Can you spot a Bad Financial Advisor?

[Matt]

It's not as easy as you might think. People who work in financial advice require sales skills. And the vast majority of advising is simply making the client feel good and happy. But how do you know if they have your best interests at heart?

There are a couple of high level tests. The first is compensation model. Understanding comp should not make you decide on the spot if they are good or bad advisors, it should instead teach you where to look for the next test.

There are two models for compensation:

• Fee ONLY - the advisor is unable to 'sell you' a product that has a commission attached. They cannot sell you life insurance, or mutual funds that have load fees. You have to pay these advisors directly. There are two main ways to pay a Fee ONLY planner:
  • Flat Fees - by the project or by the hour
  • Assets under Management Fees - a percentage of the total wealth they are managing for you.
• Commission Based - the advisor can sell you anything, earn commissions from life insurance or mutual funds, providing they have the proper licenses. They can also charge you Flat fees, by the project or by the hour, and they can also charge you Assets under management.

Some commission based advisors/planners will claim to be Fee BASED or claim that they can charge you in the same way as Fee ONLY planners do (Assets under management, flat fees, by the hour etc) however.... if they do this they frequently don't waive the right to sell their own product. Indeed, if they do not sell their own product they are often fired.

I personally have interviewed with, or rejected interviews with many of the major firms. There are many trying to jump in on the Fee ONLY movement by presenting Fee BASED (a word they made up to obfuscate) and the key here is again Compensation.

When I interviewed with a leading NY Boutique they informed me that I would be compensated by:

1. New Business Developed (new clients) or New Business brought under management (more money from old clients)
2. Selling proprietary products to either.

The way the compensation worked is that you'd get some decent revenue from 1. but you would double it if you could also get the clients onto 2. The propriety products (their own funds) would have fees between 2x and 10x market norms. But still small enough to sell with ease.

However, Fee ONLY planners can be bad advisors too, because if they are compensated by Assets under management they have an incentive to keep your assets, and gather more. So you can't just judge on the comp model.

How to tell?

The key to knowing is to understanding Opportunity Costs - it's not easy, but I'd like to make this a part of the forum too, so ask away please. Any good advisor or planner needs to offer you an IF, THEN, ELSE approach to a solution. And it has to include vanilla options.

For example: An advisor/planner recommends an investment strategy of X different funds. You have to ask them: over the course of 1 year what are the fees for this fund structure compared to Vanguard Index Funds?

If they answer with anything "Sales Like" such as "these funds are different/special/unique" or "index funds are different/bad/not right" then they are full of crap. A true advisor/planner will show you side by side. Bear in mind, that a good Sales Guy can present data in a tricky manner, when asked to compare with index funds they might search for a period of history for performance comparison. While this has some value, and while I am not against Actively Managed funds, it is not the question we asked.

• We want to know how much in fees?
• We also want to know, how much in early surrender fees if we change our minds?

We should use the same route when dealing with Fee ONLY planners

If you have a store of cash and some debt, there is a real chance for abuse here. Because a Fee ONLY planner wouldn't get paid if you took $100,000 and paid down the mortgage, he would if you took it and bought a Vanguard Fund.

So if you have money (either in savings or as a windfall) and you are advised to invest it you should demand a model showing the savings offered vs paying down a debt (IE not adding more money to his Assets under management) that dataset should include savings on interest paid, and also include his own fees.

Hope that gets you started, and please feel free to use this thread to ask more questions. There are a LOT of really shitty people out there who are trying to make money from you. Be careful.

 

[Paul]

Why does anyone in the 99% need any financial "advisor"? How hard is it to figure out how to invest your assets? Most of the so-called advice I've read is worthless, self serving nonsense designed to fleece suckers, er, clients from their assets one way or another. Fee Based vs Fee Only is just a matter of degree.

 

[Matt]

Why does anyone in the 99% need any financial "advisor"? How hard is it to figure out how to invest your assets? Most of the so-called advice I've read is worthless, self serving nonsense designed to fleece suckers, er, clients from their assets one way or another. Fee Based vs Fee Only is just a matter of degree.

Well.... How hard is it to sell your own home? Not very but people still use realtors. How hard is it to process US immigration? Not very but people still use lawyers.

Investing assets is just one piece of the puzzle- other considerations found in a good advisor would be: tax planning, estate planning, cost savings through insurance, other fees and time.

Asset allocation itself is pretty simple, but the big picture is more complex, even though the most important part of an advisors job is to educate and calm the client so they don't make emotional led mistakes.

I do agree though- there is a ton of fleecing going on.

 

[Annie H.]

Why does anyone in the 99% need any financial "advisor"? How hard is it to figure out how to invest your assets? Most of the so-called advice I've read is worthless, self serving nonsense designed to fleece suckers, er, clients from their assets one way or another. Fee Based vs Fee Only is just a matter of degree.

We use a FA for two reasons. One is to keep me out of trouble and on the straight and narrow with passive, buy and hold. I know I have to justify any "fun" money purchases with my advisor (I set it up that way) and so I hardly even bother. It also lets me stop obsessively checking gains/losses. Reason two is more important, though. My SO isn't that educated about investing, doesn't want to spend the time on it and *I* don't want to handle his money so this is a good compromise. We're mostly invested in DFA, I believe in the "DFA premium" and our fixed fee works out to about 35bps and I figure it's more than a wash.

 

[ElainePDX]

We spoke to a financial adviser at our credit union and he said that there are some good products that are only available through commission based advisers. Do Fee Only planners ever suggest a client buy something available only through a Commission Based adviser?

 

[Annie H.]

We spoke to a financial adviser at our credit union and he said that there are some good products that are only available through commission based advisers. Do Fee Only planners ever suggest a client buy something available only through a Commission Based adviser?

NEVER! I think Matt has a post on this, will look tomorrow. So called financial advisors at credit unions, banks, brokerages, insurance agencies, etc. are commission based sales people. You need to begin with a registered financial advisor, educate yourself. It's really not that hard (much easier than MS) and Matt can certainly guide you to proper resources. I'll be glad to answer any questions.

 

[Matt]

We spoke to a financial adviser at our credit union and he said that there are some good products that are only available through commission based advisers. Do Fee Only planners ever suggest a client buy something available only through a Commission Based adviser?

Yes. As a fee only planner you can certainly suggest things that have a commission, and connect you to a person to sell to you. But why would you? The examples I could think of where you would are in Insurance - a fee only advisor while trained quite well in matters of insurance could not execute a contract for you, as advisors, providing they met state regulations for licensing a commission based advisor could sell directly.

A commission based advisor is incentivized to sell to you, so take anything they say about their products (especially proprietary products) with a pinch of salt. That said, it doesn't mean you can't have a great commission based advisor who is working in your best interests, and it just so happens that the products that they are selling are the best solution for you every time.

Fee only planning means you cannot be compensated by anyone other than the client, which makes for a much cleaner ethical structure and avoids many, but not all conflicts of interest.

 

[Sesq]

We spoke to a financial adviser at our credit union and he said that there are some good products that are only available through commission based advisers. Do Fee Only planners ever suggest a client buy something available only through a Commission Based adviser?

Most annuities are sold on commission. While variable annuities are usually lousy fee laden junk, fixed annuities can be an arrow in the quiver if an investor wants to purchase a stable (well as stable as the insurance co who sells it) income stream for a portion of their portfolio. I know of one CFP who dropped out of NAFPA (fee only trade group) because he was tired of referring out annuity sales.

 

[Annie H.]

Single premium immediate annuities are the ONLY way to go. Annuities are one of the most hyped products out there because the commission is so high. One of the best annuities you can get is by delaying your social security from 62 or 66 to age 70.
http://www.obliviousinvestor.com/single-premium-immediate-annuity/

"Many annuities (maybe even most) are a raw deal for investors. They carry needlessly high expenses and surrender charges, and their contracts are so complex that very few investors can properly assess whether the annuity is a good investment."

 

[ElainePDX]

....fixed annuities can be an arrow in the quiver if an investor wants to purchase a stable (well as stable as the insurance co who sells it) income stream for a portion of their portfolio. I know of one CFP who dropped out of NAFPA (fee only trade group) because he was tired of referring out annuity sales.

Yes, this is what he was talking about.

Don't worry - we are not rushing out to buy annuities. I know they have a bad rap and why, but also that not all annuities are created equal.

 

[Annie H.]

Yes, this is what he was talking about.

Don't worry - we are not rushing out to buy annuities. I know they have a bad rap and why, but also that not all annuities are created equal.

Don't mean to keep repeating myself by Bogleheads.org is a great resource. Great place to be able to ask questions. Here's a wiki to begin the exploration.
http://www.bogleheads.org/wiki/Category:Annuities Lots more links to follow.

Be careful of anything besides an SPIA. Annuity products are sometimes so complex and convoluted that even the folks selling them cannot understand the product. As you may already know the older you are the cheaper a fixed annuity. Many recommend waiting until 75 or even 80. Make sure you integrate your annuity planning with your social security strategy. Learn about "file and suspend" and educate yourself so you know which social security strategy makes the most sense for your and your husband.

 

[ElainePDX]

Learn about "file and suspend" and educate yourself so you know which social security strategy makes the most sense for your and your husband.

Yes, I am well aware of this. We expect to defer taking SS. Much as I would like to see my H retire soon, he loves his work. If I am lucky he will cut back some by 2016, so that we can travel more.

Confession - the credit union financial planner I mentioned above is one of his good friends. I do think he is one of the (few?) ethical ones and the friendship will not mean we will therefore buy his products. The conversation was all about firms like Vanguard and Fidelity, and in the course of that, he told us that there are some products that you can't get through such firms, such as fixed annuities. Whenever we talk money with him, we always learn something, and I've never felt the least bit pressured to bring him our investment business.

 

[Annie H.]

Yes, I am well aware of this. We expect to defer taking SS. Much as I would like to see my H retire soon, he loves his work. If I am lucky he will cut back some by 2016, so that we can travel more.

Confession - the credit union financial planner I mentioned above is one of his good friends. I do think he is one of the (few?) ethical ones and the friendship will not mean we will therefore buy his products. The conversation was all about firms like Vanguard and Fidelity, and in the course of that, he told us that there are some products that you can't get through such firms, such as fixed annuities. Whenever we talk money with him, we always learn something, and I've never felt the least bit pressured to bring him our investment business.

Both Vanguard and Fidelity sell fixed annuities:
http://www.bogleheads.org/wiki/Vanguard_Lifetime_Income_Program_-_SPIA
https://www.fidelity.com/annuities/immediate-fixed-income-annuities/compare

Forgive me if you already know this about SS, others may not, it's more complex than just deferring to age 70. You need to do an anlysis of different strategies which take into account higher vs. lower earner, continued income, etc. There are actually firms set up that for a fee will analyze your situation and make a recommendation for the best strategy. For instance, your husband could continue working but "file and suspend" at Full Retirement Age (FRA) and then you could apply for benefits. Thas has been popular on bogleheads for years but apparently is all the rage now for mainstream publications. Another strategy involves how you collect your benefits. Prior to FRA you must take the higher benefit (either yours or 1/2 of your husband's). After you reach FRA you can choose which benefit you wish to take.

Another interesting component of SS benefits is that if one is divorced but the marriage lasted 10 years or more one can collect benefits against the account of the former husband (it doesn't affect his benefits and more than one or two or more ex-spouses can do this). As part of my divorce settlement negotiation--since it was close to 10 years--we made sure the divorce wasn't final until the marriage had lasted 10 years. What this allowed me to do was apply for benefits on his account (1/2 of his benefits) and delay my benefits to age 70 which increased them by 8% per year. Another avenue that sometimes widows don't know is that they can receive reduced benefits as early as age 60 (SS does not notify widows/widowers of this fact) and full benefits at FRA. Strategy here is to collect reduced benefits at age 60 and if it pencils out wait until age 70 for own benefits. Another benefit often overlooked by parents who had children late in life. If one retires at FRA, let's say 66 and still has kids unter 18 you/they are entitled to benefits-- step children, sometimes even grandchildren qualify. Spouses also qualify and the benefits are all calculated together for a "family" benefit. I really get off on this because I worked with the daughter of a very good friend helping to convince her husband (almost like convincing a spouse MS is too good to be true) to file for these benefits (he was 67 and still working with a kid 10 and 13) and they started getting monthly family benefits of $2500 a month plus back benefits of $60K.

http://www.montgomeryadvertiser.com/story/money/2014/08/06/powerful-strategy-can-maximize-social-security-benefits/13657965/

http://www.ssa.gov/retire2/yourchildren.htm

 

[Sesq]

Good post Annie. SPIA's is what I was referring to. I still harbor some reluctance related to them since they most often don't have inflation adjustments and I am a long way from needing them (age 42). If folks haven't read it Jim Otar's book (Unveiling the retirement myth) has some interesting thoughts on the use of annuities in an overall retirement plan. Full confession, I only got about halfway through when I put it down. I mean to finish it but its on my wife's kindle. I have read articles that summarize it though.

 

[Annie H.]

Good post Annie. SPIA's is what I was referring to. I still harbor some reluctance related to them since they most often don't have inflation adjustments and I am a long way from needing them (age 42). If folks haven't read it Jim Otar's book (Unveiling the retirement myth) has some interesting thoughts on the use of annuities in an overall retirement plan. Full confession, I only got about halfway through when I put it down. I mean to finish it but its on my wife's kindle. I have read articles that summarize it though.

Wow, Jim Otar--seems like years ago. I actually have a PDF of his book and no, I haven't finished either! (I'll blame it on the fact I do all my reading now by e-book). Here's something he's written more recently, "Stress Testing Your Retirement Plan: “How Big is My Cushion?”

One thing I forgot to add when discussing SPIA is they are less attractive right now in the current interest rate environment and folks considering one might do well to wait a few years for interest rates to rise (at least according to my cloudy crystal ball).

 

[Sesq]

I have that pdf too, I sent to my wife's Kindle, and it worked pretty well, even with pictures and graphs. Except for the fact that she is usually using the kindle.

http://www.amazon.com/gp/sendtokindle/email

I'll take a look at the link.

 

[Annie H.]

I have that pdf too, I sent to my wife's Kindle, and it worked pretty well, even with pictures and graphs. Except for the fact that she is usually using the kindle.

http://www.amazon.com/gp/sendtokindle/email

I'll take a look at the link.

I have a Nexus 7 tablet Android device (which I'm using right now -not the greatest for editing posts) which I absolutely love as a substitute for my laptop and as an ebook reader. I hadn't even thought of trying to transfer the PDF to the Nexus (probably because I've been so focused on whether the ALR will work with it). Thanks for the nudge - no more excuses on reading Otar's book.

 

[El Ingeniero]

We spoke to a financial adviser at our credit union and he said that there are some good products that are only available through commission based advisers. Do Fee Only planners ever suggest a client buy something available only through a Commission Based adviser?

DFA funds for example. They slice and dice the market in really interesting and potentially useful ways.

 

[El Ingeniero]

I avoid managers promoting actively managed funds. I don't consider them scammers necessarily, but the research on this is definitive: active funds have a compound annualized growth rate over 2% less than passive funds. Not that it isn't possible to mess up passive investing too.

My mother went with a manager that uses only active funds, and charges 1% of AUM on top of the fees charged by the funds they invest in (although they get institutional rates). I don't like to think about it very much.

 

[El Ingeniero]

Another benefit often overlooked by parents who had children late in life. If one retires at FRA, let's say 66 and still has kids unter 18 you/they are entitled to benefits-- step children, sometimes even grandchildren qualify. Spouses also qualify and the benefits are all calculated together for a "family" benefit. I really get off on this because I worked with the daughter of a very good friend helping to convince her husband (almost like convincing a spouse MS is too good to be true) to file for these benefits (he was 67 and still working with a kid 10 and 13) and they started getting monthly family benefits of $2500 a month plus back benefits of $60K.

Thank you for bringing this to my attention. I will almost certainly end up in that situation. Now if those SOBs in DC can get their act together, my happiness would be complete.

 

[Matt]

DFA funds for example. They slice and dice the market in really interesting and potentially useful ways.

I'm confused and am taking this to the great world of experts that is twitter... But I think fee only planners can offer DFA, I'm just checking how it works.

 

[Matt]

I avoid managers promoting actively managed funds. I don't consider them scammers necessarily, but the research on this is definitive: active funds have a compound annualized growth rate over 2% less than passive funds. Not that it isn't possible to mess up passive investing too.

My mother went with a manager that uses only active funds, and charges 1% of AUM on top of the fees charged by the funds they invest in (although they get institutional rates). I don't like to think about it very much.

We have family with a shitty broker (I mean advisor) too, tried to discuss it but can't get through the brainwashing... we let it drop, more inclined to do so with family than with a stranger.

 

[Annie H.]

I'm confused and am taking this to the great world of experts that is twitter... But I think fee only planners can offer DFA, I'm just checking how it works.

Twitter??????? Indeed DFA is only sold by fee-only planners. However, there are a few 401k plans that are lucky enough to offer their funds along with some CPAs and I believe, a few insurance brokers.

DFA is fairly choosy about who they allow to sell their funds but apparently not as choosy as they were in the past. I would recommend using a low cost,but full service, fixed fee-only planner to utilize DFA funds. However, there are some planners who offer access, and basically access only, for about $1000 a year. There's a search tool on the DFA website that will recommend 5 planners in the zip code area you enter if you wish to experiment and see the types offered-lots of 1% AUM and higher. AVOID!

 

[El Ingeniero]

I'm confused and am taking this to the great world of experts that is twitter... But I think fee only planners can offer DFA, I'm just checking how it works.

http://www.forbes.com/sites/feeonlyplanner/2013/12/03/why-you-should-know-dimensional-fund-advisors/
http://www.thestreet.com/funds/mutualfundmondaybg/10038756.html

Although I heavily discount anything I read on Forbes and TheStreet as nothing more than finance porn, I think those articles are pretty good summaries of the good points of DFA funds.

The more important thing to consider is how much you want to be married to the Efficient Market Hypothesis and CAPM. Buy DFA, and you're buying the services of very smart people who've built their careers and won Nobel prizes on top of that foundation. I could go into this more, but that would be a loooong post.

 

[Matt]

http://www.forbes.com/sites/feeonlyplanner/2013/12/03/why-you-should-know-dimensional-fund-advisors/
http://www.thestreet.com/funds/mutualfundmondaybg/10038756.html

Although I heavily discount anything I read on Forbes and TheStreet as nothing more than finance porn, I think those articles are pretty good summaries of the good points of DFA funds.

The more important thing to consider is how much you want to be married to the Efficient Market Hypothesis and CAPM. Buy DFA, and you're buying the services of very smart people who've built their careers and won Nobel prizes on top of that foundation. I could go into this more, but that would be a loooong post.

I know what they are- I'm just asking you where it says a fee only planner can't use them?

 

[Annie H.]

I know what they are- I'm just asking you where it says a fee only planner can't use them?

It never says that anywhere. Fee only planners can and do use them. They have a fantastic support staff and back office and my advior uses that aspect to provide more services. They have great info and publications. They small tilt. They have a few funds in areas that cannot be matched in any other family. Some advisers offer you a combo of ETFs, Vgd and DFA. Others lean more heavily to DFA. Others (mine) have a discussion w/client and then decide. Find/be one with all the tools. Learn about DFA and then decide if you want to offer them-- if they'll have you.

 

[Annie H.]

My advisor recently shared a 62 page survey "Dimensional s annual survey of asset class performance provides updated matrices, plus details on balanced strategies and global strategy weights. " There is ususally something available every quarter.

Dimensional Fund Advisors -DFA
Dimensional Fund Advisors -DFA

search for an advisor using zip code

 

[Matt]

They look decent. I find an inclination to challenge their exclusivity when on the outside, but might want to defend them from the inside... certainly a good tool to have to offer.

 

[Annie H.]

This is an old article but worth the read. Neat little tables on effect of investment management fees on your IRA balance:

How should I select a financial advisor ? What should it cost ?

Here's another oldie that compares the fee structure of various DFA fixed-fee advisors: (lots of back story on this one, lawsuits threated, etc.)

Comparison of DFA-approved advisor fees

 

[Annie H.]

I've found an interesting thing when trying to talk with people about their advisors - the reality is that you are paying more money, but there is often an emotional attachment to them. It's a dangerous subject to broach because on the one hand, i'll be charging advisory fees myself soon, and these will be higher than other options available, but on the other it depends what you really get in terms of service for that dollar.

I've shared my story before about low-cost fixed fee advisors. I spent a lot of time talking with a well-known firm before deciding not to go with them, I picked another firm and there were so many mistakes, lack of response and accessibility we parted ways in the first month--I actually got fired by them for "asking too many questions-- I'm rather proud of that!

Decided perhaps that "you get what you pay for" and went with a larger, national, well-known index AUM (avg 1.2% at our level) firm (one of the principals is allllll over the internet machine (Financial advisors pimp themselves [instead of CC apps] all over blogs, forums, website/newpaper articles). Stayed with them for close to 8 months during which time our advisor made partner, firm started a new group to offer advisor services to smaller advisor firms, advisor assistant became ill--everything went wrong at the firm. Meanwhile my advisor kept insisting s/he visit-- fly out to the Valley, see another client, see us--we could have cared less but agreed and then s/he kept cancelling. I kept talking about the problems, advisor kept apologizing and when I finally went to a higher up he said, "it was just bad luck."

I cancelled our account and our advisor said, "I knew I should have visited you." Firms absolutely depend on this FTF, take you out to dinner, etc. The firm was large and that seemed to give more chances of error from the "new client" division to "bond" division to things delegated to assistant (at one point they pulled $50K from our bank instead of pushing, they purchased wrong funds--they always made it good but I hated having to spend the time to watch them like a hawk). They also made errors in fee refunds and 1099s associated with these manually calculated refunds.

After we left the firm I continued dialogue in PMs with high profile "face" of the firm. He annoyed and irritated me all over again talking about bad luck, expecting too much, they lost fewer than 1% of clients per year, why couldn't I accept it and move on. I did move on and decided to contacted the CEO of the firm and negotiated a very hefty fee refund. They actually made a mistake in calculating that-- in my favor-- and neglected to send a 1099.

@Matt as I'm sure you know this is a hugely competitive world. I've never thought about it before but there is a comparison to MS bloggers in a way. Some of the lower cost firms actually brag about keeping costs low. Steven Evanson at Evanson Asset Management actually brags about keeping costs low via his basic, "non-slick" website
http://www.evansonasset.com/

PS At some point can you do a post on ADVs?

 

[Matt]

Good story! Yep, its very much sales[person]ship.

I'll be sure to add something regarding ADVs when I get a moment.

 

[Annie H.]

Good story! Yep, its very much sales[person]ship.

I'll be sure to add something regarding ADVs when I get a moment.

Yes, but once you get away from "real" sales folks AKA brokers... it's not supposed to be sales--it's supposed to be a frickin' financial advisor who has *your* interests at heart. There's no commission involved Again, one of the reasons I advocate for fixed-fee over AUM.

Have you gotten to the point in your new carrier and this stuff where you're learning about give-backs from the brokers-- Fido, Schwab, TD Ameritrade and DFA. You can get back office help, access to resources and publications, it's very, very interesting-- and has to be disclosed --in ADV but you have to hunt for it and it's not that specific. Every once in awhile a broker will do a promo with Adv. Firm and I got caught in the TD Ameritrade promo w/my adviser where *I* paid to get out. Most advisers offer a choice of brokerage firms. One adviser this space, Portfolio Solutions (Rick Ferri) only offers one-- it used to be Fidelity (and their institutional department just sux) but now it's Schwab:
http://portfoliosolutions.com/account-faq
Lots to learn especially about minimums.

 

[Matt]

Yes, but once you get away from "real" sales folks AKA brokers... it's not supposed to be sales--it's supposed to be a frickin' financial advisor who has *your* interests at heart. There's no commission involved Again, one of the reasons I advocate for fixed-fee over AUM.

Have you gotten to the point in your new carrier and this stuff where you're learning about give-backs from the brokers-- Fido, Schwab, TD Ameritrade and DFA. You can get back office help, access to resources and publications, it's very, very interesting-- and has to be disclosed --in ADV but you have to hunt for it and it's not that specific. Every once in awhile a broker will do a promo with Adv. Firm and I got caught in the TD Ameritrade promo w/my adviser where *I* paid to get out. Most advisers offer a choice of brokerage firms. One adviser this space, Portfolio Solutions (Rick Ferri) only offers one-- it used to be Fidelity (and their institutional department just sux) but now it's Schwab:
http://portfoliosolutions.com/account-faq
Lots to learn especially about minimums.

Nope, everything is sales. Even the fixed fee advisor needs to sell/market themselves in order to be selected. Selling isn't a bad thing. Selling a service to you is different from selling a product to you.

As for Ferri, clearly a leader in the field, but if you note, they aren't truly planners, rather are investment advisors, which is only one piece of the fee only planning firm that I will be creating.

 

[Annie H.]

Nope, everything is sales. Even the fixed fee advisor needs to sell/market themselves in order to be selected. Selling isn't a bad thing. Selling a service to you is different from selling a product to you.

As for Ferri, clearly a leader in the field, but if you note, they aren't truly planners, rather are investment advisors, which is only one piece of the fee only planning firm that I will be creating.

Yes sir, I do note, actually they were the first firm I contacted a half dozen years ago because at that time Evanson was one of the only others in this under $5K annual fee space. At that time their firm was not quite as clear on the options they were offering AND wiggled a bit when asked about financial planning. It took a lot of back and forth to finally get them to say precisely what they "didn't do." At that time their rate was .25. They have/had a really interesting asset allocation model-- one of the things they do that other firms don't,at least they used- to is a portfolio on spec. If one has a regular and a tax advantaged account they didn't used to spread the AA over all accounts but would buy the same funds in each account thereby doubling funds and fees.

Evanson Asset Management used to include financial planning several years ago but now has an hourly rate for that. They have a CFP on staff but she's also one of the overall "advisors"--I've gotten some interesting feedback on how that works/doesn't work.

 

[Matt]

The double fund strategy is a good method to harvest cap losses. There may be some additional transaction fees, but they would be wiped out by the savings. Thanks for the info overall, lots to ponder.