Your Investment Adviser’s Dirty Secret

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Rick Ferri
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Your Investment Adviser’s Dirty Secret

Post by Rick Ferri »

Sometimes I write stuff I shouldn’t because it makes a few people upset. This might be one of those articles:

Your Investment Adviser’s Dirty Secret

Rick Ferri
The Education of an Index Investor: born in darkness, finds indexing enlightenment, overcomplicates everything, embraces simplicity.
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Re: Your Investment Adviser’s Dirty Secret

Post by lostdog »

Excellent article.

Thank you.
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Re: Your Investment Adviser’s Dirty Secret

Post by watchnerd »

Rick Ferri wrote: Sun Apr 05, 2020 10:04 am Sometimes I write stuff I shouldn’t because it makes a few people upset. This might be one of those articles:

Your Investment Adviser’s Dirty Secret

Rick Ferri
Surely some may use this as a pricing tier:

Basic: total market indexes - low fee

Expert: throw in some factor funds or tilts - med fee

Elite: all of the above, plus alternative asset classes & fancier reports - high fee
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Re: Your Investment Adviser’s Dirty Secret

Post by Neil H »

Hey, Rick. Sometimes the truth hurts. Doesn't mean you should stop telling it.
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Re: Your Investment Adviser’s Dirty Secret

Post by The Broz »

Neil H wrote: Sun Apr 05, 2020 10:32 am Hey, Rick. Sometimes the truth hurts. Doesn't mean you should stop telling it.
Amen - the truth needs to be told more these days.
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Re: Your Investment Adviser’s Dirty Secret

Post by retiredjg »

Thanks Rick. Short and to the point.
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Re: Your Investment Adviser’s Dirty Secret

Post by JiggyWillis »

Have you not heard? The current crisis is the death of passive investing! You now own way more losers than winners in your haystack. You need to do your homework and pick the winners with good balance sheets that will survive and get rid of all those other losers that are dragging your returns down. That is the only path forward for successful investing. The guys and gals on television all agree so it must be true.
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Re: Your Investment Adviser’s Dirty Secret

Post by Sandtrap »

Good article.
Would something like this be printed in the Wall Street Journal?

Thanks for posting.

There's something about the phrase, ". . . dirty secrets". . . that implies a lot of secret dirty things. . . . . :shock:
j :happy
Last edited by Sandtrap on Sun Apr 05, 2020 12:22 pm, edited 1 time in total.
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Re: Your Investment Adviser’s Dirty Secret

Post by Clever_Username »

Great article. Keep upsetting whoever you're upsetting!
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Re: Your Investment Adviser’s Dirty Secret

Post by Vanguard Fan 1367 »

Great article! Thanks for sharing. I know several people who don't take your advice and they could use the money. I find that frustrating.
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Re: Your Investment Adviser’s Dirty Secret

Post by lgs88 »

Rick,

This article is, no doubt, correct.

However, I maintain that an AUM investment adviser can earn his/her fees by coaching clients to avoid behavioral errors in times of market turbulence. They’d be more honest to market themselves as financial-markets-therapists than stock-pickers, but c’est la vie. If I ever get into the business, that’ll be my pitch.

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Re: Your Investment Adviser’s Dirty Secret

Post by nedsaid »

Rick Ferri wrote: Sun Apr 05, 2020 10:04 am Sometimes I write stuff I shouldn’t because it makes a few people upset. This might be one of those articles:

Your Investment Adviser’s Dirty Secret

Rick Ferri
The truth is, an advisor can educate clients and put them into diversified portfolios. There is no secret sauce, believe me I have tried to find it. The best advisors teach the basics. I remember watching videos of the famed football coach Vince Lombardi. A couple of conclusions that I came to about him: first he was an excellent technician and second he really believed in the fundamentals. He was big on such things as stance, footwork, balance, and proper technique. There is a clip of him describing the famed Green Bay sweep play with the pulling guards. You could tell that the guy knew what he was talking about. He knew football in great depth but he always started with the fundamentals, the basics. Every advisor should watch videos of Lombardi in action as he coaches, it is very informative.
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Re: Your Investment Adviser’s Dirty Secret

Post by Stinky »

lgs88 wrote: Sun Apr 05, 2020 11:52 am However, I maintain that an AUM investment adviser can earn his/her fees by coaching clients to avoid behavioral errors in times of market turbulence. They’d be more honest to market themselves as financial-markets-therapists than stock-pickers, but c’est la vie. If I ever get into the business, that’ll be my pitch.
If you went into business using this business model, you could justify a fee of 1% per year on a $100k portfolio. But not on a $1 million portfolio.

For larger portfolios, you’d need to move from AUM to a flat fee model.
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Re: Your Investment Adviser’s Dirty Secret

Post by 9-5 Suited »

There is no other professional advice other than financial advice where we would ever remotely consider payment for services in the form of a % of our personal assets. If your doctor, lawyer, accountant, repair man, or any other advice-giving professional said “yeah I’ll help you for 1% of everything you own every year, forever” you would think that person needs to be committed to an institution.

Yet because financial advisors feel somehow linked to our portfolio because of the nature of the work, this type of pay arrangement goes on without much question. I find that completely absurd.

It’s not to say that as assets grow there aren’t unique client needs that require more expertise and justify a higher cost. But why not just agree on an annual or hourly fee based on specific services provided?
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Re: Your Investment Adviser’s Dirty Secret

Post by bfeenix44 »

Rick Ferri wrote: Sun Apr 05, 2020 10:04 am Sometimes I write stuff I shouldn’t because it makes a few people upset. This might be one of those articles:

Your Investment Adviser’s Dirty Secret

Rick Ferri
It sure didn't upset me, Rick. :P
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Re: Your Investment Adviser’s Dirty Secret

Post by Sandtrap »

nedsaid wrote: Sun Apr 05, 2020 11:58 am
Rick Ferri wrote: Sun Apr 05, 2020 10:04 am Sometimes I write stuff I shouldn’t because it makes a few people upset. This might be one of those articles:

Your Investment Adviser’s Dirty Secret

Rick Ferri
The truth is, an advisor can educate clients and put them into diversified portfolios. There is no secret sauce, believe me I have tried to find it. The best advisors teach the basics. I remember watching videos of the famed football coach Vince Lombardi. A couple of conclusions that I came to about him: first he was an excellent technician and second he really believed in the fundamentals. He was big on such things as stance, footwork, balance, and proper technique. There is a clip of him describing the famed Green Bay sweep play with the pulling guards. You could tell that the guy knew what he was talking about. He knew football in great depth but he always started with the fundamentals, the basics. Every advisor should watch videos of Lombardi in action as he coaches, it is very informative.
+1
I remember those videos. Vince Lombardi. Legendary!

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Re: Your Investment Adviser’s Dirty Secret

Post by BullMoose »

Solid advice. There will always be some investors that for a variety of reasons, be it naivety, social conditioning or even ego, think that they need a professional to manage their investments, especially as the AUM grows. The hope should be that this type of article guides them to hopefully making better choices in an adviser or at least holding them more accountable.
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Re: Your Investment Adviser’s Dirty Secret

Post by BullMoose »

Sandtrap wrote: Sun Apr 05, 2020 12:23 pm
nedsaid wrote: Sun Apr 05, 2020 11:58 am
Rick Ferri wrote: Sun Apr 05, 2020 10:04 am Sometimes I write stuff I shouldn’t because it makes a few people upset. This might be one of those articles:

Your Investment Adviser’s Dirty Secret

Rick Ferri
The truth is, an advisor can educate clients and put them into diversified portfolios. There is no secret sauce, believe me I have tried to find it. The best advisors teach the basics. I remember watching videos of the famed football coach Vince Lombardi. A couple of conclusions that I came to about him: first he was an excellent technician and second he really believed in the fundamentals. He was big on such things as stance, footwork, balance, and proper technique. There is a clip of him describing the famed Green Bay sweep play with the pulling guards. You could tell that the guy knew what he was talking about. He knew football in great depth but he always started with the fundamentals, the basics. Every advisor should watch videos of Lombardi in action as he coaches, it is very informative.
+1
I remember those videos. Vince Lombardi. Legendary!

j :happy
There is something almost magical about watching someone who is passionate in their craft discuss it with such passion. I can hear the faded voices of my old football coaches yelling, "if you can't learn the fundamentals, why would I ever trust you with something more difficult!"
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Re: Your Investment Adviser’s Dirty Secret

Post by lgs88 »

Stinky wrote: Sun Apr 05, 2020 12:11 pm
lgs88 wrote: Sun Apr 05, 2020 11:52 am However, I maintain that an AUM investment adviser can earn his/her fees by coaching clients to avoid behavioral errors in times of market turbulence. They’d be more honest to market themselves as financial-markets-therapists than stock-pickers, but c’est la vie. If I ever get into the business, that’ll be my pitch.
If you went into business using this business model, you could justify a fee of 1% per year on a $100k portfolio. But not on a $1 million portfolio.

For larger portfolios, you’d need to move from AUM to a flat fee model.
A lot of AUM advisors do use a sliding scale -- e.g. 1% on the first $500,000, 0.75% on the next $1,000,000, etc. But yes, a flat fee model would make more sense for many high-net-worth investors. Isn't that what Mr. Ferri does?

That said, behavioral errors can cost investors a heck of a lot more than 1%/year. During this bear market, I've been writing down my predictions about what the market will do in the next day, week, etc. I do not act on these predictions, but I do write them down.

Had I acted upon them? Man, I'd have lost a pile of money! Some were right, but others were wrong -- and wrong in a big way, amidst the volatility we're seeing. Had I been less disciplined and more inclined to act upon my gut, a 1% AUM advisor could've more than earned his fee by keeping my finger off the trade button.

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Re: Your Investment Adviser’s Dirty Secret

Post by Triple digit golfer »

9-5 Suited wrote: Sun Apr 05, 2020 12:14 pm There is no other professional advice other than financial advice where we would ever remotely consider payment for services in the form of a % of our personal assets. If your doctor, lawyer, accountant, repair man, or any other advice-giving professional said “yeah I’ll help you for 1% of everything you own every year, forever” you would think that person needs to be committed to an institution.

Yet because financial advisors feel somehow linked to our portfolio because of the nature of the work, this type of pay arrangement goes on without much question. I find that completely absurd.

It’s not to say that as assets grow there aren’t unique client needs that require more expertise and justify a higher cost. But why not just agree on an annual or hourly fee based on specific services provided?
That is an excellent point. I never even thought of it that way. I shouldn't have to pay an advisor what is essentially a commission. Besides, in the sales world a commission is paid for performance, not on business brought in years ago or on the base business. If I go to an advisor with $1 million portfolio, he should get a portion of my returns, not a portion of my million.

Anyway, I would never pay a percentage fee anyway. Hourly fee only.
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Re: Your Investment Adviser’s Dirty Secret

Post by 9-5 Suited »

Triple digit golfer wrote: Sun Apr 05, 2020 12:49 pm
9-5 Suited wrote: Sun Apr 05, 2020 12:14 pm There is no other professional advice other than financial advice where we would ever remotely consider payment for services in the form of a % of our personal assets. If your doctor, lawyer, accountant, repair man, or any other advice-giving professional said “yeah I’ll help you for 1% of everything you own every year, forever” you would think that person needs to be committed to an institution.

Yet because financial advisors feel somehow linked to our portfolio because of the nature of the work, this type of pay arrangement goes on without much question. I find that completely absurd.

It’s not to say that as assets grow there aren’t unique client needs that require more expertise and justify a higher cost. But why not just agree on an annual or hourly fee based on specific services provided?
That is an excellent point. I never even thought of it that way. I shouldn't have to pay an advisor what is essentially a commission. Besides, in the sales world a commission is paid for performance, not on business brought in years ago or on the base business. If I go to an advisor with $1 million portfolio, he should get a portion of my returns, not a portion of my million.

Anyway, I would never pay a percentage fee anyway. Hourly fee only.
Exactly right. It’s totally understandable you pay a real estate agent a 3% commission on a house sale. It would be insane to pay him/her a % of the home value every year in perpetuity.

I suppose the difference is a financial advisor has a longer term relationship, but like you said only the profits should be subject to commission, not the base capital.
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Re: Your Investment Adviser’s Dirty Secret

Post by retired@50 »

Rick Ferri wrote: Sun Apr 05, 2020 10:04 am Sometimes I write stuff I shouldn’t because it makes a few people upset. This might be one of those articles:

Your Investment Adviser’s Dirty Secret

Rick Ferri
Thanks Rick. The complexity angle reminds me of this article.

https://www.researchaffiliates.com/en_u ... exity.html

Regards,
This is one person's opinion. Nothing more.
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Re: Your Investment Adviser’s Dirty Secret

Post by RonSwanson »

9-5 Suited wrote: Sun Apr 05, 2020 12:14 pm It’s not to say that as assets grow there aren’t unique client needs that require more expertise and justify a higher cost. But why not just agree on an annual or hourly fee based on specific services provided?
I suppose it is an attempt to try and align interests. The more they make for you, the more they receive themselves?

I've thought about this for awhile and I couldn't come up with a paid management business model that did not include some sort of potential conflict of interest. The best I could come up with was having a group of smart people sharing ideas in order to manage their own portfolios. Turns out that's this website more or less.
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Re: Your Investment Adviser’s Dirty Secret

Post by 9-5 Suited »

RonSwanson wrote: Sun Apr 05, 2020 1:16 pm
9-5 Suited wrote: Sun Apr 05, 2020 12:14 pm It’s not to say that as assets grow there aren’t unique client needs that require more expertise and justify a higher cost. But why not just agree on an annual or hourly fee based on specific services provided?
I suppose it is an attempt to try and align interests. The more they make for you, the more they receive themselves?

I've thought about this for awhile and I couldn't come up with a paid management business model that did not include some sort of potential conflict of interest. The best I could come up with was having a group of smart people sharing ideas in order to manage their own portfolios. Turns out that's this website more or less.
That’s probably the most fair/optimistic rationale. How about this for aligning interests: 25% commission on all alpha generated above and beyond an appropriate risk-adjusted benchmark passive index fund mix. Of course no advisor would agree to such an agreement because they’d make no money, but the interest alignment would be there! Perhaps a more workable structure is a base annual fee in fixed dollars plus the outlined commission above.
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Re: Your Investment Adviser’s Dirty Secret

Post by bertilak »

9-5 Suited wrote: Sun Apr 05, 2020 12:14 pm “I’ll help you for 1% of everything you own every year, forever”
Gotta remember that one!
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Re: Your Investment Adviser’s Dirty Secret

Post by Gill »

The article might have had a greater impact if it didn't have a grammatical error in the third sentence. :oops:
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Last edited by Gill on Sun Apr 05, 2020 1:53 pm, edited 1 time in total.
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Re: Your Investment Adviser’s Dirty Secret

Post by JohnDindex »

Rick Ferri wrote: Sun Apr 05, 2020 10:04 am Sometimes I write stuff I shouldn’t because it makes a few people upset. This might be one of those articles:

Your Investment Adviser’s Dirty Secret

Rick Ferri
Great article, I like that you mentioned cds, a real advantage for the individual investor. No mention of tips, do you still like 20% in tips? Ishares TIP or vanguard tips mutual fund ?
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Re: Your Investment Adviser’s Dirty Secret

Post by Rus In Urbe »

*

Great Piece! Thanks for posting this.

I'll send it to a few family members who still insist on "having a guy." (Sheesh).
A lot of people are intimidated by money and economics.

Making investing complex provides cover for those ridiculous high fees.

Every day, I'm grateful to Jack Bogle!

Keep telling it like it is, Rick Ferri!


Cheers. Rus. :beer
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Re: Your Investment Adviser’s Dirty Secret

Post by abuss368 »

JiggyWillis wrote: Sun Apr 05, 2020 11:32 am Have you not heard? The current crisis is the death of passive investing!
I am not surprised how many times I heard that on CNBC last week.
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Re: Your Investment Adviser’s Dirty Secret

Post by abuss368 »

9-5 Suited wrote: Sun Apr 05, 2020 12:14 pm There is no other professional advice other than financial advice where we would ever remotely consider payment for services in the form of a % of our personal assets. If your doctor, lawyer, accountant, repair man, or any other advice-giving professional said “yeah I’ll help you for 1% of everything you own every year, forever” you would think that person needs to be committed to an institution.

Yet because financial advisors feel somehow linked to our portfolio because of the nature of the work, this type of pay arrangement goes on without much question. I find that completely absurd.

It’s not to say that as assets grow there aren’t unique client needs that require more expertise and justify a higher cost. But why not just agree on an annual or hourly fee based on specific services provided?
Very well said. Could anyone really imagine another service provider requiring a % of assets?

How the financial industry has gotten away with this for such a long period of time is incredible.
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Re: Your Investment Adviser’s Dirty Secret

Post by Nate79 »

I agree that fixed fee or per hour fee for an advisor is much better than AUM. I have said multiple times shame on Vanguard for ripping off clients with their AUM model PAS system.
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Re: Your Investment Adviser’s Dirty Secret

Post by bertilak »

retired@50 wrote: Sun Apr 05, 2020 1:15 pm The complexity angle reminds me of this article.

https://www.researchaffiliates.com/en_u ... exity.html
The irony is, the author (not Rick Ferri!) resorts to a complex theory ("Daniel Kahneman’s construct of System 1 and System 2 thinking") to explain why complexity does not work!
Last edited by bertilak on Sun Apr 05, 2020 2:24 pm, edited 2 times in total.
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Re: Your Investment Adviser’s Dirty Secret

Post by grettman »

I wonder if ric Eddleman is one of these advisors that Ferri is speaking of.
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Re: Your Investment Adviser’s Dirty Secret

Post by AK62 »

Four years ago, as I was approaching my +5 years to retirement, I hired an %AUM fiduciary advisory firm to help us with our nearly $2M portfolio as we began our transition into retirement. I was very uneducated on investing, and during the 30 years that we've been saving/investing in the 401k, we had never hired a fiduciary advisor to manage our portfolios, but I found his firm through a friend referral and I hired the firm to help us. They managed our stuff for close to three years and during that time, I started educating myself on investing and markets and, of course, the expenses I was paying each month. I knew we were paying way too much each month or this firm to manage our money, so I started shopping around and I interviewed a few flat-fee fiduciary advisory firms, and last year, I found one that does everything the %AUM firm offered but for 75% less the cost. And guess what? My new advisor is more responsive and has worked harder for me than the AUM advisor ever did. We haven't retired yet, but planning to in the next three years. I know that I could probably do this portfolio thing on my own, or hire a great guy like Rick Ferri to help guide our portfolio on an hourly basis. Someday, I might eventually go that route. But, right now, I am happy with the services I am getting from our flat-fee fiduciary adivsor that charges us a flat rate each quarter.
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Re: Your Investment Adviser’s Dirty Secret

Post by Stinky »

Gill wrote: Sun Apr 05, 2020 1:47 pm The article might have had a greater impact if it didn't have a grammatical error in the third sentence. :oops:
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I’m sure that the grammar was perfect when Rick submitted the article. :D
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Re: Your Investment Adviser’s Dirty Secret

Post by amp »

Rick, this is a really nice article, and it has the potential to be one of those pieces which is quoted and shared across the web. Although somewhat shorter, it reminds me a bit of the famous San Francisco magazine article from 2006 which introduced many people to the idea of indexing and forgoing an advisor.

Unfortunately though I find the article somewhat hard to read. There's an elderly relative to whom I'd like to send it, but I don't think they'd be able to navigate the magazine-style layout or download it as a PDF. Is there a version available somewhere with a more web-friendly layout?
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Re: Your Investment Adviser’s Dirty Secret

Post by airshow »

thanks Rick. i'll be forwarding this along....
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Re: Your Investment Adviser’s Dirty Secret

Post by Rick Ferri »

Gill wrote: Sun Apr 05, 2020 1:47 pm The article might have had a greater impact if it didn't have a grammatical error in the third sentence. :oops:
Gill
Noted. “your” should be “you’re”

An edit was requested.

Rick
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Re: Your Investment Adviser’s Dirty Secret

Post by InvestInPasta »

Rick Ferri wrote: Sun Apr 05, 2020 3:17 pm
Gill wrote: Sun Apr 05, 2020 1:47 pm The article might have had a greater impact if it didn't have a grammatical error in the third sentence. :oops:
Gill
Noted. “your” should be “you’re”

An edit was requested.

Rick
IMO it looks more like a typo rather than a grammatical error.
Nice article, anyway I have realized that some people prefer to pay the advisor because they don't even want to learn how to buy an ETF on their own, even if you try to explain them that is so simple.

FYI I've just looked at your blog, the feed page is broken, it doesn't show any articles. I would like to add your blog to my feed reader. :beer
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Re: Your Investment Adviser’s Dirty Secret

Post by dachshunddad »

Great article.

I can't understand how people pay these enormous fees. I think it goes unnoticed because if you get 9%/year instead of 10%/year return it isn't as impactful as writing a check for the amount.

I recently called an investment firm whose podcast I listen to. I was considering a "second look" if it was reasonable. It wasn't. They only offered a fee for AUM. This fee would have been close to my mortgage each year!! ( well before the crash!). So I asked if this included tax planning/prep...no. Surely estate planning with an attorney...nope. No thanks, I'd rather pay an accountant and attorney a fraction and keep the money for other things like my mortgage.
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Re: Your Investment Adviser’s Dirty Secret

Post by nedsaid »

There is a siren song for complexity, what happens is that you learn more and you want to apply that newfound knowledge. You also learn about new asset classes that have a compelling story and you want to invest. There is also the desire to be up to date and cutting edge. So you can get from 3 funds to about 10 with the blink of an eye. Another factor is trying to reduce volatility and perhaps boost returns a bit with non-correlating asset classes with equity like returns. Of course what you find is that non-correlating assets don't always non-correlate. So it isn't that people are stupid, it is that they are attempting to apply what they have learned.

As to the point about advisors and their fees, there are certain realities to the business. We want the customized portfolios and all the attention and still want to pay rock bottom fees. For one thing, it takes a lot of someone's preparation time for a meeting with a client. Second, there has to be certain economies of scale to make this work, for example Vanguard gets criticism for its "cookie cutter" portfolios. The reality is that an independent advisor isn't going to be able to do this for less than 75 basis points a year or if you charge by the hour, you are looking at $150 per hour and perhaps as much as $400 an hour. The most efficient way for the smaller investor to pay for such services is by the hour. The Assets Under Management fees, even at the 0.30% charged by Vanguard, adds up pretty quickly. If you want attention, you are going to have to pay up but far better to pay by the hour.

Rick has been in the business for a long time and I consider him to be one of the good guys. Not as familiar with Alan Roth but he is pretty highly regarded around here as well. I recall that Dr. Bill Bernstein has made comments to the effect that you should treat financial professionals as criminals and yet he is in the Advisory business himself. What I will say is that there are people in the business that are better than others and I would not hesitate to recommend Ferri, Roth, or Bernstein to others. But nothing is perfect. Even Vanguard has incentives to grow its business. No one is 100% free of conflicts of interest.

As for myself, I have invested with imperfect advisors with imperfect financial products and yet somehow I have managed to survive all of that. If you have an advisor, take the opportunity to learn as much as you can, at some point you might want to take over and run the portfolio for yourself. I know that I learned a lot from the people that I worked with over the years.
A fool and his money are good for business.
Lookingforanswers
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Re: Your Investment Adviser’s Dirty Secret

Post by Lookingforanswers »

Rick Ferri wrote: Sun Apr 05, 2020 3:17 pm
Gill wrote: Sun Apr 05, 2020 1:47 pm The article might have had a greater impact if it didn't have a grammatical error in the third sentence. :oops:
Gill
Noted. “your” should be “you’re”

An edit was requested.

Rick
Also, as long as you are copy editing:

Should be "twenty different" instead of "twenty-different" (it's correct 2 sentences later)
Should be "whiz-bang" instead of "wiz bang"
Uses "1%" in the first paragraph, "1 percent" 3 times on the second page
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Random Musings
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Re: Your Investment Adviser’s Dirty Secret

Post by Random Musings »

Rick, I was torn between your financial article and Heidi Klum's as the best in the magazine.

Plus, she makes less people upset.

Nothing personal :wink:

RM
I figure the odds be fifty-fifty I just might have something to say. FZ
Wings5
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Re: Your Investment Adviser’s Dirty Secret

Post by Wings5 »

Glad to read that, Rick. Very well-said and to the point. Hopefully more than a few folks find it up there in Collin County!
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Third Son
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Re: Your Investment Adviser’s Dirty Secret

Post by Third Son »

nedsaid wrote: Sun Apr 05, 2020 11:58 am
Rick Ferri wrote: Sun Apr 05, 2020 10:04 am Sometimes I write stuff I shouldn’t because it makes a few people upset. This might be one of those articles:

Your Investment Adviser’s Dirty Secret

Rick Ferri
The truth is, an advisor can educate clients and put them into diversified portfolios. There is no secret sauce, believe me I have tried to find it. The best advisors teach the basics. I remember watching videos of the famed football coach Vince Lombardi. A couple of conclusions that I came to about him: first he was an excellent technician and second he really believed in the fundamentals. He was big on such things as stance, footwork, balance, and proper technique. There is a clip of him describing the famed Green Bay sweep play with the pulling guards. You could tell that the guy knew what he was talking about. He knew football in great depth but he always started with the fundamentals, the basics. Every advisor should watch videos of Lombardi in action as he coaches, it is very informative.
Amen brother.
"A part of all you earn is yours to keep" | | -The Richest Man in Babylon
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Re: Your Investment Adviser’s Dirty Secret

Post by Tomhost »

I think the financial industry has perpetrated the idea that investments are to complicated for the average person to manage on their own. (me included) By marketing complex products they can demonstrate how difficult it is to design a portfolio on your own. Once I began to educate myself I found I had been sold products with high expenses hidden in impossible to read performance reports. Every few years my FP would show up with some new glossy folders filled with pie charts and pictures of couples on vacation.
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Harry Livermore
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Re: Your Investment Adviser’s Dirty Secret

Post by Harry Livermore »

Rick,
Thanks for an excellent little article. It's perfect to pass along to colleagues and family member who think that "their guy" has some special sauce.
I actually opened it on a Mac in Preview, and from there can save out the 2 relevant pages as a new PDF; those of you looking to pass this nugget on to others may find this an easy way to send just the article and not the whole magazine. I don't know what the equivalent trick would be in Windows.
I sent a PM regarding some other spelling/ grammar flubs, as I'm not sure it adds much to the ongoing thread. Though I am surprised there is apparently no editor that reviews articles for such things?
Cheers
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Rick Ferri
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Re: Your Investment Adviser’s Dirty Secret

Post by Rick Ferri »

Here is the republished edited article. Thanks all!

Your Investment Adviser's Dirty Secret


Rick Ferri
The Education of an Index Investor: born in darkness, finds indexing enlightenment, overcomplicates everything, embraces simplicity.
Elysium
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Re: Your Investment Adviser’s Dirty Secret

Post by Elysium »

Rick,

I have two questions for you:
1. Are you a fee only planner now? or do you manage portfolios if someone wanted it long term?
2. Do you still have all that hair, or is that picture old? ( :wink: )
Oregano
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Re: Your Investment Adviser’s Dirty Secret

Post by Oregano »

Hi Rick,
I know a guy who wanted to go to cash the day the market bottomed last month. His advisor talked him out of it. Some people need hand holding and are willing to pay for it.

P.S. Yeah, I know most advisor suck. But not all of them.
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