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re: Financial Advisor Meeting
Posted on 11/20/19 at 10:33 am to Shepherd88
Posted on 11/20/19 at 10:33 am to Shepherd88
quote:
Most times in a brokered relationship when someone buys American funds for example and never changes them (low cost, low maintenance). A) they never really hear from the advisor again bc he doesn’t have to work for his keep (he’s been paid), B) they don’t get any additional detailed planning for their estate, legacy, or insurnace needs and C) they end up with an exorbitant cap gain that makes it really difficult to rebalance the portfolio for life changes without having big tax consequences.
You nailed it. This is the real problem with the commission model no one talks about. Once the advisor has gotten paid, there is little to no incentive to "manage" anything. They collect the 12b-1 fee and hope you don't call because if you do want to change anything, they have to pay the ticket charge! Sure, they call and see if you want to invest more, but that's not advice. I've said on here before and I'll say it again, if you don't want an advisor to "manage" anything, you shouldn't be paying an advisor. The whole point is to have them reduce the risk overall - whether that be you investments, your insurance, your estate planning, taxes, etc etc etc. Especially with robo-advisors charging next to nothing on etf's that cost next to nothing.
quote:
Edit: I can have 250 solid relationships and be able to serve all my clients deeply by charging a fee based manner. It would take at least 4x that amount of clientele for me to make the same amount of recurring revenue with a commission based approach. Having more than 350 households gets unserviceable and things start to fall through the cracks.
Another fantastic point. Ask an Edward Jones advisor how many clients his/her branch services. It's, uhh, crazy. If you exclude participants in various plans that we admittedly don't have planning relationships with, we're about 130 groups/households.
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