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How to asses financial advisor in this market
Posted on 9/29/22 at 12:48 pm
Posted on 9/29/22 at 12:48 pm
How do I go about assessing the viability of the success/failure of a financial advisor in these times? I've lost 22%+ in the account since its inception in 2019. Some of the holdings have lost 35-40%. I'm not a professional and don't see what they see and apparently this person is gathered many awards for being a top investor in the state.
I have a separate Roth IRA that is only S&P500 and it has lost less in that time period.
Any advice would be great. I want to set up a meeting and just don't know the questions to ask.
Unrealized losses -16%
Realized losses -6%
I have a separate Roth IRA that is only S&P500 and it has lost less in that time period.
Any advice would be great. I want to set up a meeting and just don't know the questions to ask.
Unrealized losses -16%
Realized losses -6%
This post was edited on 9/29/22 at 12:51 pm
11
Posted on 9/29/22 at 12:49 pm to Hu_Flung_Pu
I'll be honest - I would want one that has navigated a crisis before. You have to think there are a number of FAs in their 30s lets say that no nothing but QE - easy policy world since the financial crisis in 2008-2009.
If I were going that route - I'd want someone who learned a lesson or two when shite hits the fan
my 2 cents
If I were going that route - I'd want someone who learned a lesson or two when shite hits the fan
my 2 cents
Posted on 9/29/22 at 12:51 pm to Shankopotomus
The person is well established with Merrill and in her 50s.
Posted on 9/29/22 at 12:57 pm to Hu_Flung_Pu
The vast majority of the ones who actually know their shite are highly compensated and don't work with us peons.
You've more or less answered your own question here. Most FAs don't outperform the S&P over time.
quote:
I have a separate Roth IRA that is only S&P500 and it has lost less in that time period
You've more or less answered your own question here. Most FAs don't outperform the S&P over time.
Posted on 9/29/22 at 1:01 pm to Hu_Flung_Pu
ok. so then my only other thing would be to interview at least one more to get another perspective
if you are looking for confirmation - go for it
HOWEVER
If she is Merrill can she only advise you on Merrill products? Or is she a fiduciary and you can move your money around?
Last thoughts - good luck
if you are looking for confirmation - go for it
HOWEVER
If she is Merrill can she only advise you on Merrill products? Or is she a fiduciary and you can move your money around?
Last thoughts - good luck
Posted on 9/29/22 at 1:15 pm to Shankopotomus
Well we do have some Vanguard ETFs in there so I'm assuming no.
Posted on 9/29/22 at 2:36 pm to Hu_Flung_Pu
A lot of my clients work with financial advisors and they have been really complaining.
I also have a lot of financial advisors who are referral sources and ones I work on mutual clients with.
What I have been able to pick up is this:
In times of trouble, a good financial advisor keeps you from doing anything stupid.
They eon't necessairly "suck less" than the market.
But... they can stop you from doing things like selling at the bottom or getting crazy desperate.
Certainly not everyone needs that level of hand holding.
I also have a lot of financial advisors who are referral sources and ones I work on mutual clients with.
What I have been able to pick up is this:
In times of trouble, a good financial advisor keeps you from doing anything stupid.
They eon't necessairly "suck less" than the market.
But... they can stop you from doing things like selling at the bottom or getting crazy desperate.
Certainly not everyone needs that level of hand holding.
Posted on 9/29/22 at 2:45 pm to Hu_Flung_Pu
If your advisor is confident about anything in the next couple of weeks (good or bad), then they are salesmen/women who throw darts at a board and try to sound confident with their clients.
If your advisor is bullish about the next 2 years (after the next few weeks are complete), then they may have done their homework. Indicators are at levels after crashes in 2008/1987.
Good luck.
If your advisor is bullish about the next 2 years (after the next few weeks are complete), then they may have done their homework. Indicators are at levels after crashes in 2008/1987.
Good luck.
Posted on 9/29/22 at 3:07 pm to Hu_Flung_Pu
quote:
How do I go about assessing the viability of the success/failure of a financial advisor in these times? I've lost 22%+ in the account since its inception in 2019. Some of the holdings have lost 35-40%. I'm not a professional and don't see what they see and apparently this person is gathered many awards for being a top investor in the state.
What is your mix of assets? You need to know what the benchmark is and how much you’re over/under performing, and why that may the case.
That being said, down 22% since 2019 would be very difficult to justify.
ETA- talk to the FA and interview another one. If you can’t have a conversation with someone that can adequately address your concerns, what’s the point?
This post was edited on 9/29/22 at 3:12 pm
Posted on 9/29/22 at 3:11 pm to Hu_Flung_Pu
quote:
this person is gathered many awards for being a top investor in the state.
This is probably a red flag, at least for me. Those awards are almost exclusively self nominated, meaning the advisor is nominated herself among a pool of very few FAs who give a damn about those awards. The majority of people winning those awards are more focused on appearances and less on substance, but there are exceptions.
Posted on 9/29/22 at 3:31 pm to Hu_Flung_Pu
I can’t imagine having to pay Brandon 80% or whatever it is these days and still having to pay the Edward Jones guy 5% to lose my money
Posted on 9/29/22 at 4:06 pm to Hu_Flung_Pu
You really think they are managing your money? FA's have a list of funds that their company offers and they "help you" pick the ones that fit your "risk tolerance". They are not buying and selling individual stocks on your behalf or telling you that you should take some risk and go long or short on some puts or calls at any given time when their detailed market analysis shows them opportunities. There are a good bit of FA's who don't even know how to sell puts or calls much less know when to do it.
They just get your money, make you fell good, and collect their commission. Once they get 20 to 30 million under their belt, its 250k/year for kissing their clients buts telling them everything is ok and you are in good hands.
They just get your money, make you fell good, and collect their commission. Once they get 20 to 30 million under their belt, its 250k/year for kissing their clients buts telling them everything is ok and you are in good hands.
Posted on 9/29/22 at 4:07 pm to Hu_Flung_Pu
quote:
I've lost 22%+ in the account since its inception in 2019.
quote:Something is wrong here.
I have a separate Roth IRA that is only S&P500 and it has lost less in that time period.
The S&P 500 is up since even its highest point in 2019 -- 3,247.93.
A good financial advisor does what was previously mentioned - keeps you from doing something stupid. A bonus would be an advisor that doesn't get paid commissions.
Full disclosure: I am a financial planner and advisor. I'm a fiduciary as well, being a CFP(R) professional. All of my clients have made money since any point in 2019 - though the highest mark for the S&P 500 was 12/27/2019. Even from that date, on average, my client portfolios are up about 1%. Just depends on their level of risk and net flows.
Posted on 9/29/22 at 4:14 pm to Bazzatcha
quote:Exhibit A of someone who has never met, or worked with, a good financial advisor.
You really think they are managing your money? FA's have a list of funds that their company offers and they "help you" pick the ones that fit your "risk tolerance". They are not buying and selling individual stocks on your behalf or telling you that you should take some risk and go long or short on some puts or calls at any given time when their detailed market analysis shows them opportunities. There are a good bit of FA's who don't even know how to sell puts or calls much less know when to do it.
They just get your money, make you fell good, and collect their commission. Once they get 20 to 30 million under their belt, its 250k/year for kissing their clients buts telling them everything is ok and you are in good hands.
1. Not all FAs only sell "their company's" investments.
2. Not all FAs get paid commissions.
3. Not all FAs just buy and sell.
Have hope. There are some good guys out there truly looking out for their client's best interests.
Posted on 9/29/22 at 4:27 pm to Niner
quote:
A good financial advisor does what was previously mentioned - keeps you from doing something stupid. A bonus would be an advisor that doesn't get paid commissions.
Okay, I may be using the wrong term. I do nothing in this account but let them move my money around and they buy/sell the stocks/etfs.
I manage and do everything in my Roth IRA.
This post was edited on 9/29/22 at 4:28 pm
Posted on 9/29/22 at 4:45 pm to Niner
quote:
Have hope. There are some good guys out there truly looking out for their client's best interests.
I know there are some good ones but most don't work at a household name institution. Most good ones that you are talking about are part of a much smaller firm that have the freedom to do whatever they want, with their clients approval of course. I know there are some out there but I haven't been able to get over the trust part. Many people trusted Bernie Madoff and the Stanford Group but too many times do we see the smaller institutions providing the too good to be true returns only to find out that they were in fact, too good to be true.
I'd love to find a good FA, but my vetting process hasn't allowed me to. Kiss asses are a dead give away.
Posted on 9/30/22 at 5:02 am to Bazzatcha
quote:I will say, most of the advisors I have encountered at, say, Edward Jones or Wells Fargo Advisors get paid commissions and know VERY little other than investment options available to them. They won't give you recommendations on your 401k they aren't managing and only care about the account they can see, not your entire portfolio. Then they make excuses to buy and sell in the account because Christmas is coming up and they need to get little Johnny a new iPad with their commission check.
I know there are some good ones but most don't work at a household name institution.
Not every one is like that, but I've definitely met many who are. They give the rest of us "good guys" a bad rap. To your point, I do work at a smaller RIA and am not beholden to some corporate brand. We can implement our recommended strategy with whatever mutual fund or ETF we want - certainly all the ones available to individual investors and then some more only available to advisors. If there is a transaction fee, we justify it by making sure the purchase or sale is large enough to make the fee an incredibly minute percentage ($25 to buy $30,000 of a mutual would be worth it, for example). Most don't have transaction fees, though, and they don't even go to us - they go to Fidelity. We don't get paid any commissions whatsoever.
ETA: To be clear, I have met some competent Edward Jones or Wells Fargo Advisors FAs. They are just few and far between, in my personal experience.
This post was edited on 9/30/22 at 7:42 am
Posted on 9/30/22 at 5:06 am to Hu_Flung_Pu
quote:Do you tell them what and when to buy and sell? If so, then that is not a financial advisor.
Okay, I may be using the wrong term. I do nothing in this account but let them move my money around and they buy/sell the stocks/etfs.
If you just let them buy and sell whatever they want, you are asking the right questions and need to find someone else to work with - especially if you're down 22% since 2019...wow.
Posted on 9/30/22 at 6:58 am to Niner
quote:
Do you tell them what and when to buy and sell? If so, then that is not a financial advisor.
I don’t believe discretion is the difference between being an advisor or not. I know plenty of fee based FAs that don’t use discretion.
Posted on 9/30/22 at 7:00 am to Hu_Flung_Pu
I assume you mean you are have the account since 2019 and this year you are down 22%. YTD on the S&P 500 is 22.73%. Most Financial advisors will not out perform this on a year over year basis. As stated in another post most of the FA's are there to stop emotional trading. Doing something stupid.
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