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Message
Financial Advisor Meeting
Posted on 11/19/19 at 1:02 pm
Posted on 11/19/19 at 1:02 pm
My SO and I will be meeting with a financial advisor soon about a significant windfall that we'll be receiving. This will be our first time ever meeting with one.
Any questions that we should ask as first timers? I know to ask or listen about fees, etc., but anything else? We would like to get a small monthly draw from the investment, but I don't know how to ask about that. Any pointers will help.
Thanks.
Any questions that we should ask as first timers? I know to ask or listen about fees, etc., but anything else? We would like to get a small monthly draw from the investment, but I don't know how to ask about that. Any pointers will help.
Thanks.
This post was edited on 11/19/19 at 3:08 pm
14
Posted on 11/19/19 at 1:33 pm to btnetigers
Based on my experience, do not feel pressured into letting them manage all of your assets or feel obligated to purchase any of their funds/products. For me, a flat advisory fee works well.
Interested to see what some of the more knowledgeable folks on here say.
Interested to see what some of the more knowledgeable folks on here say.
Posted on 11/19/19 at 1:49 pm to btnetigers
If the word "fiduciary" isn't one of the first things out of their mouth, turn around and walk out.
Posted on 11/19/19 at 1:56 pm to btnetigers
Plan to meet with more than one advisor. You'd never buy the first car from the first salesman you encountered--you'd go out and comparison shop. Do the same with a FA. Don't just stick with the first guy....find a fee-only advisor who fits your needs.
Posted on 11/19/19 at 2:17 pm to btnetigers
1a) Fee only
1b) Fiduciary
If those criteria are not met, then find someone else. Those are exact words are required. Not "fee based" or any other creative lingo.
Do you actually need the cash flow monthly? Why is the small monthly draw required? I'm assuming you are younger folks so trying to get context on the need.
1b) Fiduciary
If those criteria are not met, then find someone else. Those are exact words are required. Not "fee based" or any other creative lingo.
Do you actually need the cash flow monthly? Why is the small monthly draw required? I'm assuming you are younger folks so trying to get context on the need.
Posted on 11/19/19 at 2:54 pm to lynxcat
I disagree on the fee only part. Think about why you're saying that... 1) because you don't want someone who is going to be pushing you into products that generate commissions for them and not you and all the conflicts that go with you buying their pool. I get it. I really do.
Taken a step further for long term planning, 2) you must then be ok with the fee only guy/gal referring your business to a strictly commission based insurance salesman... because the advisor can't then refer to another "fee based" advisor (talk about a crappy business model) so they have to refer to someone who doesn't compete directly with them... someone who can't sell securities.
You can always follow up the are you fee only with a question like this: What percentage of your revenue is commissions? I would argue that anything above about 10% would be cause to probe with more questions.
For example, me. I'm a "fee based" CFP RIA Fiduciary. Between 2-5% of my revenue annually is based on life, disability, and long term care sales. My current pipeline of insurance consists of 3 term life policies with total annual premium in the neighborhood of $800 (talk about year changing revenue there) and 4-5 LTC policies which, to be fair, are substantial in year one. But for the love of God, I would not want to send a financial planning client down the road to some salesman to get a LTC policy from ole Gill who really needs a sale.
To the OP, solve all your problems by finding a Registered Investment Advisor (RIA) who is a CFP. 2 for 1 in the fiduciary column with these two. Bonus points if they were in the business in 2007. Then it's just about expectations and personality. Good luck!
eta. I was not your downvote...
Taken a step further for long term planning, 2) you must then be ok with the fee only guy/gal referring your business to a strictly commission based insurance salesman... because the advisor can't then refer to another "fee based" advisor (talk about a crappy business model) so they have to refer to someone who doesn't compete directly with them... someone who can't sell securities.
You can always follow up the are you fee only with a question like this: What percentage of your revenue is commissions? I would argue that anything above about 10% would be cause to probe with more questions.
For example, me. I'm a "fee based" CFP RIA Fiduciary. Between 2-5% of my revenue annually is based on life, disability, and long term care sales. My current pipeline of insurance consists of 3 term life policies with total annual premium in the neighborhood of $800 (talk about year changing revenue there) and 4-5 LTC policies which, to be fair, are substantial in year one. But for the love of God, I would not want to send a financial planning client down the road to some salesman to get a LTC policy from ole Gill who really needs a sale.
To the OP, solve all your problems by finding a Registered Investment Advisor (RIA) who is a CFP. 2 for 1 in the fiduciary column with these two. Bonus points if they were in the business in 2007. Then it's just about expectations and personality. Good luck!
eta. I was not your downvote...
This post was edited on 11/19/19 at 2:55 pm
Posted on 11/19/19 at 3:02 pm to btnetigers
Which city does your FA work out of. Maybe some of us can share positive experiences with different FA’s pending on where we live.
Posted on 11/19/19 at 3:49 pm to UpstairsComputer
quote:
UpstairsComputer
I had lunch yesterday with an FA that I had not met before, but was introduced to him by another FA with the same broker/dealer for whom I do the tax work for about 10 clients. The guy I met yesterday is looking for someone to help some of his clients as "his CPA guy" is retiring at year end.
Anyways we were talking about his model and he said he rarely, if ever does fee only. I thought this was odd so I asked him about it, and he said something very interesting.
I'm paraphrasing, but he said if you put people in good investments and have a good understanding of their risk tolerance, then you don't need to buy or sell investments often, and thus, you don't earn much commissions. Therefore, his clients pay less on a commission model, than they would paying a % of assets every quarter, a fee that never stops.
I think the knock is most commission based advisors are bad because of the propensity to churn. But if you don't churn... maybe it works?
Posted on 11/19/19 at 4:00 pm to LSUFanHouston
I think these services can be decoupled.
1) Building a financial plan and fielding X number of sessions annually for touchbases against said plan = fixed rate fee (e.g., $1,500 for plan plus a few meetings annually).
2) Fees related to asset management that emerges as a need coming out of #1.
1) Building a financial plan and fielding X number of sessions annually for touchbases against said plan = fixed rate fee (e.g., $1,500 for plan plus a few meetings annually).
2) Fees related to asset management that emerges as a need coming out of #1.
Posted on 11/19/19 at 6:09 pm to btnetigers
I would go fee only. You eliminate the conflict of interest that broker/dealers have. If a broker is calling himself an “advisor” and selling you funds, then he is just a middle man in Product distribution. A true “adviser”, will be a fiduciary and manage your stocks and bonds. Not sell you a product.
Posted on 11/19/19 at 6:41 pm to btnetigers
If they work for Northwestern Mutual or those other rip off companies, then cancel and save your $. Would recommend toni robbins or some other material to learn how to manage your money, its not a rocket science
Posted on 11/19/19 at 8:00 pm to LSUFanHouston
quote:
think the knock is most commission based advisors are bad because of the propensity to churn. But if you don't churn... maybe it works?
I’ll take a stab at this since we have the option to work as a broker or fiduciary where we are. The option is always presented to the client in how they would like to work together and id say 9/10 times the client would prefer to work with us in a fiduciary manner. More than likely, If the client is looking for a broker, then we won’t be a good fit for them anyway.
Anyway, a “fee based” plan or fiduciary work is a lot like driving the vehicle for the client while they sit in the back. More of less your the chauffeur. A brokered relationship is a lot like letting the client drive the vehicle while you sit in the passenger seat and tell them when to change lanes or prevent themselves from having a wreck.
So having said that of course a fiduciary relationship will cost more, but if the advisor is doing the appropriate thing, the client will get a much better experience from the relationship. Deservedly so.
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.
I could go on with this but just wanted to point that out. Just like with everything else in this world, a better way to do things does evolve every now and then.
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.
This post was edited on 11/19/19 at 8:08 pm
Posted on 11/19/19 at 8:17 pm to Robertson coach
quote:
Would recommend toni robbins or some other material to learn how to manage your money, its not a rocket science
If it’s a good amount of money, it gets complicated. Good professionals pay for themselves.
Posted on 11/20/19 at 4:23 am to btnetigers
Based on the research I've done they charge around $150 an hour or you can do a whole financial planning session for around 3K initially and $1500 annual follow ups. I'm not sure if this is worth it or not I guess that's for you to judge. I'm curious which is the better way to go. I'm not sure if those fee's are charged in addition to the 1% of assets under management fees or not. I've been going back and forth if I would rather pay a fee only and get a plan put together that I could follow or pay on a continuing basis with annual follow ups.
Posted on 11/20/19 at 5:16 am to tigersfan1989
quote:
I've been going back and forth if I would rather pay a fee only and get a plan put together that I could follow or pay on a continuing basis with annual follow ups.
Think about it like this:
If you wanted to lose weight and get in shape would you be the type of who pays a trainer to write a workout guide and nutrition plan and then you follow it to a “T”?
Or would you hire the trainer to work with you on a weekly basis to help push you and give you accountability?
It’s all about what you think gives you the best probability of achieving your financial aspirations and goals. If you think you’d have the discipline to follow that written plan yourself- day in and day out- then pay for the plan.
If not, pay the ongoing fee. There’s no point in having someone just draw the blueprints if you aren’t going to follow them.
This post was edited on 11/20/19 at 5:17 am
Posted on 11/20/19 at 7:23 am to AugustaTiger
Yea I wouldn't have a problem sticking to the plan if it was laid out. Its not so much that I need someone to keep me in line I just need some guidance on where all to put in what retirement accounts and how I can pull out these accounts at retirement the most tax efficient and reducing withdrawal penalties.
Posted on 11/20/19 at 9:18 am to tigersfan1989
If you wouldn’t have any problem sticking to a plan, look for a fee-only advisor that specializes in one-time plans. These typically run in the 2-5k range depending on the complexity of your situation.
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.
Posted on 11/21/19 at 2:09 pm to LSUFanHouston
LSUFanHouston: I've held that same theory, but was proven wrong many times over. commission is obviously cheaper than annual fee, but that's only in theory. One day there will be one reason or another to make a costly change. It's basically making a bet that you'll stick with the "mutual fund of the month" for an extremely long period of time
Posted on 11/21/19 at 2:13 pm to btnetigers
Here are some questions from the great Jason Zweig:
LINK /
Additional tips:
If they're not a fiduciary- run.
If you can't understand how they're paid- run.
If they talk investments/portfolios, returns, and fees first- run.
You're looking for someone that will walk you through a financial planning process before making recommendations, someone that is willing to invest time rather than "close" you quickly, and someone that you mesh with personally. Bonus points for someone that is knowledgeable, but not a know it all- that is one of the most important factors IMO.
LINK /
Additional tips:
If they're not a fiduciary- run.
If you can't understand how they're paid- run.
If they talk investments/portfolios, returns, and fees first- run.
You're looking for someone that will walk you through a financial planning process before making recommendations, someone that is willing to invest time rather than "close" you quickly, and someone that you mesh with personally. Bonus points for someone that is knowledgeable, but not a know it all- that is one of the most important factors IMO.
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