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Meeting with possible fee only Financial Advisorfor third time this week…

Home Financial Advisors Meeting with possible fee only Financial Advisorfor third time this week…

  • Avatar Ykcor 
    Participant
    Status: Physician
    Posts: 75
    Joined: 01/02/2019

    Like everything about him except the blended fee structure for AUM (0.6 to 1%). I know this is standard fee, but for my assets would be $30,000 a year. Would it be reasonable to say to him no more than 0.5% and a cap of 10K?

    Since I’m still working and most of my retirement is in a profit sharing plan, I can’t use Vanguard PAS or the Schwab Intelligent Advisory.

    Why do I need a FA? I’m in my 60’s and look around at colleagues dying or becoming disabled. I want to make it easy for my wife if and when something happens to me.

    #196397 Reply
    Liked by hatton1
    SerrateAndDominate SerrateAndDominate 
    Participant
    Status: Physician
    Posts: 430
    Joined: 02/01/2018

    Not to be a stickler, but that advisor is fee-based.

    Earn everything.

    #196404 Reply
    Molar Mechanic Molar Mechanic 
    Participant
    Status: Dentist, Small Business Owner
    Posts: 372
    Joined: 10/29/2017
    Why do I need a FA? I’m in my 60’s and look around at colleagues dying or becoming disabled. I want to make it easy for my wife if and when something happens to me.

    Click to expand…

    You need a trustee and a written plan.  The trustee will cost some money, but you only have to engage after you die.

    #196405 Reply
    Hank Hank 
    Moderator
    Status: Attorney
    Posts: 1280
    Joined: 03/27/2017

    Schwab or Navy Federal could be worth a look if you need a professional trustee after incapacity or death.  I’m sure other forum members can recommend other professional trustees as well.

    Might not be a terrible idea to buy WCI’s Fire your Financial Advisor course and take it together with your wife.  Even if she relies on a professional advisor / trustee, she should feel more confident if she knows that what they’re doing lines up with that they’re supposed to be doing.  $500 could be cheap peace of mind.

    #196438 Reply
    Liked by ZZZ, Ykcor, birddog
    CordMcNally CordMcNally 
    Participant
    Status: Physician
    Posts: 2503
    Joined: 01/03/2017
    Like everything about him except the blended fee structure for AUM (0.6 to 1%)

    Click to expand…

    That’s a very big reason to not like him. I agree that you need a written plan and a trustee. Maybe try a true fee only advisor.

    “But investing isn’t about beating others at their game. It’s about controlling yourself at your own game.”
    ― Benjamin Graham, The Intelligent Investor

    #196440 Reply
    Liked by snowcanyon
    Molar Mechanic Molar Mechanic 
    Participant
    Status: Dentist, Small Business Owner
    Posts: 372
    Joined: 10/29/2017

    Just to clarify:  There are two types of fee only.

    Your guy only charges you an AUM fee, and presumably purports to be a fiduciary and not paid by any of the companies he helps you interact with; ie he isn’t paid commission by an insurance company or kickbacks for putting you into high fee plans.  At the same time, as your funds grow, then he gets paid more.  In your case, you are paying handsomely for that plan.

    The fee only term was originally intended to mean a flat fee or hourly fee advisor.  These guys cost more when you are broke, but far far less when you have assets.  There aren’t a ton of these, but there are some.

    #196444 Reply
    Avatar Ykcor 
    Participant
    Status: Physician
    Posts: 75
    Joined: 01/02/2019
    medical school scholarship sponsor

    Fee only FA are hard to come by except remotely. Not that anything bad about that. I guess I still like to look someone in the eye and shake hands.

    #196451 Reply
    Molar Mechanic Molar Mechanic 
    Participant
    Status: Dentist, Small Business Owner
    Posts: 372
    Joined: 10/29/2017

    I actually agree with that, but I wouldn’t pay $30k every year for it.

    #196471 Reply
    birddog birddog 
    Participant
    Status: Physician
    Posts: 28
    Joined: 02/05/2019

    Have you reached out to any of the White Coat Investor’s recommended list of financial advisors that he’s vetted?  https://www.whitecoatinvestor.com/financial-advisors/

     

    You may want to consider that before committing to an AUM fee.

    #196477 Reply
    Liked by Ykcor
    Avatar ZZZ 
    Participant
    Status: Spouse
    Posts: 561
    Joined: 06/18/2018
    Splash Refinancing Bonus

    Why don’t you and your wife just educate yourselves instead of blowing 30k/yr (plus likely hidden fees and fund loads) on some guy?

    Surely your wife can read and do algebra. Nobody will care more about taking care of your money than you guys will. You say you want want to make it easy for her, well, with a little bit of knowledge, lots of things seem pretty easy, right? Managing your finances is one of those.

    Do you have kids? If so, take this as an opportunity to get them educated about managing finances, too. That’ll go a long way to ensuring your money is used wisely should it out last you.

    Sure, you can pay lots of people to manage this stuff for you (and hope they do a good job and don’t put most of it in their own pockets), but better than ‘looking someone in the eye and shaking hands’ (yep, nobody has ever been taken advantage of by someone who smiled and shook their hand) is having the knowledge to do it yourself and saving 10s of thousands of dollars a year.

    #196526 Reply
    Faithful Steward Faithful Steward 
    Participant
    Status: Financial Advisor, Small Business Owner
    Posts: 438
    Joined: 06/12/2017
    Would it be reasonable to say to him no more than 0.5% and a cap of 10K?

    Click to expand…

    It never hurts to ask. Most advisors are willing to negotiate, to some extent, on fees.

    Is this advisor only managing your portfolio? Or, are they providing comprehensive financial planning, including retirement income planning?

    If all they are doing is managing the portfolio, then this seems like an extremely high fee.

    On the other hand, if they are doing comprehensive planning the fee may be reasonable.

    Best thing I can tell you, just like I tell my own clients, your advisor needs to provide you with value that is some multiple of the fee you pay them.

     

    Michael Peterson, CFP® | Faithful Steward Wealth Advisors
    https://ProsperousPhysician.com | (717) 496-0900

    #196528 Reply
    Faithful Steward Faithful Steward 
    Participant
    Status: Financial Advisor, Small Business Owner
    Posts: 438
    Joined: 06/12/2017
    Maybe try a true fee only advisor.

    Click to expand…

    Just to make sure everyone is speaking the same language, a Fee-Only advisor is one who receives all their compensation directly from the client. In other words, NO COMMISSIONS. An advisor who charges an AUM fee is a fee-only advisor.

    I think what you may have been referring to is a Flat-Fee advisor, where they charge a flat fee (although sometimes the flat-fee is based on your level of assets) for their services.

    Michael Peterson, CFP® | Faithful Steward Wealth Advisors
    https://ProsperousPhysician.com | (717) 496-0900

    #196529 Reply
    Liked by Tim
    SerrateAndDominate SerrateAndDominate 
    Participant
    Status: Physician
    Posts: 430
    Joined: 02/01/2018
    Maybe try a true fee only advisor. 

    Click to expand…

    Just to make sure everyone is speaking the same language, a Fee-Only advisor is one who receives all their compensation directly from the client. In other words, NO COMMISSIONS. An advisor who charges an AUM fee is a fee-only advisor.

    I think what you may have been referring to is a Flat-Fee advisor, where they charge a flat fee (although sometimes the flat-fee is based on your level of assets) for their services.

    Click to expand…

    Thanks for the clarity. Sorry if I was incorrect with my post.

     

    This isn’t a knock to you at all, but I feel like the industry (for the very short time I’ve followed it) has been very dynamic with the whole “fee-based” versus “fee-only” definition so AUM fees can still go on. Not arguing the merits of AUM; just an observation.  Bottom line: stay educated

     

    Earn everything.

    #196532 Reply
    The White Coat Investor The White Coat Investor 
    Keymaster
    Status: Physician
    Posts: 4392
    Joined: 05/13/2011

    Not to be a stickler, but that advisor is fee-based.

    Click to expand…

    Why do you say that? Fee-based means fees AND commissions. I’m not hearing anything about commissions. AUM fee charging advisors are not fee-based.

    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

    #196541 Reply
    The White Coat Investor The White Coat Investor 
    Keymaster
    Status: Physician
    Posts: 4392
    Joined: 05/13/2011

    Like everything about him except the blended fee structure for AUM (0.6 to 1%). I know this is standard fee, but for my assets would be $30,000 a year. Would it be reasonable to say to him no more than 0.5% and a cap of 10K?

    Since I’m still working and most of my retirement is in a profit sharing plan, I can’t use Vanguard PAS or the Schwab Intelligent Advisory.

    Why do I need a FA? I’m in my 60’s and look around at colleagues dying or becoming disabled. I want to make it easy for my wife if and when something happens to me.

    Click to expand…

    You can try negotiating the fees down, but be prepared to get another one if they don’t come down.

    I know dozens of advisors who will do this for you for less than $10K. Surely you can find another one you like on my list. It might be worthwhile to find them BEFORE your next meeting and then you are in a strong negotiating position.

    Best Financial Advisors

    You’ll like my post tomorrow.

    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

    #196542 Reply
    Liked by birddog, Hank

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