Commission only fiduciary planner

Have a question about your personal investments? No matter how simple or complex, you can ask it here.
Pdub
Posts: 65
Joined: Sat Oct 21, 2017 6:10 am

Re: Commission only fiduciary planner

Post by Pdub » Sun Oct 22, 2017 8:01 am

samsmith wrote:
Sat Oct 21, 2017 9:57 pm
Too many people that have recommended them know that I will be seeing them, so its too late to back out. However they do their pre client program in 3 different meetings...each building on the others, so no paper work is signed until the second or third meeting. I am curious as to what they will say however and can guarantee no signatures from me. I will report back here either way and let you guys know.
I am sorry, but I just think this is just plain wrong. From reading these threads, I would argue that this is your last chance to back out. You already feel beholden to these guys and are already setup for the three meeting plan. If you cant back out now - how are you going to back out after they spend time with you. Once you see them even once - the people that recommended them will know that you took their time and did not sign up? Each visit will make it harder for you to withdraw.

I always find it easiest to withdraw on these types of things earlier rather than later. Better to never start. I would suggest you withdraw politely now - stressing you realized that you would be wasting their time at this point, because you have changed your mind and are not ready to make a move (or some such nonsense - I used to just say my dad was a financial planner. Maybe you just realized that your best friend from college is a FA).

I would bet if you go to the first meeting, you will be talked into at least "giving them a shot with some of your money."
If you cant force yourself to back out now, I don't see you ever backing out. As others have suggested, say no politely. Its best for all. Don't waste their time. :happy My 2 cents. Good luck.
Thank you,

The meeting is on Tuesday, and after reading the fee schedule, especially the part where it says it is 2K to come u p with a plan, I will call tomorrow (Monday) and make sure that the meeting is truly no cost first. We will still go as my wife has reservations, she feels it may be worth paying fees if that means we do not need to ever stress about certain things...such as moving all our funds into the vanguard accounts. I feel strongly at this point about not using them. I do want to confront them (politely) re: the fee schedule however. That bit of news was very disturbing, as one of the persons that went to them is a family mamber of mine, and it seems like she was taken in by lies.

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

Re: Commission only fiduciary planner

Post by Pdub » Sun Oct 22, 2017 8:08 am

EyeYield wrote:
Sat Oct 21, 2017 10:36 pm
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.
I've heard the same from family members and friends. All highly intelligent.
They always said the same things, "our broker is doing very well for us" or "we love our broker, he took us out to dinner last month". Then they are shown how their investments compared to benchmarks. In some cases, even when they are shown that they could have done much better, they stay out of loyalty, because the personal bond has grown from the very first meeting and they would rather lose money than hurt the feelings of their "friend".

They never read the small print and never had a fee on their statements.
What was going on was that certain pieces of funds were being sold off during the year to pay the AUM (AssetsUnderManagement) fee. In a bull market, when not keeping count of the exact number of shares, this can go undetected. After all, why would you want to keep track of your investments when you have a team doing it for you?
This is further confused by selling a dozen or more funds to the client, which makes bookkeeping almost impossible.

This list of tricks used by these con men are too numerous to list - THEY ARE PROS and this is how they get paid. They are more than ready to answer any objection you come up with - you will be out matched, they are fined tuned machines who spend months in word labs to execute cleverly structured sentences. Three pre client meetings is pure jive and just part of the act.

Take a year if you need to to educate yourself. Financial literacy is your best investment and will benefit your long term wealth more than anything else. Then maybe you can educate your friends.

Your choice, good luck. :sharebeer
Thanks,

This is very upsetting. Sorry to hear about your family and friends. I expect a majority of the people that sign up with them believe they are not paying any fees directly, but the FA are being paid by the securities. Whenever anyone talks about these guys, that is the big selling point. I am interested to hear their response.

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

Re: The Three-Fund Portfolio

Post by Pdub » Sun Oct 22, 2017 8:14 am

Taylor Larimore wrote:
Sat Oct 21, 2017 10:37 pm
Pdub:

You might be interested to learn that the "Second Grader" Three-Fund Portfolio currently has a higher 1yr; 3yr; 5yr and 10yr return than the Yale Portfolio Model:

www.marketwatch.com/lazyportfolio

I would never buy commissioned-based mutual funds. The "advisor" has too much temptation to sell you the highest commission fund which is often the worst. In fact, why pay a commission at all when you can buy commission-free, no-load, mutual funds yourself.
In mutual funds you get what you don't pay for.--Jack Bogle
Best wishes
Taylor
Thank you, the data comparison on the returns is very helpful. I am thinking a two fund or three fund portfolio will likely be what I prefer. We will see how my wife feels after the meeting.

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

Re: Commission only fiduciary planner

Post by Pdub » Sun Oct 22, 2017 8:15 am

alexkass wrote:
Sun Oct 22, 2017 12:06 am
It has been interesting but a bit stressful to me to read this thread. Even after the truth of the situation has largely unfolded,I'm still worried that the poster is going to be conned into signing up. In particular, I'm worried that you're gong to be taken in by the use of social pressure; they're going to subtly make you feel that you are insulting the friends who recommended them if you conclude that they are selling (very expensive) snake oil.

The suspense is very palpable.

Thanks,

I will report back and let you know.

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

Re: Commission only fiduciary planner

Post by Pdub » Sun Oct 22, 2017 8:18 am

pkcrafter wrote:
Sat Oct 21, 2017 10:49 pm
Thank you, I will read that. And you are right, prior to this I really did not know the costs of my investments with them. That is really me to blame however.
They have a great reputation with many of the people I have talked to in the community.
Too many people that have recommended them know that I will be seeing them, so its too late to back out.
Well, you are here and you are learning. That's good, but going to a meeting because a lot of friends have recommended them makes no sense. Have you not yet realized your friends know less about smart investing than you do, and you've only just started!

Paul
I am starting to understand that what some of these people know is perhaps less than I thought with reapect to finance. And also, I forgot to mention that yes, EJ has put me in guided solutions...what is it about guided solutions that you dont like? Is it the fees only or something else?

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

Re: Commission only fiduciary planner

Post by Pdub » Sun Oct 22, 2017 8:25 am

2comma wrote:
Sun Oct 22, 2017 2:11 am
pkcrafter wrote:
Sat Oct 21, 2017 10:49 pm
Thank you, I will read that. And you are right, prior to this I really did not know the costs of my investments with them. That is really me to blame however.
They have a great reputation with many of the people I have talked to in the community.
Too many people that have recommended them know that I will be seeing them, so its too late to back out.
Well, you are here and you are learning. That's good, but going to a meeting because a lot of friends have recommended them makes no sense. Have you not yet realized your friends know less about smart investing than you do, and you've only just started!

Paul
Pdub,

The day you happened upon the Bogleheads is one of the luckiest days of your life.

Sad fact is most people are terrible investors - do you really discuss money, politics or religion with them? You mentioned the returns others told you about but ask them if they know what fees they are paying. I bet not one of them knows what the true cost of their investments are and you can bet your are paying that cost! Many investment sales people will tell you not to worry about the fees (after they try to hide what they are) their "special sauce" will will make you enough and more to cover those costs. Fact is studies have proven if you collect whatever the market brings and diversify your investments at the lowest cost you will consistently outperform. If you were able to figure out what % they are collecting in fees, which will be hard to do in this case, you can determine the amount you will eventually have by using an investment fee calculator. I'd assume that they will remove between 1% and 2% in fees per year. Although that sounds like not much, over many years it will amount to hundreds of thousands of dollars. Here is one investment fee calculator: http://buyupside.com/calculators/feesdec07.htm.

Take a look at the three fund portfolio. It's simple, anyone can do it. Investing doesn't need to be complicated.
Thank you,

Yes I am very happy to have found this website. All the information available is priceless and the community is helpful and active. It reminds me of other times in life when you learn of things that run counter to what you had always thought to be true, the cognitive dissonance is gnawing at first, but good to work through.

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

Re: Commission only fiduciary planner

Post by dbr » Sun Oct 22, 2017 8:36 am

Pdub wrote:
Sun Oct 22, 2017 8:18 am
pkcrafter wrote:
Sat Oct 21, 2017 10:49 pm
Thank you, I will read that. And you are right, prior to this I really did not know the costs of my investments with them. That is really me to blame however.
They have a great reputation with many of the people I have talked to in the community.
Too many people that have recommended them know that I will be seeing them, so its too late to back out.
Well, you are here and you are learning. That's good, but going to a meeting because a lot of friends have recommended them makes no sense. Have you not yet realized your friends know less about smart investing than you do, and you've only just started!

Paul
I am starting to understand that what some of these people know is perhaps less than I thought with reapect to finance. And also, I forgot to mention that yes, EJ has put me in guided solutions...what is it about guided solutions that you dont like? Is it the fees only or something else?
Social pressure is one of the primary, most insidious, and most absolutely evil of all the mechanisms by which financial parasites engage in their criminal behavior. It was one of the primary mechanisms Madoff used in his schemes. The evil originates in the bad hiding behind what should be good and most of the principals not even being aware that there is a problem. In this sort of case it goes beyond mere ignorance.

User avatar
Majormajor78
Posts: 901
Joined: Mon Jan 31, 2011 9:13 pm
Location: Chicagoish

Re: Commission only fiduciary planner

Post by Majormajor78 » Sun Oct 22, 2017 10:30 am

Pdub wrote:
Sun Oct 22, 2017 8:01 am
We will still go as my wife has reservations, she feels it may be worth paying fees if that means we do not need to ever stress about certain things...such as moving all our funds into the vanguard accounts.
This is the one argument that is supportive of financial planners that I don't have a problem with. My wife is much the same. She gets very stressed out and nervous when talking about money and generally refuses to take an active part in our investments. Luckily she trusts my knowledge enough to let me maintain them for us.

For people who have neither the time, knowledge, or temperament to self direct their investments a good financial planner can be extremely beneficial. If they do nothing else than give the client peace of mind and convince them to stay the course then they have earned a modest fee because it is often the behavioral pitfalls that do the most damage to a portfolio.

This being said, giving people you barely know complete control of your finances is a great method of transferring wealth from your finances to theirs. While I typically recommend self directing your money, if it will keep peace in your house and help you and your wife sleep at night then a good advisor may be a great choice. The key is though to do your due diligence and find one that offers a good solid TRANSPARENT investment philosophy and keeps the fee's transparent and reasonable as well.

I believe someone else has already mentioned NAPFA and the Garret Network as a means of searching out fee only financial planners near you but I just wanted to repeat the point. Self directing is a great option but it may be beneficial to be able to approach your wife with mutiple choices instead of simply pushing for a straight yes/no in regard to this one group. Kind of like looking at multiple houses before you buy or several car dealerships. This is a purchase and one that will have long-term impacts of a magnitude at least equal to if not greater than a car or home purchase.
"Oh, M. le Comte, it is only a loss of money which I have sustained... nothing worth mentioning, I assure you."

User avatar
ruralavalon
Posts: 13308
Joined: Sat Feb 02, 2008 10:29 am
Location: Illinois

Re: Commission only fiduciary planner

Post by ruralavalon » Sun Oct 22, 2017 11:25 am

Grt2bOutdoors wrote:
Sat Oct 21, 2017 8:12 pm
^^^ You sure? In business, the general unspoken rule is "everything costs". There is no "free". Ignore that at your own peril.
If you receive a product or service it is always paid for. If advertised or promoted as free or no cost to you it's still paid for somehow.

It's reasonable for the service providers to expect to be paid for a service provided. It's very important as a customer to know what you are paying for what you get. The commission model, front load, back load, and the 12b1 fees folded into the expense ratio hide that cost, and allow less scrupulous service providers pretend that the customer is not paying anything.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started

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

Re: Commission only fiduciary planner

Post by dbr » Sun Oct 22, 2017 11:29 am

Majormajor78 wrote:
Sun Oct 22, 2017 10:30 am

For people who have neither the time, knowledge, or temperament to self direct their investments a good financial planner can be extremely beneficial. If they do nothing else than give the client peace of mind and convince them to stay the course then they have earned a modest fee because it is often the behavioral pitfalls that do the most damage to a portfolio.
This is a valid consideration. However the essence of the anti-FA argument is that even people who need this service cannot actually afford it at rates that allow advisors to stay in business. The only actual solution is to solve the problem without use of an advisor.

In short, people who cannot somehow correctly manage their assets without an advisor are screwed. At least that is one point of view.

JW-Retired
Posts: 6778
Joined: Sun Dec 16, 2007 12:25 pm

Re: Commission only fiduciary planner

Post by JW-Retired » Sun Oct 22, 2017 11:39 am

Pdub wrote:
Sun Oct 22, 2017 8:18 am
And also, I forgot to mention that yes, EJ has put me in guided solutions...what is it about guided solutions that you don't like? Is it the fees only or something else?
It's 2 things. (1) the total investment expense drag on your portfolio growth and (2), the ultra-naive belief you have that they can pick investments that overcome this expense drag. They can't and they only make a show of trying.

Guided solutions charges 1.3% AUM and the not-very-low-cost funds they will choose will probably make the total cost 2%. There are online calculators that show you the effect of years of such a cost drag on your final retirement nest egg size. For example, try playing with this one for what 30 years of retirement nest egg contributions comes to when you retire, with a cost drag of 0.1% versus 2%, for example.... for a 6% market growth I get you will have about 1/3rd less when you retire.
http://www.dinkytown.net/java/CompareFees.html

You don't need a calculator for the withdrawal phase of retirement. The classic William P. Begen paper "safe" withdrawal amount from a stock/bond nest egg is 4% including all investment expenses. So if your EJ expense drain is 2% you can only safely take 2% to live on.
http://www.retailinvestor.org/pdf/Bengen1.pdf

IMO, high expense investing approaches total madness. :oops:
JW
Last edited by JW-Retired on Sun Oct 22, 2017 11:46 am, edited 2 times in total.
Retired at Last

User avatar
ruralavalon
Posts: 13308
Joined: Sat Feb 02, 2008 10:29 am
Location: Illinois

Re: Commission only fiduciary planner

Post by ruralavalon » Sun Oct 22, 2017 11:41 am

Pdub wrote:
Sun Oct 22, 2017 8:01 am
We will still go as my wife has reservations, she feels it may be worth paying fees if that means we do not need to ever stress about certain things...such as moving all our funds into the vanguard accounts.
That's reasonable, to pay reasonable fees to avoid significant stress. But there is almost no stress involved in transferring accounts. Just call Vanguard and they will help with the transfer, there is very little that you personally have to handle to accomplish the transfer.

You and she need to be clear on the costs paid for the services received from these advisors.

The commissions, front loads, back loads, and 12b1 fees folded into the expense ratios of high expense ratio funds are all expenses that you pay. Seemingly tiny percentage charges have a tremendous impact when compounded over the long-term.

To illustrate that please see the Vanguard blog post "Stopping the silent killer of returns". The table at the end illustrates the long-term effect of seemingly small annual percentage fees.

Also learn exactly what services of the advisors are provided for "free", and what you would have to pay extra for. It truly is not hard to manage your own investments, I believe that most people can learn to do that using a very simple portfolio of 3-4 broadly diversified index funds with very low expense ratios. It doesn't have to be complicated at all.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started

User avatar
Majormajor78
Posts: 901
Joined: Mon Jan 31, 2011 9:13 pm
Location: Chicagoish

Re: Commission only fiduciary planner

Post by Majormajor78 » Sun Oct 22, 2017 12:38 pm

dbr wrote:
Sun Oct 22, 2017 11:29 am
Majormajor78 wrote:
Sun Oct 22, 2017 10:30 am

For people who have neither the time, knowledge, or temperament to self direct their investments a good financial planner can be extremely beneficial. If they do nothing else than give the client peace of mind and convince them to stay the course then they have earned a modest fee because it is often the behavioral pitfalls that do the most damage to a portfolio.
This is a valid consideration. However the essence of the anti-FA argument is that even people who need this service cannot actually afford it at rates that allow advisors to stay in business. The only actual solution is to solve the problem without use of an advisor.

In short, people who cannot somehow correctly manage their assets without an advisor are screwed. At least that is one point of view.
Yes, a good fee only advisor can be quite expensive up front and this prices them out for anybody that isn't relatively wealthy. I was under the impression that the OP was, but of course could be wrong since he never gave any clues to his personal financial situation other than the fact that his family and peers have been aggressively targeted by these FA's. Sharks don't often waste time hunting individual minnows but I could be reading too much into it.

I agree most people need to learn to do this themselves or be at the mercy of potentially unscrupulous persons. My earlier posts were just an honest acknowledgement that there are exceptions and that good FA's can have value in certain situations. This may very well be one of them but only the OP can make that determination.
"Oh, M. le Comte, it is only a loss of money which I have sustained... nothing worth mentioning, I assure you."

User avatar
ruralavalon
Posts: 13308
Joined: Sat Feb 02, 2008 10:29 am
Location: Illinois

Re: Commission only fiduciary planner

Post by ruralavalon » Sun Oct 22, 2017 12:50 pm

Majormajor78 wrote:
Sun Oct 22, 2017 12:38 pm
dbr wrote:
Sun Oct 22, 2017 11:29 am
Majormajor78 wrote:
Sun Oct 22, 2017 10:30 am

For people who have neither the time, knowledge, or temperament to self direct their investments a good financial planner can be extremely beneficial. If they do nothing else than give the client peace of mind and convince them to stay the course then they have earned a modest fee because it is often the behavioral pitfalls that do the most damage to a portfolio.
This is a valid consideration. However the essence of the anti-FA argument is that even people who need this service cannot actually afford it at rates that allow advisors to stay in business. The only actual solution is to solve the problem without use of an advisor.

In short, people who cannot somehow correctly manage their assets without an advisor are screwed. At least that is one point of view.
Yes, a good fee only advisor can be quite expensive up front and this prices them out for anybody that isn't relatively wealthy. I was under the impression that the OP was, but of course could be wrong since he never gave any clues to his personal financial situation other than the fact that his family and peers have been aggressively targeted by these FA's. Sharks don't often waste time hunting individual minnows but I could be reading too much into it.

I agree most people need to learn to do this themselves or be at the mercy of potentially unscrupulous persons. My earlier posts were just an honest acknowledgement that there are exceptions and that good FA's can have value in certain situations. This may very well be one of them but only the OP can make that determination.
And for the new investor or one with a modest portfolio, a single good balanced fund (such as Target Retirement, STAR Fund, LifeStrategy, Balanced Index Fund, Wellington, or similar) is all that is needed. That requires no up front cost, requires no commitment of time, and requires no portfolio management or personal expertise or professional advice at all.

I also believe that a good fee only planner or advisor has a place. We used a fee only planner to help set up our investment plan, which I now manage myself. I feel that the fee was well worth it. The planner provided a rapid learning of the basics.

I also believe that most people can learn to manage their own investments, if a modest effort is made to learn.
Last edited by ruralavalon on Sun Oct 22, 2017 1:02 pm, edited 2 times in total.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started

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

Re: Commission only fiduciary planner

Post by dbr » Sun Oct 22, 2017 1:00 pm

ruralavalon wrote:
Sun Oct 22, 2017 12:50 pm

And for the new investor or one with a modest portfolio, a single good balanced fund (such as Target Retirement, STAR Fund, LifeStrategy, Balanced Index Fund, Wellington, or similar) is all that is needed. That requires no portfolio management or personal expertise or professional advice at all.
You still have to identify an investment company, open account(s) there, figure out what fund to buy, navigate how to purchase funds, decide about reinvesting or not, navigate how to sell funds if you need to withdraw money, understand tax consequences and how to fill out your tax return. For some people this is already an insurmountable obstacle. I would advocate that people see to it that such things are mastered. As soon as you decide that you want a person to help you with these things it becomes highly likely that you will be diverted to a salesman and you are screwed.

User avatar
ruralavalon
Posts: 13308
Joined: Sat Feb 02, 2008 10:29 am
Location: Illinois

Re: Commission only fiduciary planner

Post by ruralavalon » Sun Oct 22, 2017 1:09 pm

dbr wrote:
Sun Oct 22, 2017 1:00 pm
ruralavalon wrote:
Sun Oct 22, 2017 12:50 pm

And for the new investor or one with a modest portfolio, a single good balanced fund (such as Target Retirement, STAR Fund, LifeStrategy, Balanced Index Fund, Wellington, or similar) is all that is needed. That requires no portfolio management or personal expertise or professional advice at all.
You still have to identify an investment company, open account(s) there, figure out what fund to buy, navigate how to purchase funds, decide about reinvesting or not, navigate how to sell funds if you need to withdraw money, understand tax consequences and how to fill out your tax return. For some people this is already an insurmountable obstacle. I would advocate that people see to it that such things are mastered. As soon as you decide that you want a person to help you with these things it becomes highly likely that you will be diverted to a salesman and you are screwed.
For the new investor or one with a modest portfolio there is likely only one account, a work-based account or an IRA. And you simply buy, don't sell. So it's not that complex for the new investor or one with a small amount.

You do have to pick either Vanguard, Fidelity, Schwab etc, and pick one balanced fund. I am just pointing out that even the new or small investor with only a small knowledge base can do without expensive professional advice. They are not necessarily "screwed".
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started

Finridge
Posts: 376
Joined: Mon May 16, 2011 7:27 pm

Re: Commission only fiduciary planner

Post by Finridge » Sun Oct 22, 2017 3:49 pm

samsmith wrote:
Sat Oct 21, 2017 9:57 pm
Too many people that have recommended them know that I will be seeing them, so its too late to back out. However they do their pre client program in 3 different meetings...each building on the others, so no paper work is signed until the second or third meeting. I am curious as to what they will say however and can guarantee no signatures from me. I will report back here either way and let you guys know.
I am sorry, but I just think this is just plain wrong. From reading these threads, I would argue that this is your last chance to back out. You already feel beholden to these guys and are already setup for the three meeting plan. If you cant back out now - how are you going to back out after they spend time with you. Once you see them even once - the people that recommended them will know that you took their time and did not sign up? Each visit will make it harder for you to withdraw.

I always find it easiest to withdraw on these types of things earlier rather than later. Better to never start. I would suggest you withdraw politely now - stressing you realized that you would be wasting their time at this point, because you have changed your mind and are not ready to make a move (or some such nonsense - I used to just say my dad was a financial planner. Maybe you just realized that your best friend from college is a FA).

I would bet if you go to the first meeting, you will be talked into at least "giving them a shot with some of your money."
If you cant force yourself to back out now, I don't see you ever backing out. As others have suggested, say no politely. Its best for all. Don't waste their time. :happy My 2 cents. Good luck.
This. Exactly this.

Nip it in the bud. They already have you on the hook. And you're going along out of a sense of social obligation. If you feel obligated now, it will only get worse.

It's YOUR money. You owe them *nothing*. Just give them a polite brush off. "Sorry, I'll have to take a raincheck. Things are just crazy busy right now. Maybe in a couple of months". Then when they call a month or two later, just don't take their calls, or respond to their voice messages.

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

Re: Commission only fiduciary planner

Post by dbr » Sun Oct 22, 2017 4:43 pm

Finridge wrote:
Sun Oct 22, 2017 3:49 pm

This. Exactly this.

Nip it in the bud. They already have you on the hook. And you're going along out of a sense of social obligation. If you feel obligated now, it will only get worse.

It's YOUR money. You owe them *nothing*. Just give them a polite brush off. "Sorry, I'll have to take a raincheck. Things are just crazy busy right now. Maybe in a couple of months". Then when they call a month or two later, just don't take their calls, or respond to their voice messages.
Yes, Nip it in the bud. I couldn't agree more strongly. It should be no different than if they were to try to talk you into trying cocaine or heroin.

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

Re: Commission only fiduciary planner

Post by Pdub » Sun Oct 22, 2017 6:06 pm

All great replies, thank you to everyone for taking the time to post and offer their advice.

So after some good discussion my wife is much more on board with us doing it ourselves. We will plan to do some more research, come up with a good portfolio and seek out an initial flat fee advisor to guide us upfront - mostly with paperwork for transfer of accounts (moving in kind vs sell and buy, or both) and the tax issues related to the transactions. We have some IRAs, a 401k which will not move, and a majority of our funds in a taxable account.

I will call the FAs tomorrow and see if there is a charge for the initial meeting regardless of if we end up signing or not. If there is a charge if we don't sign up, we wont go. If there is no charge then we will still go as I would like to know why everyone I have talked with say there are no fees, but their disclosure brochure to the SEC says they charge fees.

Again, great advice and thanks. I will keep the board updated.

NotWhoYouThink
Posts: 1880
Joined: Fri Dec 26, 2014 4:19 pm

Re: Commission only fiduciary planner

Post by NotWhoYouThink » Sun Oct 22, 2017 6:44 pm

Pdub, you sound like a nice person. That's too bad, because these sharks are going to eat you alive. The way to not be eaten by sharks is not to swim in their waters. Really, I can't recommend strongly enough that you cancel this meeting. It won't do anyone any good for you to quiz them about fees. You already know the answer, and they already know the answer.

You don't need to tell your friends they are making a mistake. You might want to tell them that someday, but there is no rush.

As has been mentioned numerous times above, if you go to this meeting they will sell you something. They will certainly convince your wife that you should buy what they are selling, since she hasn't been the one posting here. I'm sorry you are about to make that mistake. Come back here in a few years when you are ready to correct it.

User avatar
sergeant
Posts: 829
Joined: Tue Dec 04, 2007 11:13 pm

Re: Commission only fiduciary planner

Post by sergeant » Sun Oct 22, 2017 7:02 pm

Pdub, you do indeed sound like a nice fellow. You will soon be raked over the coals by salesman that you absolutely have no skills to counter. You also have no power to right the wrongs they have done to other people. I predict that if you go to the initial meeting you will not post here again as they will have a new customer. I hope that I'm wrong.

Also, if you do ever really figure this out, transfer your IRA's! Vanguard will do it for you.
Lincoln 3 EOW!

User avatar
Dale_G
Posts: 3042
Joined: Tue Feb 20, 2007 5:43 pm
Location: Central Florida - on the grown up side of 81

Re: Commission only fiduciary planner

Post by Dale_G » Sun Oct 22, 2017 8:03 pm

Pdub, the first meetings will indeed be free, but that doesn't mean that they won't eventually cost you dearly.

I suspect the Advisors will deflect any conversation about fees until the 3rd meeting. And if you push back at that time, the advisor will pointedly ask, "You do love your wife, don't you"? And all eyes, including your wife's will be upon you. Next question, "You want to do what is best for her, don't you"?

You already know there is a $2,000 fee for a plan and an ongoing yearly fee of 1-2%. What you won't know until after you sign up what high cost, risky or illiquid investments you will be saddled with.

I would surely not go to any meeting.

What is the name of this advisor's firm or the group that they are associated with?

Dale
Volatility is my friend

pkcrafter
Posts: 12809
Joined: Sun Mar 04, 2007 12:19 pm
Location: CA
Contact:

Re: Commission only fiduciary planner

Post by pkcrafter » Sun Oct 22, 2017 8:20 pm

Pdub, that first meeting is to get to know you, and they are going to ask for some personal information including name, address and phone number.

We are not saying don't use an advisor, but we are recommending you don't use this one.

https://investingroadmap.wordpress.com/ ... n-advisor/

Paul
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.

samsmith
Posts: 115
Joined: Sun Mar 15, 2015 9:33 am

Re: Commission only fiduciary planner

Post by samsmith » Sun Oct 22, 2017 8:49 pm

Pdub, as others have said, you seem like a very nice person.
Pdub wrote:
Sun Oct 22, 2017 6:06 pm
So after some good discussion my wife is much more on board with us doing it ourselves. We will plan to do some more research, come up with a good portfolio and seek out an initial flat fee advisor to guide us upfront - mostly with paperwork for transfer of accounts (moving in kind vs sell and buy, or both) and the tax issues related to the transactions. We have some IRAs, a 401k which will not move, and a majority of our funds in a taxable account.

I will call the FAs tomorrow and see if there is a charge for the initial meeting regardless of if we end up signing or not. If there is a charge if we don't sign up, we wont go. If there is no charge then we will still go as I would like to know why everyone I have talked with say there are no fees, but their disclosure brochure to the SEC says they charge fees.
But, with all due respect, the above makes no sense to me. In the first paragraph you say you and your wife have decided on seeking out a flat fee advisor. Fair enough. But then in the second paragraph, you come up with what I would describe as a rationalization on why you still feel obligated to go to this meeting. If you are going with a flat fee advisor why do you care that "everyone I have talked with say there are no fees, but their disclosure brochure to the SEC says they charge fees." Why do you care? What does it matter? If you have really decided on the fee only advisor, then don't waste their time. When they convince you that there is really "no fee," (but somehow the SEC made them put that in) then will you sign up with them? I think you are such a nice guy, that you cant bring yourself to cancel and you are rationalizing why you have to attend. But once you attend , you will be in even deeper!! So I stick with my prior statement, if you can't cancel now, you will not be able to cancel after your meeting.

Good luck. I am interested in what will be the most compelling reason that convinced you to sign up with the FA team after you meet with them. I respectfully ask you to keep us informed. Thanks

RudyS
Posts: 1166
Joined: Tue Oct 27, 2015 10:11 am

Re: Commission only fiduciary planner

Post by RudyS » Mon Oct 23, 2017 8:32 am

Pdub wrote:
Sat Oct 21, 2017 3:41 pm

Thank you,

I fully feel that the FAs will be very charming, charismatic and personable people. I am sure their office will be set up to some how psychologically make people feel at ease. And I will certainly go into it knowing they are trying to make money off of me.

Too many people that have recommended them know that I will be seeing them, so its too late to back out. However they do their pre client program in 3 different meetings...each building on the others, so no paper work is signed until the second or third meeting. I am curious as to what they will say however and can guarantee no signatures from me. I will report back here either way and let you guys know.
By now you understand what's going on. It's not too late to back out; if asked why, you can truthfully say that you received information detailing that they do (now) indeed charge fees, and that in this case, you are no longer interested. "Thanks for the lead anyway".

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

Re: Commission only fiduciary planner

Post by dbr » Mon Oct 23, 2017 8:45 am

A comment as far as fees is that the term is not defined. It is common that loads, expense ratios, and even a 12b-1 fee in the ER are not called fees and one can say there are no fees even in the presence of those costs. Commissions and trading charges are also not fees. It is even true that costs incurred by a fund to trade securities are not counted in the ER and not reported on short forms of fund information. That is even true at Vanguard.

There can be a lot of disingenuous huffing and puffing by people trying to sell you something and it is utterly completely useless to engage in a discussion over it.

User avatar
ruralavalon
Posts: 13308
Joined: Sat Feb 02, 2008 10:29 am
Location: Illinois

Re: Commission only fiduciary planner

Post by ruralavalon » Mon Oct 23, 2017 8:46 am

Pdub wrote:
Sun Oct 22, 2017 6:06 pm
All great replies, thank you to everyone for taking the time to post and offer their advice.

So after some good discussion my wife is much more on board with us doing it ourselves. We will plan to do some more research, come up with a good portfolio and seek out an initial flat fee advisor to guide us upfront - mostly with paperwork for transfer of accounts (moving in kind vs sell and buy, or both) and the tax issues related to the transactions. We have some IRAs, a 401k which will not move, and a majority of our funds in a taxable account.

I will call the FAs tomorrow and see if there is a charge for the initial meeting regardless of if we end up signing or not. If there is a charge if we don't sign up, we wont go. If there is no charge then we will still go as I would like to know why everyone I have talked with say there are no fees, but their disclosure brochure to the SEC says they charge fees.

Again, great advice and thanks. I will keep the board updated.
That's good news about your wife now being comfortable with doing this yourself, and in my opinion a reasonable plan for how to proceed with some initial fee-only advice.

You seem to now have a good enough grasp of fee basics and conflicts of interest to shrug off the sales pitch. I understand the curiosity factor, but personally would just cancel.

Don't try to argue with the sales pitch or cross-examine the "advisor", just ignore the pitch. The "advisor" is a skilled salesman with plenty of practice.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started

JW-Retired
Posts: 6778
Joined: Sun Dec 16, 2007 12:25 pm

Re: Commission only fiduciary planner

Post by JW-Retired » Mon Oct 23, 2017 11:50 am

Pdub wrote:
Sun Oct 22, 2017 6:06 pm
I will call the FAs tomorrow and see if there is a charge for the initial meeting regardless of if we end up signing or not. If there is a charge if we don't sign up, we wont go. If there is no charge then we will still go as I would like to know why everyone I have talked with say there are no fees, but their disclosure brochure to the SEC says they charge fees.
Pdub,
They will have a pat answer of some kind that makes draining money from your account not appear to be "fees", and/or is totally worth it!

Anyway, I give up explaining.
Good luck!
JW
ps: I just had a flash! I think maybe you are a junior FA guy researching how to counter Boglehead thinking? :twisted:
Retired at Last

Grt2bOutdoors
Posts: 18575
Joined: Thu Apr 05, 2007 8:20 pm
Location: New York

Re: Commission only fiduciary planner

Post by Grt2bOutdoors » Mon Oct 23, 2017 12:31 pm

Pdub wrote:
Sun Oct 22, 2017 6:06 pm
All great replies, thank you to everyone for taking the time to post and offer their advice.

I will call the FAs tomorrow and see if there is a charge for the initial meeting regardless of if we end up signing or not. If there is a charge if we don't sign up, we wont go. If there is no charge then we will still go as I would like to know why everyone I have talked with say there are no fees, but their disclosure brochure to the SEC says they charge fees.

Again, great advice and thanks. I will keep the board updated.
Let's turn this around in a way you'll understand - You and your wife are having work done on your house. You invite a couple of contractors over to give you an estimate. While the contractors are scoping out the work - replacing your front bay window with the one you already have ordered directly from the manufacturer, you are just bidding out for installation. You wait patiently. They come back and provide you with a written estimate for $5K. You also have a competing bid for $1,000 to install the same exact window. You say thanks, we'll let you know. After, speaking with several former clients who were thoroughly pleased with the lower cost contractor, you decide to take that offer.

The above is an example of "irrational" economical behavior. The study of behavioral economics is a big and lucrative field.
You decide to call back the contractor who bid $5K and ask if there is a charge whether you sign up with them or not. :shock: :o :oops: What???
There is no bargain to be had by you calling them. Consider the first interaction or date with them to be the "last date". There is no mutual interest, drop them like a hot iron. Don't even call them back.
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions

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

Re: Commission only fiduciary planner

Post by Pdub » Mon Oct 23, 2017 5:28 pm

NotWhoYouThink wrote:
Sun Oct 22, 2017 6:44 pm
Pdub, you sound like a nice person. That's too bad, because these sharks are going to eat you alive. The way to not be eaten by sharks is not to swim in their waters. Really, I can't recommend strongly enough that you cancel this meeting. It won't do anyone any good for you to quiz them about fees. You already know the answer, and they already know the answer.

You don't need to tell your friends they are making a mistake. You might want to tell them that someday, but there is no rush.

As has been mentioned numerous times above, if you go to this meeting they will sell you something. They will certainly convince your wife that you should buy what they are selling, since she hasn't been the one posting here. I'm sorry you are about to make that mistake. Come back here in a few years when you are ready to correct it.
Thanks,

Well, I can't predict the future, but am certain that I will not be investing with these individuals. I have said as much to my wife.

The meeting will be for me to hear an explanation re: the fees. I understand the hesitancy from the community here, but after tomorrow this particular subkect should be over.

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

Re: Commission only fiduciary planner

Post by Pdub » Mon Oct 23, 2017 5:31 pm

sergeant wrote:
Sun Oct 22, 2017 7:02 pm
Pdub, you do indeed sound like a nice fellow. You will soon be raked over the coals by salesman that you absolutely have no skills to counter. You also have no power to right the wrongs they have done to other people. I predict that if you go to the initial meeting you will not post here again as they will have a new customer. I hope that I'm wrong.

Also, if you do ever really figure this out, transfer your IRA's! Vanguard will do it for you.
Thank you,

I do plan on transferring the IRAs and the taxable accounts. Only the 401k will stay. The paperwork and the taxes on the taxable account now have me more worried than anything else.

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

Re: Commission only fiduciary planner

Post by Pdub » Mon Oct 23, 2017 5:33 pm

Dale_G wrote:
Sun Oct 22, 2017 8:03 pm
Pdub, the first meetings will indeed be free, but that doesn't mean that they won't eventually cost you dearly.

I suspect the Advisors will deflect any conversation about fees until the 3rd meeting. And if you push back at that time, the advisor will pointedly ask, "You do love your wife, don't you"? And all eyes, including your wife's will be upon you. Next question, "You want to do what is best for her, don't you"?

You already know there is a $2,000 fee for a plan and an ongoing yearly fee of 1-2%. What you won't know until after you sign up what high cost, risky or illiquid investments you will be saddled with.

I would surely not go to any meeting.

What is the name of this advisor's firm or the group that they are associated with?

Dale
Thanks Dale,

Yes, I now have it confirmed in writing and over the phone that the first meeting is free.

I can only hope that they do not question my love for my wife or my family because I know we wont be able to hold the laughter in if it gets to that!

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

Re: Commission only fiduciary planner

Post by Pdub » Mon Oct 23, 2017 5:37 pm

pkcrafter wrote:
Sun Oct 22, 2017 8:20 pm
Pdub, that first meeting is to get to know you, and they are going to ask for some personal information including name, address and phone number.

We are not saying don't use an advisor, but we are recommending you don't use this one.

https://investingroadmap.wordpress.com/ ... n-advisor/

Paul
Thank you for the resource Paul I will read it.

At this point we do plan on using an initial flat fee advisor, but only to help us with initial set up and occasional guidance along the way if needed.

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

Re: Commission only fiduciary planner

Post by Pdub » Mon Oct 23, 2017 5:40 pm

samsmith wrote:
Sun Oct 22, 2017 8:49 pm
Pdub, as others have said, you seem like a very nice person.
Pdub wrote:
Sun Oct 22, 2017 6:06 pm
So after some good discussion my wife is much more on board with us doing it ourselves. We will plan to do some more research, come up with a good portfolio and seek out an initial flat fee advisor to guide us upfront - mostly with paperwork for transfer of accounts (moving in kind vs sell and buy, or both) and the tax issues related to the transactions. We have some IRAs, a 401k which will not move, and a majority of our funds in a taxable account.

I will call the FAs tomorrow and see if there is a charge for the initial meeting regardless of if we end up signing or not. If there is a charge if we don't sign up, we wont go. If there is no charge then we will still go as I would like to know why everyone I have talked with say there are no fees, but their disclosure brochure to the SEC says they charge fees.
But, with all due respect, the above makes no sense to me. In the first paragraph you say you and your wife have decided on seeking out a flat fee advisor. Fair enough. But then in the second paragraph, you come up with what I would describe as a rationalization on why you still feel obligated to go to this meeting. If you are going with a flat fee advisor why do you care that "everyone I have talked with say there are no fees, but their disclosure brochure to the SEC says they charge fees." Why do you care? What does it matter? If you have really decided on the fee only advisor, then don't waste their time. When they convince you that there is really "no fee," (but somehow the SEC made them put that in) then will you sign up with them? I think you are such a nice guy, that you cant bring yourself to cancel and you are rationalizing why you have to attend. But once you attend , you will be in even deeper!! So I stick with my prior statement, if you can't cancel now, you will not be able to cancel after your meeting.

Good luck. I am interested in what will be the most compelling reason that convinced you to sign up with the FA team after you meet with them. I respectfully ask you to keep us informed. Thanks
Thank you,

Yes, the psychology of it is very interesting, and if I were looking from the outside in, I think I would say the same things re: rationalizing the decision.

I do not feel like there is anything they can say or do to change my mind about this at this point, but would like to hear what they have to say about those fees.

I will update the board tomorrow

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

Re: Commission only fiduciary planner

Post by Pdub » Mon Oct 23, 2017 5:43 pm

dbr wrote:
Mon Oct 23, 2017 8:45 am
A comment as far as fees is that the term is not defined. It is common that loads, expense ratios, and even a 12b-1 fee in the ER are not called fees and one can say there are no fees even in the presence of those costs. Commissions and trading charges are also not fees. It is even true that costs incurred by a fund to trade securities are not counted in the ER and not reported on short forms of fund information. That is even true at Vanguard.

There can be a lot of disingenuous huffing and puffing by people trying to sell you something and it is utterly completely useless to engage in a discussion over it.
Thanks for this,

I don't understand how these could be charged and not defined as a fee? Can you elaborate?

GmanJeff
Posts: 97
Joined: Sun Jun 11, 2017 7:12 am

Re: Commission only fiduciary planner

Post by GmanJeff » 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.

pkcrafter
Posts: 12809
Joined: Sun Mar 04, 2007 12:19 pm
Location: CA
Contact:

Re: Commission only fiduciary planner

Post by pkcrafter » Mon Oct 23, 2017 6:02 pm

will update the board tomorrow
We will be waiting in great anticipation.
At this point we do plan on using an initial flat fee advisor, but only to help us with initial set up and occasional guidance along the way if needed.
Good idea. You can hire a fee-only advisor on an hourly basis and he will set up a thorough plan, but the initial plan is rather expensive. After that you can touch basis when ever you feel the need. Follow-up meetings will be much less expensive.


Paul
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.

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

Re: Commission only fiduciary planner

Post by Pdub » Mon Oct 23, 2017 6:16 pm

ruralavalon wrote:
Mon Oct 23, 2017 8:46 am
Pdub wrote:
Sun Oct 22, 2017 6:06 pm
All great replies, thank you to everyone for taking the time to post and offer their advice.

So after some good discussion my wife is much more on board with us doing it ourselves. We will plan to do some more research, come up with a good portfolio and seek out an initial flat fee advisor to guide us upfront - mostly with paperwork for transfer of accounts (moving in kind vs sell and buy, or both) and the tax issues related to the transactions. We have some IRAs, a 401k which will not move, and a majority of our funds in a taxable account.

I will call the FAs tomorrow and see if there is a charge for the initial meeting regardless of if we end up signing or not. If there is a charge if we don't sign up, we wont go. If there is no charge then we will still go as I would like to know why everyone I have talked with say there are no fees, but their disclosure brochure to the SEC says they charge fees.

Again, great advice and thanks. I will keep the board updated.
That's good news about your wife now being comfortable with doing this yourself, and in my opinion a reasonable plan for how to proceed with some initial fee-only advice.

You seem to now have a good enough grasp of fee basics and conflicts of interest to shrug off the sales pitch. I understand the curiosity factor, but personally would just cancel.

Don't try to argue with the sales pitch or cross-examine the "advisor", just ignore the pitch. The "advisor" is a skilled salesman with plenty of practice.

Thanks again,

We do feel confident that we will not fall for the pitch. And I plan to keep everything civil and respectful. I plan to question their fee schedule, and not their ethics or person.

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

Re: Commission only fiduciary planner

Post by Pdub » Mon Oct 23, 2017 6:18 pm

JW-Retired wrote:
Mon Oct 23, 2017 11:50 am
Pdub wrote:
Sun Oct 22, 2017 6:06 pm
I will call the FAs tomorrow and see if there is a charge for the initial meeting regardless of if we end up signing or not. If there is a charge if we don't sign up, we wont go. If there is no charge then we will still go as I would like to know why everyone I have talked with say there are no fees, but their disclosure brochure to the SEC says they charge fees.
Pdub,
They will have a pat answer of some kind that makes draining money from your account not appear to be "fees", and/or is totally worth it!

Anyway, I give up explaining.
Good luck!
JW
ps: I just had a flash! I think maybe you are a junior FA guy researching how to counter Boglehead thinking? :twisted:
Hahaha

You caught me!

itstoomuch
Posts: 5343
Joined: Mon Dec 15, 2014 12:17 pm
Location: midValley OR

Re: Commission only fiduciary planner

Post by itstoomuch » Mon Oct 23, 2017 6:35 pm

I use a commission only FA. He gets paid only if I buy. He gets an trail commission for keeping our AUM.
As for the ROI of the financial products (A little MF, Index, LTCi, and annuities). It's reasonable.
Could we have done better in a DYI is not a big concern for me. I am not one to look too far back in history. I am a person who looks forward and makes my own decisions.

YMMV
Rev012718; 4 Incm stream buckets: SS+pension; dfr'd GLWB VA & FI anntys, by time & $$ laddered; Discretionary; Rentals. LTCi. Own, not asset. Tax TBT%. Early SS. FundRatio (FR) >1.1 67/70yo

itstoomuch
Posts: 5343
Joined: Mon Dec 15, 2014 12:17 pm
Location: midValley OR

Re: Commission only fiduciary planner

Post by itstoomuch » Mon Oct 23, 2017 6:39 pm

We got a Troll? :oops:
Bound to happen :annoyed
Rev012718; 4 Incm stream buckets: SS+pension; dfr'd GLWB VA & FI anntys, by time & $$ laddered; Discretionary; Rentals. LTCi. Own, not asset. Tax TBT%. Early SS. FundRatio (FR) >1.1 67/70yo

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

Re: Commission only fiduciary planner

Post by Pdub » 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?

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

Re: Commission only fiduciary planner

Post by Pdub » Mon Oct 23, 2017 7:10 pm

JW-Retired wrote:
Sun Oct 22, 2017 11:39 am
Pdub wrote:
Sun Oct 22, 2017 8:18 am
And also, I forgot to mention that yes, EJ has put me in guided solutions...what is it about guided solutions that you don't like? Is it the fees only or something else?
It's 2 things. (1) the total investment expense drag on your portfolio growth and (2), the ultra-naive belief you have that they can pick investments that overcome this expense drag. They can't and they only make a show of trying.

Guided solutions charges 1.3% AUM and the not-very-low-cost funds they will choose will probably make the total cost 2%. There are online calculators that show you the effect of years of such a cost drag on your final retirement nest egg size. For example, try playing with this one for what 30 years of retirement nest egg contributions comes to when you retire, with a cost drag of 0.1% versus 2%, for example.... for a 6% market growth I get you will have about 1/3rd less when you retire.
http://www.dinkytown.net/java/CompareFees.html

You don't need a calculator for the withdrawal phase of retirement. The classic William P. Begen paper "safe" withdrawal amount from a stock/bond nest egg is 4% including all investment expenses. So if your EJ expense drain is 2% you can only safely take 2% to live on.
http://www.retailinvestor.org/pdf/Bengen1.pdf

IMO, high expense investing approaches total madness. :oops:
JW
Thanks for taking the time to write that out and do the math. Looking at fees from a minus 4% standpoint certainly does make one weigh fees heavier.

neilpilot
Posts: 1699
Joined: Fri Dec 04, 2015 1:46 pm
Location: Memphis area

Re: Commission only fiduciary planner

Post by neilpilot » Mon Oct 23, 2017 7:20 pm

pkcrafter wrote:
Mon Oct 23, 2017 6:02 pm
You can hire a fee-only advisor on an hourly basis and he will set up a thorough plan, but the initial plan is rather expensive. After that you can touch basis when ever you feel the need. Follow-up meetings will be much less expensive.
When I retired and decided to fire our FA, I drafted an investment plan. Since my wife had some concern about my ability to manage our investments (a concern she no longer has), we decided to visit a fee-only adviser to critique my draft plan. We interviewed 2 local fee-only advisers, explaining that we wanted advise on my investment plan but did not want to pay for a "thorough plan", since we felt no need to review things like retirement income, social security and tax planing, insurance needs, etc.

One of the advisers insisted that she provide a "thorough plan", which was "rather expensive". She was unwilling to provide the limited services that I wanted, and so naturally she was not hired.

The other FA agreed to work with me to critique my draft plan at an agreed hourly rate, without reviewing our entire financial and retirement plan.
He provided the desired input in just a few billable hours at a reasonable cost.

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

Re: Commission only fiduciary planner

Post by dbr » Mon Oct 23, 2017 8:58 pm

Pdub wrote:
Mon Oct 23, 2017 5:43 pm
dbr wrote:
Mon Oct 23, 2017 8:45 am
A comment as far as fees is that the term is not defined. It is common that loads, expense ratios, and even a 12b-1 fee in the ER are not called fees and one can say there are no fees even in the presence of those costs. Commissions and trading charges are also not fees. It is even true that costs incurred by a fund to trade securities are not counted in the ER and not reported on short forms of fund information. That is even true at Vanguard.

There can be a lot of disingenuous huffing and puffing by people trying to sell you something and it is utterly completely useless to engage in a discussion over it.
Thanks for this,

I don't understand how these could be charged and not defined as a fee? Can you elaborate?
As an example the costs of running a fund are costs not fees. Those costs include the salaries of the fund managers, their secretaries, rent on the office space, paper clips, but are not fees. Funds pay brokers transaction costs to trade the holdings of the fund, but those are commissions paid by the fund to someone for a transaction. That is not a fee. In general a commission is not a fee as it is related to the transaction rather than to being paid for a service rendered. That even applies to the load on a load fund. One example of the distinction between commissions and fees is that when a fee is charged, such as AUM, the salesman is not supposed to also charge a commission, and if a commission is charged, there should not be a fee, which is exactly what these guys said. If you think that is all disingenuous, insincere, dishonest, untruthful, false, deceitful, duplicitous, lying, mendacious, and hypocritical you would be right.
Last edited by dbr on Mon Oct 23, 2017 9:28 pm, edited 2 times in total.


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

Re: Commission only fiduciary planner

Post by Pdub » Tue Oct 24, 2017 1:54 pm

dbr wrote:
Mon Oct 23, 2017 8:58 pm
Pdub wrote:
Mon Oct 23, 2017 5:43 pm
dbr wrote:
Mon Oct 23, 2017 8:45 am
A comment as far as fees is that the term is not defined. It is common that loads, expense ratios, and even a 12b-1 fee in the ER are not called fees and one can say there are no fees even in the presence of those costs. Commissions and trading charges are also not fees. It is even true that costs incurred by a fund to trade securities are not counted in the ER and not reported on short forms of fund information. That is even true at Vanguard.

There can be a lot of disingenuous huffing and puffing by people trying to sell you something and it is utterly completely useless to engage in a discussion over it.
Thanks for this,

I don't understand how these could be charged and not defined as a fee? Can you elaborate?
As an example the costs of running a fund are costs not fees. Those costs include the salaries of the fund managers, their secretaries, rent on the office space, paper clips, but are not fees. Funds pay brokers transaction costs to trade the holdings of the fund, but those are commissions paid by the fund to someone for a transaction. That is not a fee. In general a commission is not a fee as it is related to the transaction rather than to being paid for a service rendered. That even applies to the load on a load fund. One example of the distinction between commissions and fees is that when a fee is charged, such as AUM, the salesman is not supposed to also charge a commission, and if a commission is charged, there should not be a fee, which is exactly what these guys said. If you think that is all disingenuous, insincere, dishonest, untruthful, false, deceitful, duplicitous, lying, mendacious, and hypocritical you would be right.
Thank you,

So costs = upkeep and the payment a fund will pay the broker, fees = anything the broker will charge the ckient for the direct act of managing the assets.

If I understand that correctly, then I would believe they should not be charging their clients "fees" but collecting costs from the funds for trading - per client reports.

However per the disclosure brochure to the SEC they have a fee schedule.

We shall see what happens in the next few hours.

GmanJeff
Posts: 97
Joined: Sun Jun 11, 2017 7:12 am

Re: Commission only fiduciary planner

Post by GmanJeff » 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.

afan
Posts: 3559
Joined: Sun Jul 25, 2010 4:01 pm

Re: Commission only fiduciary planner

Post by afan » 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.
We don't know how to beat the market on a risk-adjusted basis, and we don't know anyone that does know either | --Swedroe | We assume that markets are efficient, that prices are right | --Fama

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

Re: Commission only fiduciary planner

Post by Pdub » 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.

Post Reply