re: Are financial planners full of shite? Should I trust them?

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Fama, Nobel Prize winner

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Look at you, smart guy!

If you are knowledgeable about Fama-French research, then you know that believed in asset tilting, and sector analysis.

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Active management doesn't/cannot beat the index over the last ~100 years because of market efficiency, anyone telling you otherwise is a huckster

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I guess every hedge fund manager and every fund (including index) manager is a huckster too?

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How do I say this nicely? Most responses on this topic have no clue what a real financial planner does. It's not about picking the best fund or stock that gives a good return.

A real financial planner provides consultation on managing life events, taxes, tax implications, different investment vehicles, i.e. qualified vs. non-qualified funds, managing those different pots of money, business succession planning, etc.

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When financial planners or advisors are brought up in conversations like this, the vast majority of the time it is in reference to people employed by insurance firms to pose as financial advisors. That's why most replies are saying to steer clear. Most people have no clue about money and will get ripped off.

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How do I say this nicely? Most responses on this topic have no clue what a real financial planner does

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This should surprise no one on this board

I started typing out a response that basically was saying most don't need an advisor until they hit the ~$5M investible asset range. Anything less than that and needs generally aren't complex enough to justify an advisor and their AUM fees.

But then I read some of the responses and started to doubt the 'anyone could do it' mindset

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This is false. Asset based fee advisors also have a fiduciary duty it’s just not automatic.

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Agree. I meant that fee-only advisors are the only ones with a fiduciary duty. That includes per hour and percent of assets. Asset based planners won’t take you unless you’ve already accumulated a decent amount of wealth or have the potential to do so because that’s how they are compensated. Once you have a considerable amount of wealth, it is way, way cheaper to pay per hour; however, you have to be disciplined enough to actually implement what the planner tells you. Many of the asset based planners will move your assets for you, so you don’t have to think about anything. There are pros and cons to each model, but definitely use a fee only model.

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Further proof you’re an absolute moron

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So that money is going to be taxed, currently, at 24%. Unless those rates drop dramatically it will be taxed at the same rate anytime we take it....as a confirmed moron our retirement income will be about 80% of the income we are currently earning and every dollar above $190K either way is taxed at 24% up to about $340K so the money in question is going to be taxed at 24% this year and, unless it changes, every year until we kill over. The only advantage to waiting would be to wait until our income was such that it was taxed at a lower rate. To drop it it the next lower bracket that would mean it would be taxed at 22% for any amount of income above $89k. Our income will never be that low, if it is we have bigger issues than paying a 2% penalty on the money that would cost about 7% to borrow at the moment. I'm sorry you are in a position to save a few % points on taxes but luckily we have seen to it that our tax bracket at the margin will be the same in retirement as it is when we are working.

Financial advisor and strip mall developer steal $100 million

The advisor only facilitated the theft of $100 million dollars (not to mention the $320 million guarantees)…..but he’s a goooood guuuuy.

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tax strategy such as Roth conversion vs harvesting gains in zero LTCG rate during early retirement.

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This is the key. My income is only about 60K. I purposely choose to keep it low. My ACA bills are minimal. I need to up my Roth conversion or capture gains at the 0 or 15% percent level. My tax advisor wants me to go deep into the 24% bracket but I hate pay taxes. I'll pay for it later I guess but if I can keep my taxable savings high, my sons will get the step up. Trad IRA's are going to create an issue for them I guess.

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So that money is going to be taxed, currently, at 24%.

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Hopefully you are over 59 1/2 and didn’t pay the 10% penalty as well

Any planner that has an insurance company as their broker/dealer for securities should probably be avoided. They wont necessarily be named that same as the insurance company but if an old line life insurance or property insurance company are their employers, they want to sell life insurance and ancillary products more than they want to manage your money and provide objective financial advice. Find a planner that is affiliated with an independent broker/dealer (not insurance, bank, or wire house broker/dealer). They won't be using in house products probably like the "captives".
Use the fee based programs instead of commissions and meet with advisors 1-2 times per year after establishing your relationship.

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Are financial planners full of shite? Should I trust them?

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They are not full of shite….however, I think you can do just as well investing on your own. They often charge 1% of your portfolio annually…if you do that math, that can be a hell of a lot of money every year.

I’d rather just pick out several high performing index funds and let them grow as the economy grows.

When I need advice, I have got a fee-only advisor to ask. He is constantly trying to get me to let him manage my portfolio, because he wants to charge me an annual fee…but he knows he can’t match my return over the last 30 years.


ETA: i totally trust him, because I don’t allow him to implement any transaction. When I need advice, he provides it….whether I take his suggestions is up to me.