Originally Posted by Todd @IntegrityIA (Post 1096752)

There are lots of financial Advisors/ sales representatives in TV that are looking to sell retirees products that they may or may not need. Sometimes these commissions are 5% for A shares and above 10% for some insurance products.

I have mentioned this many times in the TOTV forum. If you hire an advisor, please make sure that they are a low cost, fee only advisor and a fiduciary for you 100% of the time.

Fee based is NOT the same as Fee Only! Please get your advisor to sign the below pledge.

The Pledge Most Advisors Won’t Sign!

Sadly, you will find that most of the Advisors mentioned in this thread will NOT sign this pledge. They will give you all sorts of excuses but they won't sign it. For those of you who love your advisors at the local bank, Edward Jones, Morgan Stanley, Wells Fargo, Fross, Parady, Baum and others, please let the forum know if your advisor will be a fiduciary for you 100% of the time and sign the pledge.

Typically when we do a free 2nd opinion for clients above $500k in portfolio value, we find that there are many hidden fees and total investing expenses are much more than clients realize. If you need help, give us a call.

TOTV - Understand how you pay for financial services

PS: For all of the Vanguard "do-it-yourself" fans, I like Vanguard. They are cheap and offer great exposure to market beta. That being said, building a market cap weighted 60/40% bond portfolio may not be your best strategy. Over the last 15 years (2000 to 2014), Vanguard LifeStrategy Moderate 60/40 (VSMGX) has returned 4.88% per year. Vanguard LifeStrategy Conservative 40/60 (VSCGX) has returned 4.94% per year. These returns are much lower than many investors expect. The major problem today is that future expected returns for both stocks and bonds are lower than historical averages. By targeting other asset classes, value companies, small cap companies, companies with high profit, companies with high investment and companies with momentum, you can potentially increase returns. If you want to learn more, check out our Why DFA page. Watch some of the DFA videos at the bottom of the page.

It is easy to be a good investor in a raging bull market. As of 8/5/15, the SP500 has been up 15.66% per year (5 year compound rate of return). We have also had a 33 year bull market in bonds. The next 5 and 10 years will surprise many investors. A competent, low cost, fee only, fiduciary Advisor can add value to your portfolio. Most people need a coach.

Click here to subscribe to my blog

Good luck,
Todd Moerman
We are a low-cost, fee-only fiduciary for our clients, no commissions
352-205-4377
CLICK HERE FOR WEBSITE

---------------------------------------------------------------------

To my Advisor,

Given the current volatility of stock and bond markets, I wanted to make sure that I understand the foundation of our relationship. I have worked hard for my retirement savings and I want to make sure that my investments are aligned with my best interests and my goals.

Please answer the following:
Are you currently a fiduciary for me 100% of the time?
How do you and your firm get paid for my account? Please list all sources.
What were my total fees for 2014 & 2013 for my accounts? Please break out by Advisor fees, mutual fund expenses, 12b-1 fees, commissions, other fees.
What percent of my portfolio has commission products and 12b-1 fees? Mutual funds with A, B or C shares, UIT’s, closed-end funds, non-traded REITs, insurance?

Will you sign and agree to the following?
• I will be a fiduciary for you 100% of the time.
• I shall always act in good faith and with candor.
• I shall always put the client’s best interest first.
• I shall be proactive in my disclosure of any conflicts of interest that may impact you.
• I will provide to each client full and fair disclosure of all important facts, including full transparency of how we are paid by the client or other financial companies.
• I shall not accept any referral fees or compensation that is contingent upon the purchase or sale of a financial product.
• I shall disclose my advisor fee, any commissions, all operating expenses and any trailing advisor fees or 12b-1 fees.

FIDUCIARY \DEFINITION\: A person legally appointed and authorized to hold assets in trust for another person. The fiduciary manages the assets for the benefit of the other person, rather than for his or her own profit. (source: Investopedia.com) \USAGE\: A registered investment advisor, who is held to a “fiduciary standard of care”, looks after the assets of another person on that person’s behalf, is fully transparent, and required to disclose any potential conflicts of interest

_____________________________ Name of Advisor (print)
_____________________________ Signature of Advisor
_____________________________ Date

Originally Posted by tcxr750 (Post 1109217)

Regarding the perception of the performance of VSMGX and VSCGX relative to a diversified portfolio managed by an advisor with a 1% management fee.
Let's say you have a $1,000,000 portfolio (good luck) and take out 4% per year. You get $40,000 per year and your advisor gets $10,000 per year. In other words 20% of your annual withdrawals are not going to you. 10 years of advice = $100K.
I've been retired 10 years and can safely say that my advisors (see Barron's top 100 list) have allowed my account value to incur 20% losses during the Great Recession. The good news is that if you live long enough and don't make withdrawals eventually your portfolio will recover to it's original value. Unless of course your in the RMD phase. Enjoy!

Originally Posted by rjm1cc (Post 1109529)

Yes the fee is 25% of your "income".
Maybe the fee should be based the performance of the account.

Originally Posted by itnetpro (Post 1110246)

One Word, VANGUARD they are the most reputable in my opinion. If you want to do it yourself go with their low cost targeted funds. If you feel more comfortable using an advisor they also offer that service. If I recall its .03% is the advisor fee. You will be assigned a personal advisor if your assets exceed 500k. I]

Me personally, I have been moving my personal portfolio from Fidelity to a Targeted Mutual Fund VanGuard account. I don't really think we need more then that at the moment.

My instructions to my wife are simple. If I die, since our holdings far exceed the $500K mark. I instructed her to contact Vanguard and have them manage her portfolio. She has no interested learning how to invest and I feel very confident in their ability to manage her assets in the event of my death.

John

Originally Posted by Maxman (Post 1110420)

John agree on Vanguard but I want to point out a slight mistake. Vanguard charges .3% on its advisory services not .03%. Still this is a very low cost advisory service.

Jeff

Originally Posted by l2ridehd (Post 1109677)

Yes the fee paid an advisor goes up and down based on a % of your portfolio when your total value goes up and down. And this is exactly why most advisors try to sell you "things" you shouldn't buy so they get high commissions. And why they put you in investments that have higher risks then you should be taking so the potential returns may be higher. Think of it like this. You could put all your money in 20 different banks using CD ladders and have almost zero risk. You would also have VERY low returns. So you take 20% of your money and put it in stocks to improve your return.

You have also just increased your risk. And so you take 80% and put it in stocks and your risk goes much higher. Then you decide to put that 80% all in twitter stock and your risk of failure is now through the roof. You may get lucky and get a very high return, but your risk is still extremely high. So how do you balance risk and return? You set an asset allocation that you are comfortable with and then make sure your fixed income and your stock portion are both highly diversified. You have lots of different bonds and stocks. So if one should fail your returns have limited impact.

Lower your risk by having many different stocks and bonds by using index funds. Total stock market, total bond market and total international stock and bond funds accomplish that objective. Then get your expenses as low as possible so you keep a very high % of your returns. You can use a tool from Morningstar called Portfolio Xray to determine your total expenses. Mine are .011% for everything. That is for every $1000 invested, I pay $1.10 a year. All in mutual fund expense ratios. If your paying 1.5% a year then your paying $15.00 for every $1000 invested. Over time that adds up to very expensive advice. If you have a 1 million dollar portfolio you would pay just in advisor fees $15000 plus your also paying the expense ratios and loads for what ever investments your in. In this example I would pay $1100.00 a year. That means I would have a minimum of $15000 savings to invest even if the advisor also used very low cost funds. Most don't. Over ten years that's a huge advantage of $150,000 to re-invest. And I can almost guarantee that my downside risk is significantly lower.

Originally Posted by l2ridehd (Post 1113868)

You're probably right "outlaw" I was just trying to show an example of the way folks should be thinking about stocks and bonds. There was also a recent article on lazy portfolio's that showed how very simple it was to manage your own with low risk and decent returns. I like Bernsteins or Yale University and their are billions invested that way. Last I read, Yales endowment fund was something like 15.9 billion? And they use a very simple low risk way to manage it for the past 50 years.

The very most important thing people miss when deciding to go with any advisor is that higher returns ALWAYS equals higher risk. And it's not their money they are going to lose, it's yours.