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Financial advisor fee
Posted by: space-time
Date: November 16, 2018 12:23PM
I am in contact with an advisor for a potential consultation. This is what I asked and this is the response I got.

Q: Do you work on flat fee or commission? Thanks
A: We are a fee-only Registered Investment Advisor and have a fiduciary obligation to our clients.

We do not make any money from product sales or commissions, and do not recommend the use of mutual funds, ever.



What do you think? Thanks
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Re: Financial advisor fee
Posted by: mattkime
Date: November 16, 2018 12:31PM
This is _exactly_ what you want to hear.

Funny story - some politicians recently decided that it shouldn't be necessary for financial advisors to have a 'fiduciary obligation' to their clients. You know, thats the clients choice. Imagine if the same were true of doctors.



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Re: Financial advisor fee
Posted by: PeterW
Date: November 16, 2018 12:37PM
If they don’t recommend mutual funds, what are they pushing?
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Re: Financial advisor fee
Posted by: NewtonMP2100
Date: November 16, 2018 12:49PM
......most people benefit from the use of mutual funds......



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I reject your reality and substitute my own!
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Re: Financial advisor fee
Posted by: Buzz
Date: November 16, 2018 12:58PM
Fee only could be, and likely is, a percentage of assets under management charged on an annual, semi-annual, or quarterly basis. Probably in the 1% - 2% annually.
==
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Re: Financial advisor fee
Posted by: space-time
Date: November 16, 2018 01:01PM
Quote
PeterW
If they don’t recommend mutual funds, what are they pushing?

actually they are not pushing anything. They offer a free consultation and I guess I could pay after that, I will follow up if the fee is percentage based or flat fee. I need more details.
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Re: Financial advisor fee
Posted by: NewtonMP2100
Date: November 16, 2018 01:07PM
.....IMHO.....for most people, you can manage your own finances.....mutual funds, DRIPS, stocks, etc.........


....if you are relatively intelligent just do a lot of reading.......Kiplinger's, Money magazine......read Peter Lynch's book......learn basics........



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Edited 1 time(s). Last edit at 11/16/2018 01:25PM by NewtonMP2100.
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Re: Financial advisor fee
Posted by: Dennis S
Date: November 16, 2018 01:17PM
Quote
NewtonMP2100
.....IMHO.....for most people, you can manage your own finances.....mutual funds, DRIPS, stocks, etc.........

I agree. You can learn a lot with a Kiplingers subscription and a couple of books. I think getting someone to "handle your money" is a bad idea.
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Re: Financial advisor fee
Posted by: space-time
Date: November 16, 2018 01:36PM
This is exactly what I did so far, and I think I did OK, but as the portfolio grows and I get closer to retirement, I wonder if having some pro look over my shoulder is a good idea. I want to understand what the fee is before I engage.

Thanks
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Re: Financial advisor fee
Posted by: flightdelayedagain
Date: November 16, 2018 01:50PM
A close friend of mine was using Merrill Lynch for the past 25 or so years. He has since retired but he did tell me that they lost a small fortune for him.
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Re: Financial advisor fee
Posted by: NewtonMP2100
Date: November 16, 2018 02:01PM
....even if you are the 'lazy' type, you can just place in Vanguard index fund (or any index fund) and probably still beat the performance of a 'professional'......

......you should read Peter Lynch's book (he was guru at Fidelity) and gives basics and says that anyone can get the returns that he got when he was managing his Fidelity Fund........tips on how to pick stocks.............



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I reject your reality and substitute my own!
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Re: Financial advisor fee
Posted by: space-time
Date: November 16, 2018 02:07PM
Thanks Newt! I do have 3 books about stocks, but I think this is not one of them. will order and read. Thanks.
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Re: Financial advisor fee
Posted by: NewtonMP2100
Date: November 16, 2018 02:10PM
......his book is called 'Beating the Street' and you may be able to get it free at a local library.......it is an old book but found it interesting read on how he picked his stocks to give Fidelity Magellan Fund those great returns during the fund's heyday.......



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I reject your reality and substitute my own!
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Re: Financial advisor fee
Posted by: billb
Date: November 16, 2018 02:13PM
Quote
NewtonMP2100
....even if you are the 'lazy' type, you can just place in Vanguard index fund (or any index fund) and probably still beat the performance of a 'professional'......

......you should read Peter Lynch's book (he was guru at Fidelity) and gives basics and says that anyone can get the returns that he got when he was managing his Fidelity Fund........tips on how to pick stocks.............

The Church's story ?



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Re: Financial advisor fee
Posted by: space-time
Date: November 16, 2018 02:39PM
here is the cost:

[support.personalcapital.com]-
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Re: Financial advisor fee
Posted by: NewtonMP2100
Date: November 16, 2018 02:47PM
....uh, don't like that.......I would avoid.........but that is just me.....



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Re: Financial advisor fee
Posted by: space-time
Date: November 16, 2018 02:51PM
yes, seems high...
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Re: Financial advisor fee
Posted by: Acer
Date: November 16, 2018 03:21PM
Personally, I like boring old target date funds you can set up using the self-serve features at Vanguard, etc.
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Re: Financial advisor fee
Posted by: rgG
Date: November 16, 2018 03:35PM
Look for an advisor that bills by the hour.





Roswell, GA (Atlanta suburb)
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Re: Financial advisor fee
Posted by: Dennis S
Date: November 16, 2018 03:41PM
I'm not sure I would go with a place where mutual funds are not even on the table.
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Re: Financial advisor fee
Posted by: freeradical
Date: November 16, 2018 06:05PM
The guy from Vanguard wrote the classic: A Random Walk Down Wall Street
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Re: Financial advisor fee
Posted by: tortoise
Date: November 16, 2018 07:52PM
After twenty five years with Vanguard and no help but my own research and decisions I am comfortably retired and living well. That is the goal after all. Jack Bogle and Warren Buffet were my gurus.

Never mind trying for a home run, just ride the inevitable upward trend of the market and stay the course during the inevitable downturns. Slow and steady wins the race, just like the Tortoise and the Hare.



Edited 1 time(s). Last edit at 11/16/2018 07:55PM by tortoise.
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Re: Financial advisor fee
Posted by: mattkime
Date: November 16, 2018 07:54PM
I agree, you want someone that bills hourly



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Re: Financial advisor fee
Posted by: Winston
Date: November 16, 2018 11:09PM
Quote
freeradical
The guy from Vanguard wrote the classic: A Random Walk Down Wall Street

Not exactly. That's Burton Malkiel, a Princeton Professor of Economics.
[en.wikipedia.org]

You are probably thinking of Jack Bogle
[en.wikipedia.org]
Quote

John Clifton "Jack" Bogle (born May 8, 1929) is an American investor, business magnate, and philanthropist. He is the founder and retired chief executive of The Vanguard Group.

His 1999 book Common Sense on Mutual Funds: New Imperatives for the Intelligent Investor became a bestseller and is considered a classic within the investment community.


A Random Walk Down Wall Street is a fabulous book for learning about investing. Add it to your bookshelf if you don't have it, or borrow a copy.


There are good reasons to get help from an independent (fee based) financial advisor. A good one should review not only investment strategy, but things like life insurance, wills, maybe even property and casualty insurance coverage. Plus they should be able to run numbers for you to give you an idea if you are headed toward the goals you think you are headed for.

But if they start talking about "beating the market", head for the door.


Good luck.

- Winston



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Re: Financial advisor fee
Posted by: Winston
Date: November 16, 2018 11:20PM
Quote
NewtonMP2100
......his book is called 'Beating the Street' and you may be able to get it free at a local library.......it is an old book but found it interesting read on how he picked his stocks to give Fidelity Magellan Fund those great returns during the fund's heyday.......

The problem with stock pickers is that very few have a lifetime of success. There are a few famous ones (Peter Lynch, Warren Buffet, John Templeton). But most of those who are in the top 20% are not after 5 years, and after 10 years, with extremely rare exceptions, none of them are.

Indexing is powerful because it's low cost, and assumes that over a long period of time there will be real (after inflation) growth in the stock market. In my view, most people have a longer time horizon than they feel like they have - and trying to pick individual stocks exacerbates that. Plus, if you are trading regularly you pay commissions (although lower today than they used to be), carry some market impact costs (bid-ask spread), and the big one: realize capital gains taxes.

One thing to ask about any index fund (or any investment strategy, for that matter) is how it minimizes capital gains taxes.

One of the things I don't like about mutual funds is that when you buy into one that has had gains you buy into any existing capital gains. So there is the potential that you will pay capital gains taxes on someone else's gains - even if your own investment has gone down.

Supposedly investment companies have figured out a way around this with ETFs (which are a form of mutual fund). And Vanguard has apparently been able to minimize realized capital gains with its regular indexed mutual funds. But I'd ask questions about embedded taxes before investing in any mutual fund or ETF.


Good luck.

- Winston



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Be seeing you.
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Re: Financial advisor fee
Posted by: Mr645
Date: November 18, 2018 06:31AM
1-2% seems a little high. Plenty of financial advisor groups in the .5 to .9% range.
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