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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…

  • Faithful Steward Faithful Steward 
    Participant
    Status: Financial Advisor, Small Business Owner
    Posts: 438
    Joined: 06/12/2017
    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.

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    No offense taken. Didn’t consider it a knock. I took it as an expression of the frustration over how many in my industry try to use these various terms as a marketing ploy.

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

    #196555 Reply
    Hank Hank 
    Moderator
    Status: Attorney
    Posts: 1280
    Joined: 03/27/2017

    An extra $30K per year would go a long way towards a secure retirement.

    Quick thought exercise: if you have a paid off house, Social Security, and an additional $30K per year of income, what percentage of retirees does that put you ahead of?  Some quick google-fu shows average household retirement spending of $48K per annum.

    #196559 Reply
    Liked by Lordosis
    Lordosis Lordosis 
    Participant
    Status: Physician
    Posts: 1296
    Joined: 02/11/2019

    That was the real tipping point for me to DIY investing.  The costs are so high that you would really need to screw things up to make up the difference.

    “Never let your sense of morals prevent you from doing what is right.”

    #196562 Reply
    Avatar Kamban 
    Participant
    Status: Physician
    Posts: 2353
    Joined: 08/01/2016

    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.

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    Assuming 1% AUM you are looking at assets of $3M. For that amount that is going to be drained from your account every year, it might be worth considering spending 5K-10K to set up a plan to streamline your accounts so that it can be in index funds when you retire and can provide a steady income by quarterly dividends or selling some principal. In addition you will also have SS income on top of that. That will be a much better financial move in the long run.

    By paying AUM you might even start draining the principal on the years when the market is down ad there is a dip in your net worth. You don’t want to add 30K extra drain on that amount.

    #196564 Reply
    Avatar Physicians Capital Management LLC 
    Participant
    Status: Physician, Financial Advisor
    Posts: 32
    Joined: 07/17/2017

    30k is too much.  The products are so good these days that it can literally just sit there with nothing to do.

    #196566 Reply
    Avatar Kamban 
    Participant
    Status: Physician
    Posts: 2353
    Joined: 08/01/2016
    No offense taken. Didn’t consider it a knock. I took it as an expression of the frustration over how many in my industry try to use these various terms as a marketing ploy.

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    Would be nice if all CFP could display their payments structure

    1. Fess – Is it a flat fee or sliding scale. If a sliding scale, at what junctions do the fee increase.

    2. AUM : Do you charge AUM. if so what percentage is it.

    3. Commissions: Do you accept commissions from the entities you invest my money in.

    By them being purposefully opaque and also being blindsided by a front load fee on one occasion, I have sworn off CFP. If they were more straightforward I could recommend them to my relatives and friends. Instead I recommend just DIY, mainly in index funds.

    #196567 Reply
    Avatar Physicians Capital Management LLC 
    Participant
    Status: Physician, Financial Advisor
    Posts: 32
    Joined: 07/17/2017
    #196568 Reply
    Avatar Physicians Capital Management LLC 
    Participant
    Status: Physician, Financial Advisor
    Posts: 32
    Joined: 07/17/2017

    Actually, the expense ratio on that one is 0.42 percent.  You can do better with the other Vanguard funds (.04 percent).  It is easier than medicine, trust me!  Don’t pay 30k.

    #196570 Reply
    jfoxcpacfp jfoxcpacfp 
    Moderator
    Status: Financial Advisor, Accountant, Small Business Owner
    Posts: 7794
    Joined: 01/09/2016

    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.

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    I’m confused as to why the cost is $30k if most of your retirement is in a PS plan. Typically, those assets are not included in the AUM fee (and, yes, I agree that this advisor is probably fee-only). Or do you have a large taxable account + Roths in addition?

    You may not need a FA if all you want is investment management and you’re not looking for planning. A checkup this close to retirement might be a good idea, though.

    Johanna Fox Turner, CPA, CFP, Fox Wealth Mgmt & Fox CPAs ~
    http://www.fox-cpas.com/for-doctors-only ~ [email protected]

    #196573 Reply
    birddog birddog 
    Participant
    Status: Physician
    Posts: 28
    Joined: 02/05/2019

    You’ll like my post tomorrow.

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    As WCI already alluded to, his post from today (link below) is an excellent resource and would save you tens of thousands over $30,000 a year in fees you mentioned in your original post. The few hundred dollars to take his course with your spouse (even if you went with an advisor) would be well worth in in terms of having a foundation for you and your spouse to make informed decisions about money and advisors together. This course seems like a relatively VERY small investment of time and money for managing what you’ve worked so hard for decades to accumulate.

    How to Find A Good Financial Advisor at a Fair Price

    #196791 Reply
    Liked by Hank
    jfoxcpacfp jfoxcpacfp 
    Moderator
    Status: Financial Advisor, Accountant, Small Business Owner
    Posts: 7794
    Joined: 01/09/2016

    You’ll like my post tomorrow.

    Click to expand…

    As WCI already alluded to, his post from today (link below) is an excellent resource and would save you tens of thousands over $30,000 a year in fees you mentioned in your original post. The few hundred dollars to take his course with your spouse (even if you went with an advisor) would be well worth in in terms of having a foundation for you and your spouse to make informed decisions about money and advisors together. This course seems like a relatively VERY small investment of time and money for managing what you’ve worked so hard for decades to accumulate.

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    I appreciate the heads up, birddog, or I might have missed it. While I truly appreciate the mention, I take issue with WCI’s comments in one part. But what else is new?😉

    Johanna Fox Turner, CPA, CFP, Fox Wealth Mgmt & Fox CPAs ~
    http://www.fox-cpas.com/for-doctors-only ~ [email protected]

    #196805 Reply
    Liked by Tim
    Avatar Tim 
    Participant
    Status: Accountant
    Posts: 2621
    Joined: 09/18/2018

    Ways of making money!

    1) Fee for service or time.

    2) Fee on AUM.

    3) Commissions on products sold.

    4) Transactions fees.

    5) Fiduciary or not.

    Start-up and ongoing support are the primary elements for an advisor standpoint. An open disclousure is sometimes buried in the weeds. That’s how you get burned. The size of the portfolio and complexity is a definate factor. Good advice under 1) is the most cost effective if you can move forward yourself.

     

     

     

    #196814 Reply
    Avatar pulpsnatcher 
    Participant
    Status: Dentist
    Posts: 43
    Joined: 09/10/2018
    Earnest refinancing bonus

    I was looking through the archives investigating the fee structure for Financial Advisors.  The readers of this forum I would assume are looking for a flat fee advisor.  Certainly a flat fee advisor should get rewarded for his/her time on an agreed upon rate.  This rate could be the same or different depending on the task i.e. portfolio management, retirement planning, possibly trust planning, and etcetera.  It seems obvious to me that readers of this forum would have a greater attraction to flat fee advisors if the fees were fair and reasonable.  I have no idea about the history of the AUM fee structure and how it got traction, but I do know as a dentist I get paid a fee for my service to the patient that has nothing to do with how many or few teeth they have.

    #206388 Reply

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