.google.com/search?source=hp ... 5vK8BqxT8U

Do you really think the customer pays nothing to be invested in resources, funds, real estate, etc.

It's appalling -- really.

JW-Retired
Posts: 6907
Joined: Sun Dec 16, 2007 12:25 pm

Re: Commission only fiduciary planner

Post by JW-Retired » Wed Oct 25, 2017 9:00 pm

dbr wrote:
Wed Oct 25, 2017 3:30 pm
Pdub wrote:
Tue Oct 24, 2017 9:01 pm
We did talk about their fee schedule. So they have 2 ways they generate income...1. They use a separate securities firm to handle all the stocks..the firm charges a percent and they do as well *I think* adding up to .5 to 2% a year. 2. They get paid by the funds they handle - in which case the client does not pay them. They do utilize an endowment model, so I am going to guess that the people I know who use them must not be invested in any stocks at all, thus they are not paying any fees. Instead they are likely invested in resources, funds, real estate etc...
So you still don't actually know what investing through these people costs the client do you?

You "think" they add .5 to 2% a year. Even the smallest of those numbers is outrageous and that is just the beginning of all the possible costs. Did you mean that for both firms or is the real number 1%-4% a year?

Do you even understand what "get paid by the funds they handle" means? Whose money finances that do you think? You could start with 12b-1 fee, for example, and the concept that "The 12b-1 fee is considered to be an operational expense and, as such, is included in a fund's expense ratio." https://www.google.com/search?source=hp ... 5vK8BqxT8U

Do you really think the customer pays nothing to be invested in resources, funds, real estate, etc.

It's appalling -- really.
+1
I seriously can't decide if the OP is just hopelessly gullible when listening to expensive suits, or if he is putting us on and is really one of them practicing his art here?

Appalling is a good description either way. :beer
JW
Retired at Last

User avatar
Taylor Larimore
Advisory Board
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Joined: Tue Feb 27, 2007 8:09 pm
Location: Miami FL

Re: Commission only fiduciary planner

Post by Taylor Larimore » Wed Oct 25, 2017 9:27 pm

I seriously can't decide if the OP is just hopelessly gullible when listening to expensive suits, or if he is putting us on and is really one of them practicing his art here?
JW:

There is little doubt in my mind that Pdub is a legitimate poster. Nothing Pdub said reflects favorably for the unnamed advisory firm.

Many of us have been through the same experience before coming here for advice that is free of conflict-of-interest.

We can all learn from this thread and it appears we have saved Pdub from making a bad decision. :sharebeer

Best wishes.
Taylor
"Simplicity is the master key to financial success." -- Jack Bogle

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EyeYield
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Location: Extremistan

Re: Commission only fiduciary planner

Post by EyeYield » Wed Oct 25, 2017 9:52 pm

Let's give the OP a chance to catch his breath without undo cynicism, he's new and has been through a lot.

I think the important take away from the OP is this:
Afterwards my wife and I went out to dinner and discussed our options and have decided that this is indeed aomething we can manage on our own. We will continue to research, plan and seek advice prior to transferring and investing, but we will do it ourselves and claim the responsibility.
As for the rest, well, as has been mentioned, he seems like a really nice guy. So it seems that he is trying to rationalize not having to let down his friends with the news that, in fact, the fees that are paid to the firm by the funds ARE coming out of the clients pocket.

You do realize that OP, don't you? After all the descriptions of front end loads, high expense ratios and 12b-1 fees, etc.?

If you still don't, then get a few of your friends' portfolio ticker symbols and we'll be glad to show you.

I know you will have to face your friends and don't want to rock the boat, but think how amazing it will be if, as you become more knowledgeable, you can save them over six figures in their investing lifetime!
"The stock market is a giant distraction from the business of investing." - Jack Bogle

Miriam2
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Re: Commission only fiduciary planner

Post by Miriam2 » Wed Oct 25, 2017 10:17 pm

Pdub wrote:
Sat Oct 21, 2017 11:26 am
I do not know how to break the quotes up into smaller chunks..so sorry for the long post on this one...
Pdub, since you are putting together your portfolio and will likely be visiting the Boglehead forum often :D here is how to break up someone else's quote into smaller chunks - so you can answer certain questions individually or in case you only want to quote a small portion of a larger post.

When you are composing your message in the white "post a reply" window and you have your quoted material in quotes brackets, put your cursor into the quoted portion and edit it the way you want, leaving only the sentence or clause you want to quote for your reply. Then put your cursor out of the quoted portion and continue with your reply.

Click the "preview" button at the bottom and it will show your finished product that will appear on the forum when you click "submit." The quoted part will be in beige and your direct reply will be in blue.

You can keep doing that - moving in and out of quoted portions in the "post a reply" window - to highlight or answer many different portions of a long quote.

The key is to keep the beginning of each quoted portion with the "beginning quote tag" = [ quote ] - and keep the end of each quoted portion with the "end quote tag" = [ /quote ]. Click on the { " } button above the "post a reply" window to see the beginning and end quote tags with text in between. In other words, keep your quoted material within the quote direction brackets and you can edit all you want inside the quote :happy

Further helpful instructions are in the upper left FAQs tab on each page.

And you can try out test posts here

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ruralavalon
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Re: Commission only fiduciary planner

Post by ruralavalon » Thu Oct 26, 2017 9:18 am

Taylor Larimore wrote:
Wed Oct 25, 2017 9:27 pm
I seriously can't decide if the OP is just hopelessly gullible when listening to expensive suits, or if he is putting us on and is really one of them practicing his art here?
JW:

There is little doubt in my mind that Pdub is a legitimate poster. Nothing Pdub said reflects favorably for the unnamed advisory firm.

Many of us have been through the same experience before coming here for advice that is free of conflict-of-interest.

We can all learn from this thread and it appears we have saved Pdub from making a bad decision. :sharebeer

Best wishes.
Taylor
I agree.

I noticed that Pdub and wife went to the meeting only out of curiosity (and to score some free cookies?), decided not to use the "advisor", and plans on following our suggestion to do it himself and avoid the "advisor" fees and conflicts of interest.

I see no reason to criticize Pdub.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started

likegarden
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Re: Commission only fiduciary planner

Post by likegarden » Thu Oct 26, 2017 9:56 am

In respect to his friends who are going with that adviser firm he could suggest to them to compare their annual net financial gains with that firm against a benchmark of total stock market index ETF and total bond market index ETF, using an age based asset allocation.

Pdub
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Re: Commission only fiduciary planner

Post by Pdub » Thu Oct 26, 2017 10:49 am

I'm not sure where the anger from some of the replies are coming from. Perhaps years of frustration on repeating the same message to a seemingly never ending crowd of lost and manipulated people. Perhaps seeing people make the same mistakes that others have made before. Perhaps a tonal issue that is hard to convey in writting over a forum. I have participated in forums in the past of my own profession (clearly not finances haha) and have seen all these things as we have tried to educate the public on issues that we specialize in. Regardless, I will take the positive and helpful advice and information here, and disregard anything that is not.


To clarify, not sure if it matters at all at this point..they did say the funds were broken into three classes:a,b,c and described the fees associated with each one. I believe these are the fees some of the posters above are referring to? They did say they try to steer most towards c class and hold long enough to not incur fees from it. Also I do understand that the alternative resources paying them a finders fee of sorts is like money out of the clients pocket, that is not beyond me.

Thank you again to this very responsive and informative community. I have a meeting with a vanguard assets specialist on Friday just to discuss some questions and was also told I can speak with a vanguard financial advisor for free just to chat, which I likely will do.

Pdub
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Re: Commission only fiduciary planner

Post by Pdub » Thu Oct 26, 2017 10:51 am

Miriam2 wrote:
Wed Oct 25, 2017 10:17 pm
Pdub wrote:
Sat Oct 21, 2017 11:26 am
I do not know how to break the quotes up into smaller chunks..so sorry for the long post on this one...
Pdub, since you are putting together your portfolio and will likely be visiting the Boglehead forum often ...
Thanks! Of course that makes sense!

PatrickA5
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Re: "The Three-Fund Portfolio"

Post by PatrickA5 » Thu Oct 26, 2017 11:47 am

Pdub wrote:
Wed Oct 25, 2017 10:56 am
Taylor Larimore wrote:
Tue Oct 24, 2017 10:02 pm
Pdub:

Consider The Three-Fund Portfolio and save the cost of advisors.

Best wishes
Taylor
Thank you for the link Taylor. I have been steadily working my way through it.
Taylor's suggestion is a great one. And, an even easier, but slightly more expensive, route is to just put all of your pre-tax retirement money in one of the Vanguard Life Strategy funds - which is Taylor's 3 fund portfolio and adding some International bonds to the mix. My wife and I have 100% of our pre-tax money in one fund (VSMGX - Vanguard Life Strategy - Moderate). Check out the different Life Strategy funds. Very simple. Very diversified. We may make some changes when we hit the withdrawal stage in a few years, but we're happy with this while we're accumulating. You can do something similar at Fidelity and Schwab.

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ruralavalon
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Re: Commission only fiduciary planner

Post by ruralavalon » Thu Oct 26, 2017 12:03 pm

Pdub wrote:
Thu Oct 26, 2017 10:49 am
I'm not sure where the anger from some of the replies are coming from. Perhaps years of frustration on repeating the same message to a seemingly never ending crowd of lost and manipulated people. Perhaps seeing people make the same mistakes that others have made before. . . . . .
I think you are right. It's (1) not wanting to see others make serious mistakes which we know how to avoid, and in addition (2) the history of some of us who were seriously harmed by less scrupulous "advisors" and still bear the scars.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started

Jack FFR1846
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Re: Commission only fiduciary planner

Post by Jack FFR1846 » Thu Oct 26, 2017 12:18 pm

Pdub wrote:
Sat Oct 21, 2017 7:55 pm

Thank you, what a great resource. After putting in their information and looking at their fees....they state they charge 2k for setting up the plan and then charge 1.5-2% up to 1 million invested, 1-1.5% up to 5 million and .75-1% after that. This was a surprise as three seperate people have told me that they never pay anything...at all. One of those people just signed up this week. The disclosure is from February 2017. Is it possible they are just sneaking those fees in from the top and no one is noticing? I dont understand it, as all three of these people are very intelligent and knowledgeable with business.
Let's do a real world comparison. Assume $2M to invest, since that's what I have invested.

Your broker, $2k setup, let's say 1% AUM, which is $20k. So for the first year, $22k and after that, $20k per year.

My total cost (actual total cost) on just over $2M: $800.

So while we're not talking about paying for a new BMW for the salesman, we ARE talking about a new Volkswagen GTi right now at my local dealer..........every year!
Bogle: Smart Beta is stupid

pkcrafter
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Re: Commission only fiduciary planner

Post by pkcrafter » Thu Oct 26, 2017 12:31 pm

Pdub, you have made a major decision to self-manage and it won't take long to realize it is not difficult. You can hang around and continue to learn, with emphasis on investor behavior.

One point for clarification and understanding. Shares A, B, and C describe loads (commissions).

A shares apply a load (usually 5.25%) up front and it is extracted even before your money is invested, and the way they extract that money never shows in the fund you bought.

B shares are a back-end load, meaning a fee is charged when you sell. The commission on B shares drops some each year until it is zero, usually after about 5 years.

C shares are embedded in the expense ratio and show up as a 12b-1 fee. The usual charge is 1% (0.75 is commission) and it never stops. Since the commish is embedded in the 12b-1 fee, it is reflected in the expense ratio, which make the ER very high.

Your comment:
They did say they try to steer most towards c class and hold long enough to not incur fees from it.
You probably misunderstood this because it describes B shares, not C. However, B shares are disappearing, so if they actually meant C shares, they don't go away, so their statement about holding until you don't incur the fee is wrong. I'll give them the benefit of the doubt, they probably don't understand how it works. :mrgreen: OK, it can be removed, as soon as the fund closes and stops taking new money. :confused

Final point: advisory fees are extracted from fund holdings without a word to the investor. If they had to be paid by check every quarter, investors would look much more carefully at costs.

250k in funds with an advisory fee of 1.3% = $3250/year or 812.50/quarter. Investors would get very tired of paying out that money every 3 months. And after doing this for 25 years, the investor has shelled out $81,250, and that's without the investments gaining a penny! At 1MM in assets, it's $13,000/year :shock:

Paul
Last edited by pkcrafter on Thu Oct 26, 2017 1:27 pm, edited 1 time in total.
When times are good, investors tend to forget about risk and focus on opportunity. When times are bad, investors tend to forget about opportunity and focus on risk.

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goingup
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Re: Commission only fiduciary planner

Post by goingup » Thu Oct 26, 2017 1:00 pm

This thread has me confused. Are the advisors using an AUM model or using A,B,C loaded shares? Or both?

Bogleheads are laser-focused on costs, so this imprecision in explaining exactly how these advisors make money is kind of frustrating. No matter, I guess, as the OP has thankfully decided to self-manage his portfolio. :beer

NotWhoYouThink
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Re: Commission only fiduciary planner

Post by NotWhoYouThink » Thu Oct 26, 2017 1:07 pm

goingup wrote:
Thu Oct 26, 2017 1:00 pm
This thread has me confused. Are the advisors using an AUM model or using A,B,C loaded shares? Or both?

Bogleheads are laser-focused on costs, so this imprecision in explaining exactly how these advisors make money is kind of frustrating. No matter, I guess, as the OP has thankfully decided to self-manage his portfolio. :beer
Keeping investors confused about costs is how these guys make their money. That and the welcoming office, warm cookies, and reassuring words, spoken in sentences that could not be diagrammed and including claims too vague to enforce. But mostly the confusion and cookies.

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