re: Financial Advisor Meeting

After you meet with the "advisor", then take a look at Schwab's investment management with a one time $300 advisor fee (Automated Investing with Professional Guidance)to set your investments. $25k asset level and above to open. Investing doesn't have to be difficult.

Schwab

Depends on your confidence in what you personally understand about the market and investing. What you do early in your investing can have drastic impact to where you end up. Having said that, if you're young most people exposing themselves to the market through a low cost total market index buys you time before adopting other strategies. If you've got a nice nest egg and don't know what to do, then by all means go see one (fee only). There are independent advisors out there who do a good job. My advice is to buy some books or get a formal education regarding the market and investing. Bottom line it's like insurance -- there is no 'right' answer; just what you believe is necessary.

your situation is gonna matter on the amount of dollars, your time horizon and risk tolerance etc etc, the specific advisor.

Inheriting $120,000
Scenario 1
let's say you have a 25 year time horizon and the advisor has a good reputation. If they are "managing your account" you are getting charged an asset management fee it is gonna be most likely 1 percent every year usually charged quarterly. $120k that is gonna be 1200 bucks a year for the first year etc so on and so forth based on the total amount of the account

Scenario 2
The advisors sells you some A-shares of a couple of funds from same fund family. 3.5% front end commission with 0.25% 12b-1 fees. These funds can be exchanged at anytime free of charge after 1 year the event your risk tolerance changes which it will

Scenario 3
you pay a planner $2,000 one time and you manage everything yourself through no load funds.

Scenario 4
you believe everything your read on the MB and don't listen to anyone and pay zero fees.

Many advisors "manage" accounts that charge a fee. That same advisor will also sell a product like scenario 2 if it makes sense for the client. Scenario 1 will lead to more revenue for him over the long run, and cost you more. Scenario 2 will cost more on the front end and less over the long haul.

Fee based is actually more money over the long haul for companies. That is why many are moving towards that model contrary popular belief that they will magically be a better advisor.

Due to my role I see all accounts and all advisors and we have some crappy ones and some that are amazing. The style of account doesn't determine the quality of the advisor so get multiple opinions and make sure they have access to a Certified Financial Planner if they are not one.

Good luck.
Always remember this past performance doesn't guarantee future results.

anytime you hear someone make a guarantee, that is when you should run.

Ideally scenario 2 is best assuming all returns are the samee and you get treated the same as if the advisor were actively managing the account... to get that type of customer service I would look for someone younger that has been mentored by a seasoned advisor. The financial planner should be in at least one of the initial meetings.

This is a hypothetical situation to illustrate different accounts. If you are receiving something > 500k that changes the dynamic

quote:

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Scenario 1 will lead to more revenue for him over the long run, and cost you more. Scenario 2 will cost more on the front end and less over the long haul.

Fee based is actually more money over the long haul for companies. That is why many are moving towards that model contrary popular belief that they will magically be a better advisor

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Man, you dug deep to get back to this topic I like it.

It is true scenario 1 costs more over the long run, but what you fail to mention is that it also aligns the clients goals to the goals of the advisor (ie. we want the account going up as much as possible and when it goes down, have it go down as little as possible). Another benefit of a fee based/only model is you can generally fire the advisor at any point with no substantial consequences.

In scenario 2, if you just paid $4,200 to the guy last year and he won't return your call are you going to fire him/her? It would take 3 1/2 years of presumably good service to make that much money in scenario 1. 4+ if you include 12b-1's. Or worse, what if you get stuck in an annuity (bc you can't lose!!)?

The other positive to the fee only investment model is you generally have someone with a little bit more experience handling your account (assuming they are not outsourcing the investment process). It's well documented how difficult it is to get started in this business. Generally, you do what you have to do to eat for the first few years.

Final point, I promise... (they really should add a bullet point feature) The move to fee based/only really got accelerated with the fiduciary rule. None of those advisors in scenario 2 have to do what is in the "best interest" of the client. The firms love the idea of more revenue long term surely, but in zero transaction fee, robo-advisor, index world it's a race to the bottom. Margins are already being compressed. They have to hit earnings next quarter. Or else they'll have to have another bailout... yikes.

Well certainly any sociopath who refuses to acknowledge hurting other people for their own personal gain would treat it as BS. But any normal guy with a couple kids and a wife doesn't want to get sued over treating their clients like ATM machines. Which is really the point.

Greatest work movie ever. That's a fantastic quote too.

I know it's a different thread, but how are you coming along? Been studying for a few months now, right?

Since I don't think the OP is ever coming back, you targeting a window yet?

Sorry guys, we meet with the advisor tomorrow. And, yes, he would be acting like a fiduciary. He is a partner in a well known firm out of the New Orleans area. Came very highly recommended from a banker friend of ours. The amount of money we're talking about is significant for my wife and I.

I appreciate all of the responses.