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  • Molar Mechanic Molar Mechanic 
    Participant
    Status: Dentist, Small Business Owner
    Posts: 341
    Joined: 10/29/2017

    I think there are two similar terms that are often confused.

     

    Flat fee is generally the lowest cost.  You pay for a plan or for the time of the adviserr, regardless of dollars invested.

    Fee only is an adviserr who makes  his money directly from you, whether that be from an hourly fee, annual fee, or an assets under management fee.  The fees should be upfront and transparent.  As your wealth grows, you’ll pay a large amount of money to an AUM adviser, which may or may not be worth it.

     

    What you really want to avoid is an “adviser” who is really a salesperson getting paid by the products being sold rather than by the purchaser.  This person will be incentivized to have you trade often and pay the largest fees possible per trade.  As is very apparent from the big data conversation, if you aren’t paying for it, then you are the product, not the customer.

    #116241 Reply
    Avatar Kamban 
    Participant
    Status: Physician
    Posts: 2060
    Joined: 08/01/2016
    Fee only is an adviserr who makes his money directly from you, whether that be from an hourly fee, annual fee, or an assets under management fee. The fees should be upfront and transparent. As your wealth grows, you’ll pay a large amount of money to an AUM adviser, which may or may not be worth it.

    Click to expand…

    The difference is between the hourly/ annual fee and the AUM is that in the former you know exactly how much you are going to pay. You can set the number of hours you wish to consult with or the max per year you are willing to give. With the AUM model and the current 10 year bull market, you are paying ever increasing amounts for essentially staying the course with the same / similar investments.

    When the investment amounts is small, the advisor makes more money with a flat annual rate than AUM but the investor feels he is overpaying a large amount for a small amount of investment. But when you have a $10M under AUM, the advisor is raking it in while the investor is having a hard time giving away the ever increasing amount in fees.

    Eternal conflict.

    #116249 Reply
    Avatar Kamban 
    Participant
    Status: Physician
    Posts: 2060
    Joined: 08/01/2016
    I think there are two similar terms that are often confused.

    Click to expand…

    And the third term is fee based – a surreptitious way of taking money from you in fees and from the other side in commissions to sell the product to you.

    #116250 Reply
    Zaphod Zaphod 
    Participant
    Status: Physician, Small Business Owner
    Posts: 5418
    Joined: 01/12/2016
    Disability Insurance

    I think there are two similar terms that are often confused.

     

    Flat fee is generally the lowest cost.  You pay for a plan or for the time of the adviserr, regardless of dollars invested.

    Fee only is an adviserr who makes  his money directly from you, whether that be from an hourly fee, annual fee, or an assets under management fee.  The fees should be upfront and transparent.  As your wealth grows, you’ll pay a large amount of money to an AUM adviser, which may or may not be worth it.

     

    What you really want to avoid is an “adviser” who is really a salesperson getting paid by the products being sold rather than by the purchaser.  This person will be incentivized to have you trade often and pay the largest fees possible per trade.  As is very apparent from the big data conversation, if you aren’t paying for it, then you are the product, not the customer.

    Click to expand…

    Its easy especially in a talk to have “flat fee” and then “fee only” both sound good compared to “fee based”. The only part makes people feel its a great deal or something. Tricky.

    #116253 Reply
    Avatar Peds 
    Participant
    Status: Physician
    Posts: 3052
    Joined: 01/08/2016

    Hi Molecularblonde, just wanted to weigh in…its a long post so buckle in:

    – charging you 1%….even if its on a reduced amount…isnt passing the sniff test that they are a fiduciary to you.

    – a lot of us use Vanguard yes, but there are other great companies too (Fidelity, Schwab, TD Ameritrade, etc).

    – dont worry about them being small, or big. worry about getting bang for your buck and value. you are getting neither right now.

    – your returns are….pretty awful…based on last year only (obviously dont have full XIRR data so might be straw man argument but just let it ride right now….)

    —— a simple 65% total US stock (VTIAX) and 35% total US bond (VBTLX) would have returned 14.9% in 2017….or 1.8X what you did. for like…..1/20th the price. (if you find the flaw in that number then congrats, you are way ahead of the curve! but like i said, run with it)

    – you should only use someone that charges you a ONE time flat fee. if you need to see them again they charge you again.  a % of assets under management is one of the worst options.

    – so by now you should have this sinking gut feeling in your stomach that this firm is not a good fit…..if you dont, pause here and do a TON of reading on this site, bogleheads, etc. pause right here. 

    —–what questions? you paid 19K to ask them questions? every year? to extrapolate my portfolio to your size (congrats by the way) it would cost me 1K. im ok not asking myself questions.

    – i can see why you think peoples strategies assume more risk. there are a lot of nit picky people here: tilting, sector guessing, and timing. and thats fine for them.

    – it totally depends what options you have which we would be happy to review and find (hopefully) apples to apples options.

    ——yes post your info either here, bogleheads, or both. this is a format you are looking for: https://www.bogleheads.org/forum/viewtopic.php?t=6212

    – i dont care if you name them….i also have no power so take it for what its worth. but again, doesnt seem fiduciary….again just letting that sink in.

    – i dont use vanguards planners. they offer the service for 0.3% AUM. so almost a third less than what you are paying.

    – you cant compare every fund to someone else. wellington is an actively managed us stock:FI fund. nothing else really acts like it, etc.

    – a simple place to start is FI = age. so I would say you are on the reasonably aggressive side for someone that is almost 50. the other argument is, why do you need to be so aggressive when you have 20 years of growth left and have won a large portion of the game? either way.

     

    Anyways, hope this gives you guys something to think about.

    #116397 Reply
    Avatar Molecularblonde 
    Participant
    Status: Spouse
    Posts: 202
    Joined: 08/22/2017

    My father, (a physician, now deceased) and his partners, used “Company x” as their Fiduciary planner. This company was a fee only Fiduciary planner. After graduate school, (when I began to make my own income) my husband and I also used this company for financial planning. Over the years, this company has merged into “company Y”.

     

    It seems that so many members here on the White Coat Team are using Vanguard for their investing needs. I sometimes worry  that my planner is too small of an outfit. Our returns are okay but of course we pay fees. I was always taught that you should use a company that makes their money from a flat rate (percentage) fee.

     

    How do I know if I should stay with my current outfit, or move on? Before you state the obvious….check my annaul rate of return, I do and my planner is always there to answer my questions. When I read the Vanguard asset allocations here for individuals who have with a similar situation as mine and I think that their strategies assume more risk. But I can’t always translate that to my planner. Is it apples and oranges? I mean can you find options in your company’s assets that are similar to those (funds) of Vanguard?

     

    So, my questions are:

    1.How do I know if I should stay with my current outfit, or move on?

    2. Are the majority of folks here using a fee only fiduciary planner?

    3. Would it be alright to list my asset allocation here for review? (I’ve seen others do it before, but it was only for Vanguard funds…) So may I list my assets allocation (ie stocks/bonds/REIT/cash) as well as our ages and incomes?

    4. Is it okay to name my fiduciary planner? Or can I check them out some other way?

    5. Do most people who have Vanguard work with one of their planners, or do they do the asset allocations themselves?

    6. How do specific Vanguard funds (ie the Vanguard Wellington Fund) translate in other companies?

     

    I apologize for the length of this post, but recently there have been a few other lengthy threads, so it must be that time of year!

    Thank you in advance…and I apologize my ignorance.

     

    Click to expand…

    1. Do you need and want an advisor? If so, then your question is this advisor or another one. If not, then your question is when and how do you manage it yourself. All three options are fine and it depends mostly on you and your interest and ability. I hate to be selling, but you seem a good candidate for the online course. And if it isn’t worth your money, it has a 7 day money back guarantee. It’s a whole lot cheaper than your advisor.

    2. No. Most forum posters are DIY investors. But most docs use an advisor.

    3. Yes. This is a great place to get a second opinion. By posting what your advisor is recommending you do, it may become very obvious very quickly that your advisor is a doofus. And if not, at least you know you’re getting good advice for what you’re paying (which is slightly less than the going rate, but nowhere near the cheapest option out there.).

    4. Yes. But when discussing specific individuals and firms it is critical to avoid libel- stick to facts and clearly identify your opinions.

    5. Most are DIYers.

    6. You can compare one fund to another using the Morningstar x-ray tool.

    https://www.whitecoatinvestor.com/understand-what-you-own/

    No reason to apologize for ignorance. If you stick around here for long, you’ll quickly be far less ignorant than most docs.

    Click to expand…

    Have any of you ever had had that reoccurring dream where you’ve sat down for a final exam only to realize that you haven’t studied the correct material? That’s how I felt after reading these responses.

     

    …the only thing that I’ve done after trying to digest these very helpful replies was:

     

    -look up our fp’s ADV form, (trying to focus on items 4, 5, 8, 9- yikes!, 14 and part 2B…and even after spending an hour focusing on these very few items I still don’t think I understand what they mean. Even the disciplinary actions didn’t make a lot of sense to me).

    -purchase the WCI book on Amazon.

    -realize that I need to start going through basically every single thread on this forum. (I was using the term flat fee incorrectly…I couldn’t even get that right. That’s just sad).

    I’d like to think I’m somewhat intelligent and while I’m looking forward to reading this book, I’m wondering what to do since I can’t even acertain if my fp’s investment strategy is in line with mine when I’m not sure what my investment strategy is. I have a lot to learn and while I’m doing that, I can’t be a DIYer now. I need to stay with an advisor, but perhaps not this one. I feel discouraged —but at least I’m here. Maybe I can try to understand the form ADV form on a basic level to help me evaluate someone new.

    Thanks.

    #116454 Reply
    Avatar frickshin 
    Participant
    Status: Student
    Posts: 45
    Joined: 03/19/2018

    I’m a beginner myself. But just having listened to the podcasts, read a few of the recommended books, and hanging out in the forums, I’m starting to gain a lot of confidence in my ability to do it myself. Two months ago I knew NOTHING about finance. All the information you need is available, and you’re a smart person.

    #116455 Reply
    Avatar Steven Podnos MD CFP 
    Participant
    Status: Physician, Financial Advisor
    Posts: 108
    Joined: 09/21/2017

    So, I’m a physician AND fee only advisor.  What’s missing from the discussion is what a financial advisor is “for.”  If all you need is an asset allocation/rebalancing/etc. you can get this for free (Schwab Intelligent Portfolios) or at very low cost: Vanguard/Go Fidelity/Wealthfront, etc.

    We manage money without providing financial advice for retirement plans and a few families and charge fees equivalent to Vanguard and the other robos-because it is not that valuable a service.

    The value of a good impartial advisor is:

    As far as investing-disclipline and behavioral management-keeping you from buying from “enthusiasm”-or that “hot stock”.  Keeping you from selling from fear.  Quite valuable-think of 2008.

    But there is so much more (if you think you cannot do it yourself-which almost no one can)-Educational planning/Estate Planning/Tax planning/Asset protection (very important in our profession)/Retirement planning/Business development and other issues.  And don’t forget all of these issues may interact with each other.  That’s the value of an FA.

    #116457 Reply
    The White Coat Investor The White Coat Investor 
    Keymaster
    Status: Physician
    Posts: 4082
    Joined: 05/13/2011

    My father, (a physician, now deceased) and his partners, used “Company x” as their Fiduciary planner. This company was a fee only Fiduciary planner. After graduate school, (when I began to make my own income) my husband and I also used this company for financial planning. Over the years, this company has merged into “company Y”.

     

    It seems that so many members here on the White Coat Team are using Vanguard for their investing needs. I sometimes worry  that my planner is too small of an outfit. Our returns are okay but of course we pay fees. I was always taught that you should use a company that makes their money from a flat rate (percentage) fee.

     

    How do I know if I should stay with my current outfit, or move on? Before you state the obvious….check my annaul rate of return, I do and my planner is always there to answer my questions. When I read the Vanguard asset allocations here for individuals who have with a similar situation as mine and I think that their strategies assume more risk. But I can’t always translate that to my planner. Is it apples and oranges? I mean can you find options in your company’s assets that are similar to those (funds) of Vanguard?

     

    So, my questions are:

    1.How do I know if I should stay with my current outfit, or move on?

    2. Are the majority of folks here using a fee only fiduciary planner?

    3. Would it be alright to list my asset allocation here for review? (I’ve seen others do it before, but it was only for Vanguard funds…) So may I list my assets allocation (ie stocks/bonds/REIT/cash) as well as our ages and incomes?

    4. Is it okay to name my fiduciary planner? Or can I check them out some other way?

    5. Do most people who have Vanguard work with one of their planners, or do they do the asset allocations themselves?

    6. How do specific Vanguard funds (ie the Vanguard Wellington Fund) translate in other companies?

     

    I apologize for the length of this post, but recently there have been a few other lengthy threads, so it must be that time of year!

    Thank you in advance…and I apologize my ignorance.

     

    Click to expand…

    1. Do you need and want an advisor? If so, then your question is this advisor or another one. If not, then your question is when and how do you manage it yourself. All three options are fine and it depends mostly on you and your interest and ability. I hate to be selling, but you seem a good candidate for the online course. And if it isn’t worth your money, it has a 7 day money back guarantee. It’s a whole lot cheaper than your advisor.

    2. No. Most forum posters are DIY investors. But most docs use an advisor.

    3. Yes. This is a great place to get a second opinion. By posting what your advisor is recommending you do, it may become very obvious very quickly that your advisor is a doofus. And if not, at least you know you’re getting good advice for what you’re paying (which is slightly less than the going rate, but nowhere near the cheapest option out there.).

    4. Yes. But when discussing specific individuals and firms it is critical to avoid libel- stick to facts and clearly identify your opinions.

    5. Most are DIYers.

    6. You can compare one fund to another using the Morningstar x-ray tool.

    https://www.whitecoatinvestor.com/understand-what-you-own/

    No reason to apologize for ignorance. If you stick around here for long, you’ll quickly be far less ignorant than most docs.

    Click to expand…

    Have any of you ever had had that reoccurring dream where you’ve sat down for a final exam only to realize that you haven’t studied the correct material? That’s how I felt after reading these responses.

     

    …the only thing that I’ve done after trying to digest these very helpful replies was:

     

    -look up our fp’s ADV form, (trying to focus on items 4, 5, 8, 9- yikes!, 14 and part 2B…and even after spending an hour focusing on these very few items I still don’t think I understand what they mean. Even the disciplinary actions didn’t make a lot of sense to me).

    -purchase the WCI book on Amazon.

    -realize that I need to start going through basically every single thread on this forum. (I was using the term flat fee incorrectly…I couldn’t even get that right. That’s just sad).

    I’d like to think I’m somewhat intelligent and while I’m looking forward to reading this book, I’m wondering what to do since I can’t even acertain if my fp’s investment strategy is in line with mine when I’m not sure what my investment strategy is. I have a lot to learn and while I’m doing that, I can’t be a DIYer now. I need to stay with an advisor, but perhaps not this one. I feel discouraged —but at least I’m here. Maybe I can try to understand the form ADV form on a basic level to help me evaluate someone new.

    Thanks.

    Click to expand…

    Take your time. There is no rush. You’ll pick up on it. Just keep learning and in a few weeks you’ll look back on this moment and wonder that there was a time when you didn’t know the answer to the questions you have now.

    I agree you’re probably not ready to be a DIYer yet, and that’s okay.

    Site/Forum Owner, Emergency Physician, Blogger, and author of The White Coat Investor: A Doctor's Guide to Personal Finance and Investing
    Helping Those Who Wear The White Coat Get A "Fair Shake" on Wall Street since 2011

    #116460 Reply
    Avatar Molecularblonde 
    Participant
    Status: Spouse
    Posts: 202
    Joined: 08/22/2017

    So, I’m a physician AND fee only advisor.  What’s missing from the discussion is what a financial advisor is “for.”  If all you need is an asset allocation/rebalancing/etc. you can get this for free (Schwab Intelligent Portfolios) or at very low cost: Vanguard/Go Fidelity/Wealthfront, etc.

    We manage money without providing financial advice for retirement plans and a few families and charge fees equivalent to Vanguard and the other robos-because it is not that valuable a service.

    The value of a good impartial advisor is:

    As far as investing-disclipline and behavioral management-keeping you from buying from “enthusiasm”-or that “hot stock”.  Keeping you from selling from fear.  Quite valuable-think of 2008.

    But there is so much more (if you think you cannot do it yourself-which almost no one can)-Educational planning/Estate Planning/Tax planning/Asset protection (very important in our profession)/Retirement planning/Business development and other issues.  And don’t forget all of these issues may interact with each other.  That’s the value of an FA.

    Click to expand…

    this is an excellent point. What do I need from a financial advisor? What exactly am I suing them for? I never thought about it that way. 

    I’m a beginner myself. But just having listened to the podcasts, read a few of the recommended books, and hanging out in the forums, I’m starting to gain a lot of confidence in my ability to do it myself. Two months ago I knew NOTHING about finance. All the information you need is available, and you’re a smart person.

    Click to expand…

    Thank you for your input. It helps to hear that you’ve gained confidence from this site. I’ve just begun to listen to some of the older podcasts…the only thing that isn’t making me feel worse is that I’m lucky to have this site as a resource. I mean all the information is right there, even which books to purchase.

    #116621 Reply
    Avatar Molecularblonde 
    Participant
    Status: Spouse
    Posts: 202
    Joined: 08/22/2017
    Hi Molecularblonde, just wanted to weigh in…its a long post so buckle in: – charging you 1%….even if its on a reduced amount…isnt passing the sniff test that they are a fiduciary to you. – a lot of us use Vanguard yes, but there are other great companies too (Fidelity, Schwab, TD Ameritrade, etc). – dont worry about them being small, or big. worry about getting bang for your buck and value. you are getting neither right now. – your returns are….pretty awful…based on last year only (obviously dont have full XIRR data so might be straw man argument but just let it ride right now….) —— a simple 65% total US stock (VTIAX) and 35% total US bond (VBTLX) would have returned 14.9% in 2017….or 1.8X what you did. for like…..1/20th the price. (if you find the flaw in that number then congrats, you are way ahead of the curve! but like i said, run with it) – you should only use someone that charges you a ONE time flat fee. if you need to see them again they charge you again.  a % of assets under management is one of the worst options. – so by now you should have this sinking gut feeling in your stomach that this firm is not a good fit…..if you dont, pause here and do a TON of reading on this site, bogleheads, etc. pause right here.  —–what questions? you paid 19K to ask them questions? every year? to extrapolate my portfolio to your size (congrats by the way) it would cost me 1K. im ok not asking myself questions. – i can see why you think peoples strategies assume more risk. there are a lot of nit picky people here: tilting, sector guessing, and timing. and thats fine for them. – it totally depends what options you have which we would be happy to review and find (hopefully) apples to apples options. ——yes post your info either here, bogleheads, or both. this is a format you are looking for: https://www.bogleheads.org/forum/viewtopic.php?t=6212 – i dont care if you name them….i also have no power so take it for what its worth. but again, doesnt seem fiduciary….again just letting that sink in. – i dont use vanguards planners. they offer the service for 0.3% AUM. so almost a third less than what you are paying. – you cant compare every fund to someone else. wellington is an actively managed us stock:FI fund. nothing else really acts like it, etc. – a simple place to start is FI = age. so I would say you are on the reasonably aggressive side for someone that is almost 50. the other argument is, why do you need to be so aggressive when you have 20 years of growth left and have won a large portion of the game? either way.   Anyways, hope this gives you guys something to think about. April 10, 2018 at 5:14 pm MST

    Click to expand…

    Thank you very much for this reply. Very grateful. And slightly dumbfounded. You’ve given me a great deal to digest and to think about. I truly appreciate it and the time that you took to write such a lengthy response. There’s truly a wealth of information on this site. I mean truly, how lucky am I to have stumbled on it? I wish my Dad had known about it.

     

    #116623 Reply
    Liked by Peds
    Avatar Molecularblonde 
    Participant
    Status: Spouse
    Posts: 202
    Joined: 08/22/2017

    My father, (a physician, now deceased) and his partners, used “Company x” as their Fiduciary planner. This company was a fee only Fiduciary planner. After graduate school, (when I began to make my own income) my husband and I also used this company for financial planning. Over the years, this company has merged into “company Y”.

     

    It seems that so many members here on the White Coat Team are using Vanguard for their investing needs. I sometimes worry  that my planner is too small of an outfit. Our returns are okay but of course we pay fees. I was always taught that you should use a company that makes their money from a flat rate (percentage) fee.

     

    How do I know if I should stay with my current outfit, or move on? Before you state the obvious….check my annaul rate of return, I do and my planner is always there to answer my questions. When I read the Vanguard asset allocations here for individuals who have with a similar situation as mine and I think that their strategies assume more risk. But I can’t always translate that to my planner. Is it apples and oranges? I mean can you find options in your company’s assets that are similar to those (funds) of Vanguard?

     

    So, my questions are:

    1.How do I know if I should stay with my current outfit, or move on?

    2. Are the majority of folks here using a fee only fiduciary planner?

    3. Would it be alright to list my asset allocation here for review? (I’ve seen others do it before, but it was only for Vanguard funds…) So may I list my assets allocation (ie stocks/bonds/REIT/cash) as well as our ages and incomes?

    4. Is it okay to name my fiduciary planner? Or can I check them out some other way?

    5. Do most people who have Vanguard work with one of their planners, or do they do the asset allocations themselves?

    6. How do specific Vanguard funds (ie the Vanguard Wellington Fund) translate in other companies?

     

    I apologize for the length of this post, but recently there have been a few other lengthy threads, so it must be that time of year!

    Thank you in advance…and I apologize my ignorance.

     

    Click to expand…

    1. Do you need and want an advisor? If so, then your question is this advisor or another one. If not, then your question is when and how do you manage it yourself. All three options are fine and it depends mostly on you and your interest and ability. I hate to be selling, but you seem a good candidate for the online course. And if it isn’t worth your money, it has a 7 day money back guarantee. It’s a whole lot cheaper than your advisor.

    2. No. Most forum posters are DIY investors. But most docs use an advisor.

    3. Yes. This is a great place to get a second opinion. By posting what your advisor is recommending you do, it may become very obvious very quickly that your advisor is a doofus. And if not, at least you know you’re getting good advice for what you’re paying (which is slightly less than the going rate, but nowhere near the cheapest option out there.).

    4. Yes. But when discussing specific individuals and firms it is critical to avoid libel- stick to facts and clearly identify your opinions.

    5. Most are DIYers.

    6. You can compare one fund to another using the Morningstar x-ray tool.

    https://www.whitecoatinvestor.com/understand-what-you-own/

    No reason to apologize for ignorance. If you stick around here for long, you’ll quickly be far less ignorant than most docs.

    Click to expand…

    Have any of you ever had had that reoccurring dream where you’ve sat down for a final exam only to realize that you haven’t studied the correct material? That’s how I felt after reading these responses.

     

    …the only thing that I’ve done after trying to digest these very helpful replies was:

     

    -look up our fp’s ADV form, (trying to focus on items 4, 5, 8, 9- yikes!, 14 and part 2B…and even after spending an hour focusing on these very few items I still don’t think I understand what they mean. Even the disciplinary actions didn’t make a lot of sense to me).

    -purchase the WCI book on Amazon.

    -realize that I need to start going through basically every single thread on this forum. (I was using the term flat fee incorrectly…I couldn’t even get that right. That’s just sad).

    I’d like to think I’m somewhat intelligent and while I’m looking forward to reading this book, I’m wondering what to do since I can’t even acertain if my fp’s investment strategy is in line with mine when I’m not sure what my investment strategy is. I have a lot to learn and while I’m doing that, I can’t be a DIYer now. I need to stay with an advisor, but perhaps not this one. I feel discouraged —but at least I’m here. Maybe I can try to understand the form ADV form on a basic level to help me evaluate someone new.

    Thanks.

    Click to expand…

    Take your time. There is no rush. You’ll pick up on it. Just keep learning and in a few weeks you’ll look back on this moment and wonder that there was a time when you didn’t know the answer to the questions you have now.

    I agree you’re probably not ready to be a DIYer yet, and that’s okay.

    Click to expand…

    I really appreciate the encouragement.

    I have a lot to read up on. Hopefully my book with come today. Then I’m going consider taking the online course. It’s an investment in our future – and that’s worth every penny to me. I just hope that I can understand the course on some basic level by first reading a few books ahead of time. If that makes sense.

     

    I feel like I have so much to learn, and what have I been doing all of this time instead of learning this? I don’t think I can even read my statements.

    #116624 Reply
    Avatar Molecularblonde 
    Participant
    Status: Spouse
    Posts: 202
    Joined: 08/22/2017
    Splash Refinancing Bonus

    I think there are two similar terms that are often confused.

     

    Flat fee is generally the lowest cost.  You pay for a plan or for the time of the adviserr, regardless of dollars invested.

    Fee only is an adviserr who makes  his money directly from you, whether that be from an hourly fee, annual fee, or an assets under management fee.  The fees should be upfront and transparent.  As your wealth grows, you’ll pay a large amount of money to an AUM adviser, which may or may not be worth it.

     

    What you really want to avoid is an “adviser” who is really a salesperson getting paid by the products being sold rather than by the purchaser.  This person will be incentivized to have you trade often and pay the largest fees possible per trade.  As is very apparent from the big data conversation, if you aren’t paying for it, then you are the product, not the customer.

    Click to expand…

    Thank you for this reply. By George I think I’ve got it.

    The one thing that I was aware of, is that you want to stay away from someone who makes their money by selling you a product (as you alluded to in your reply). Score one for me.

    #116626 Reply
    preetishah preetishah 
    Participant
    Status: Financial Advisor, Small Business Owner
    Posts: 24
    Joined: 04/10/2018

    Peds made a good point but just wanted to add a note here, Vanguard, Fidelity, Schwab and TD are custodians, but Vanguard and Fidelity also have their own funds.  Custodians just hold someone’s money and send out statements, tax documents, etc. TD Ameritrade, where I custodian, does not offer its own funds.

    If you use a Vanguard or Fidelity, they will try to emphasize their own funds over others, whether you use one of their advisors or try to self-pick from their line up of funds.  Not a problem if you want to use mostly Vanguard or Fidelity anyway, but just be aware of it and simply ignore their push and go to the general list of funds if you want to see all of them, not just from one company.

    Also, I highly doubt any of you will fall into the trap of a Bernie Madoff, but beware that he was able to do what he did because he had custody of his clients money, ie the money went into his bank accounts, and he issued the statements and tax docs.  So he could fudge whatever he wanted to.  You want a publicly known custodian.

    Preeti Shah CPA, CFP®
    [email protected]┃201-892-6094

    #116637 Reply
    preetishah preetishah 
    Participant
    Status: Financial Advisor, Small Business Owner
    Posts: 24
    Joined: 04/10/2018

    I think there are two similar terms that are often confused.

     

    Flat fee is generally the lowest cost.  You pay for a plan or for the time of the adviserr, regardless of dollars invested.

    Fee only is an adviserr who makes  his money directly from you, whether that be from an hourly fee, annual fee, or an assets under management fee.  The fees should be upfront and transparent.  As your wealth grows, you’ll pay a large amount of money to an AUM adviser, which may or may not be worth it.

     

    What you really want to avoid is an “adviser” who is really a salesperson getting paid by the products being sold rather than by the purchaser.  This person will be incentivized to have you trade often and pay the largest fees possible per trade.  As is very apparent from the big data conversation, if you aren’t paying for it, then you are the product, not the customer.

    Click to expand…

    Thank you for this reply. By George I think I’ve got it.

    The one thing that I was aware of, is that you want to stay away from someone who makes their money by selling you a product (as you alluded to in your reply). Score one for me.

    Click to expand…

    Hi Molecularblonde –  may I give you a suggestion, it may or may not appeal but just thought I’d throw it out there.  If you want to use an advisor but are afraid of making another mistake (which I completely understand because it is exhausting and costly) – pick two so you can get second opinions on everything.

    You have a good size portfolio, there are alot of advisors whose minimums are only $100k or $250k.  Hire two of them – give each their minimum, keep the rest in a do-it-yourself Vanguard portfolio per WCI suggestions – and then ask the same questions to both.  Have BOTH of them help you with Estate Planning, Tax Planning, Investments, Insurance, etc.

    Over time you’ll start seeing the difference in advice and also get multiple perspectives, and you can make the final decisions yourself.  I know I could get in trouble with fellow advisors if they read this, because most of them wouldn’t like to be in “competition” with someone else. But I think there is nothing wrong with it, I do the same when it comes to other professionals.  Not all the time, but sometimes.  I mostly trust my doctors, but on occassion I’ve consulted with a second one if I wasn’t sure I was getting the right advice.  I always research what Google says before I give an electrician or plumber my money to make an expensive repair.

    Yes, there are times when it would be easier for me to manage all the clients money because some of them can be lazy and everytime I ask them to do something on their 529 or 401k plans or get me statements so I can try to coordinate, it doesn’t get done.  But if the client is reasonably educated and motivated, I have no issues with someone having two or more planners.  A few of my really high net worth clients have multiple ones and there are times when the other planner knows something I don’t, in those cases I welcome the chance to learn and grow.

    Rather than 0% DIY or 100% DIY, take $100k to $250k, give it to a decent planner or two, follow WCI for the rest, and I bet you’ll come out much savvier in a year or so.  Good luck, I can hear the worry in your posts, and I used to be you 15 years ago at age 31 when I got divorced and knew nothing about finances (I was a CPA and Auditor right out of college but knew NOTHING about managing money while married!)  I hated anything to do with taxes or investments, if you asked me what an IRA was, I would have guessed “Irish Republican Army?”  And then somehow I had to get into it since I was newly single and I discovered it wasn’t so bad if you have the right guidance and education on the basics.

    So I feel your worry, but I hope my suggestion might be something to consider, good luck, and please post back in a year, I’m sure we’d all love to see an update.

    Preeti Shah CPA, CFP®
    [email protected]┃201-892-6094

    #116652 Reply

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