[SusanStCatherine]

We learned early on not to hire financial advisors that make a profit off of what they sell to you as they are biased. We went with fee-only advisors.
From napfa dot org:
People also ask
What is a fee-only financial planner?
A fee-only financial planner is someone who earns a fee for their services from their clients and does not receive commissions on the sale of financial products as additional compensation. The fee may be paid as an hourly rate, a flat fee or as a percentage of assets under management (typically around one percent).
We tried the assets under management and did not like that. The hourly rate was fine when we were young without many assets, but found the flat fee for advice works best to biannually review our finances. They act as a fiduciary where the customer's individuall optimal financial situation is considered.

What worked well for us was being very diversified in our investments and staying in long-term and not panicking. Our average risk level was high to moderate but lowered as we aged. With diversification some of our stuff was way up and some down but we were always balanced. Individual stocks never worked for us. The mutual funds and the like are professionally managed and diversified themselves. At our ages, it's changing to focus on creative tax planning and taking out cash as we have no pensions.
Every person has his own characteristics so what works for one may not work for another. If you don't like the way it is now, change it. Good luck!

[Tyson]

Just use Vanguard. They have thepowest expense ratios in the business. Some of my Admiral ratios are .18 of a percent.

[retiredguy123]

Originally Posted by Rainger99

Aren’t mutual funds professionally managed?

Some are, but I only buy index funds. The manager doesn't pick stocks and bonds, he/she only buys the products that make up the index. Hence, index funds have extremely low expense ratios.

[DAVES]

Originally Posted by rsmurano

Who makes money 100% of the time, you or your broker when using a broker to handle your investments? When the market goes down, do you get a break from your broker commissions? Worse, if you lose money because your broker isn't very good and the market is going gangbusters, do you get a rebate from the broker?
You know the answer to all of these questions.

1 brokerage firm that has tried many times to hook me into coming over to them, that also has the commercials with "we do better when our clients do better", I just laugh when I hear this. Why??
Say I have millions of dollars in my portfolio, if I would go over to this broker, or any broker, they will charge me a fee up front based on my portfolio value. Say I have $2M portfolio, any broker would want me to pay .5% to 1% ($10,000 to $20,000 depending on fee) up front. WHY? the broker didn't get me this money, I did. Plus, every year after this, I will be paying at least this much (give or take) depending on your portfolio gains and losses. Again, they didn't do anything for me on the initial $2M, but I will be paying on that amount forever. At the same time, no broker can guarantee me that they will make more money with their investing picks than what I can do. There is no way to know how a broker has done for their clients that I have found either, so you are relying on a salesman (never) or by a friend who has used them. Before listening to my friend, I would need to see proof of his gains/losses over the past 5-10 years, not just that they are a nice broker.

As for skin in the game, I would recommend (would never use 1) a broker that would charge a 1% fee on the gains they made me, not based on my initial portfolio value. The more money they have to work with, the easier it would be for an experienced broker to make me money so they can make money. If they don't make money, they don't make money.
For example: say I gave them a $2M to invest, and they did well and made me $100,000, I would pay them 1% of that $100,000 gain, not the $10,000-$20,000 fee that they would charge me for the $2M I gave them. Also, if they lost me money, then they would make no money, or better yet, they would give me 1% of my losses.

You know no broker will do this methodology, they want to make money whether they do good or not and on money they never did work for.

Wow. REALITY I did not work for free. Did other readers?

We make money when the clients make money is word SPIN like all advertising . If, the clients balance goes up and they are making one percent, One percent of 10,000 is 100
Assuming a 7% normal market return one percent of 10700 is 107.

Few people understand math. Thought SPIN gains compound. So do losses.
Example 10,000 and you make 10% one year and loose 10% the next year. Many think they are even. 10,000 plus 10%=11000. 11000 less 10%=9900 you are short 100.

Now no commission trades. Again no one works for free. They do not do this because they so love ME that they company spends money and does not charge me. The numbers are so large that a penny of millions of trades is serious money.

Buffetlike has become am adjective and or an adverb. We at least I am not allowed to swim in the same market-pool-where Buffet buys.

[DAVES]

Originally Posted by Tyson

Just use Vanguard. They have thepowest expense ratios in the business. Some of my Admiral ratios are .18 of a percent.

FYI T Rowe has a similar set up. I do not recall what they call it. ?????? pehaps we saw we were loosing too many customers to Vanguard shares. Admiral shares, you need to have 50,000 in the fund and it reduces the management fee by roughly a third. T Rowe is similar. Fidelity has a similar deal offered to company retirement plans same fund different trading code. The more you learn the more HUH it gets. Many Funds hold other funds hold Berkshire hathaway. HUH. You can buy partial shares why pay a management fee?.

[Stu from NYC]

Originally Posted by DAVES

FYI T Rowe has a similar set up. I do not recall what they call it. ?????? pehaps we saw we were loosing too many customers to Vanguard shares. Admiral shares, you need to have 50,000 in the fund and it reduces the management fee by roughly a third. T Rowe is similar. Fidelity has a similar deal offered to company retirement plans same fund different trading code. The more you learn the more HUH it gets. Many Funds hold other funds hold Berkshire hathaway. HUH. You can buy partial shares why pay a management fee?.

Rowe Price reduces by 20%.

[manaboutown]

It appears many stock brokers/financial advisors want to be paid a fee based upon assets under management (AUM). Most want 1% + or - , depending on portfolio size and other matters. They argue it is only 1% but it is one percent of assets and is not a function of income or the lack thereof. If a portfolio returns an average of 7% per year that 1% of AUM works out to be 1/7, more than 14% of income. That is a huge bite out of income.

Moreover studies have shown that a low cost index fund of the S&P 500 or other broad market, low fee index fund over a period of 10-20 years outperforms 95% of professional money managers. If they are active managers the total cost is even higher due to the "friction" of trading cost and income taxes.

[jedalton]

Originally Posted by rsmurano

Who makes money 100% of the time, you or your broker when using a broker to handle your investments? When the market goes down, do you get a break from your broker commissions? Worse, if you lose money because your broker isn't very good and the market is going gangbusters, do you get a rebate from the broker?
You know the answer to all of these questions.

1 brokerage firm that has tried many times to hook me into coming over to them, that also has the commercials with "we do better when our clients do better", I just laugh when I hear this. Why??
Say I have millions of dollars in my portfolio, if I would go over to this broker, or any broker, they will charge me a fee up front based on my portfolio value. Say I have $2M portfolio, any broker would want me to pay .5% to 1% ($10,000 to $20,000 depending on fee) up front. WHY? the broker didn't get me this money, I did. Plus, every year after this, I will be paying at least this much (give or take) depending on your portfolio gains and losses. Again, they didn't do anything for me on the initial $2M, but I will be paying on that amount forever. At the same time, no broker can guarantee me that they will make more money with their investing picks than what I can do. There is no way to know how a broker has done for their clients that I have found either, so you are relying on a salesman (never) or by a friend who has used them. Before listening to my friend, I would need to see proof of his gains/losses over the past 5-10 years, not just that they are a nice broker.

As for skin in the game, I would recommend (would never use 1) a broker that would charge a 1% fee on the gains they made me, not based on my initial portfolio value. The more money they have to work with, the easier it would be for an experienced broker to make me money so they can make money. If they don't make money, they don't make money.
For example: say I gave them a $2M to invest, and they did well and made me $100,000, I would pay them 1% of that $100,000 gain, not the $10,000-$20,000 fee that they would charge me for the $2M I gave them. Also, if they lost me money, then they would make no money, or better yet, they would give me 1% of my losses.

You know no broker will do this methodology, they want to make money whether they do good or not and on money they never did work for.

yes and no. Most people have no idea how to check out a broker, (FINRA) has ever registered broker there with their entire history listed there. If they have ever been sued, fined, sanctioned or any other problem. IMO, always use a R.I.A. (registered Investment advisor). They have to give you an ADV form at your 1st meeting, which is a FULL disclosure form, that has to be updated annually. RIAs will have a fiduciary responsibility towards their clients, which means that they have a moral obligation to give financial advice that is always in the best interests of their clients. Directly supervised by the Securities and Exchange Commission (SEC), RIAs are deemed to be operating in a fiduciary capacity and, therefore, to have a higher level of conduct than licensed agents. This standard trustee mandates that the RIA must always unconditionally put the best interests of the client ahead of its own interests, irrespective of any other circumstances.
RIAs are also expected to report any potential conflicts of interest to their clients and to behave ethically in all of their business dealings. A few RIAs charge their clients with a percentage of their assets under administration, while others charge an hourly or flat fee for advice. Advisors who choose this model for their practice must obtain a Series 65 license in addition to other investment license. You can find any SEC-registered investment adviser’s Form ADV on the SEC’s Investment Adviser Public Disclosure (IAPD) website. There, you can perform a Form ADV search for any firm using the firm’s name, location or Central Registration Depository (CRD) number, which is the license number the industry regulatory authority FINRA issues to firms. What can a Form ADV search tell you?
There’s a wealth of information inside a Form ADV. We’ll help you navigate each section like a pro and highlight the information you’ll find in each part.
Form ADV Part 1a
Part 1 is a disclosure that’s in a check-the-box, fill-in-the-blank format, which is not the most exciting to read, but it does contain helpful information, such as:
• States licenses. You can see the states where the advisor is licensed to do business under Item 2.C: State Securities Authority Notice Filings and State Reporting by Exempt Reporting Advisers.
• Employees, clients and compensation. Find the number of employees, advisors and clients the firm has, client types and how advisors earn money in Item 5: Information About Your Advisory Business.
• Assets under management. See how much money others have entrusted the firm to manage and the firm’s total number of clients in Item 9: Custody.
• Disclosure information. See if the firm or its employees have been subject to regulatory actions in the past 10 years in Item 11.
• Disciplinary action. If the firm or its employees have disclosures, you can get the details of all disciplinary actions and resolutions in DRPs (Disclosure Reporting Page).
Form ADV Part 2
Part 2 items are generally an easy read and broken into two subparts: Part 2a and Part 2b.
Part 2a
You can think of Part 2 as a marketing brochure that explains how the firm works, its fees and how it handles clients’ money. Inside this PDF document, you’ll find much of the same information in Part 1, but more detail on the firm’s fees, commissions, investment offerings and strategy and any potential conflicts of interest you may encounter as a client. We won’t say it’s a light read, but we will say that all firms must report the same information in the same sections. So, once you’ve read a couple of Part 2 brochures, you’ll know that Item 7 is always “Types of Clients” (the kinds of investors a firm serves and any investment minimums).
If the firm changes how it does business, it must clearly outline the changes in Part 2a when it files a new Form ADV each year, then offer you a revised brochure.
Part 2b
Called the “brochure supplement,” advisory firms must provide you with a Form ADV part 2b for each person who provides you with investment advice. This includes anyone at the firm who makes discretionary investment decisions on your behalf, even if that person never has direct contact with you.
Form ADV Part 3
Form ADV part 3, called the “Relationship Summary,” is the easiest part of the form to digest. The advisor must summarize in “plain English” much of the information in Part 2, including services, fee structure, conflicts of interest and disciplinary actions. And yes, it’s a much easier read than a Part 2 Brochure.
Part 3 also includes key questions to ask an advisor and how to get more information about the firm.

From a retired R.I.A. with 23 years service and not 1 complaint filed against me or my firm.

[OrangeBlossomBaby]

If this isn't a first-world problem, I don't know what is. If I had millions of dollars, at my age, I'd spend the rest of my life spending it, and not worry too much about investing it. I figure I have less than 40 years left on this planet. A few million bucks will cover a whole lot of great experiences. And a new car. And a new golf cart. Roll the double-wide off the property and put a newer one in - this time with real plywood flooring instead of the particle board. What the heck - I could afford to splurge, right?

Screw investments. Spend it and enjoy. Leave your kids with enough money to bury you when you go.

[CoachKandSportsguy]

Originally Posted by Tyson

Just use Vanguard. They have thepowest expense ratios in the business. Some of my Admiral ratios are .18 of a percent.

cheap also means other intangibles not working well with Vanguard. Their paper reports suck. They have one nice feature on their web site, BUT, they want long term investors and not anyone who looks like a short term trader. They shun short term traders. .

And historically they wanted to sell only their own products, even if the new ETFs were more liquid, they want to sell just their ETFS.

Cheap also is relative to performance, higher returns with higher expense ratios can still net out better than just cheap. I do not like working with Vanguard, in either 401K, IRA or taxable accounts, from experience.

[Rainger99]

I have always thought that if the financial advisor were really that good he wouldn’t be handling my small portfolio. He would be handling rich people’s accounts!

[Plinker]

Originally Posted by manaboutown

It appears many stock brokers/financial advisors want to be paid a fee based upon assets under management (AUM). Most want 1% + or - , depending on portfolio size and other matters. They argue it is only 1% but it is one percent of assets and is not a function of income or the lack thereof. If a portfolio returns an average of 7% per year that 1% of AUM works out to be 1/7, more than 14% of income. That is a huge bite out of income.

Moreover studies have shown that a low cost index fund of the S&P 500 or other broad market, low fee index fund over a period of 10-20 years outperforms 95% of professional money managers. If they are active managers the total cost is even higher due to the "friction" of trading cost and income taxes.

This is correct.
Vanguard and/or Fidelity are hard to beat. Their representatives are fiduciaries and can manage your account for a very low AUM fee. Also, their funds charge some of the lowest expense ratios on the planet. Vanguard is at 0.3%. Personally, I am a DIY guy but understand that many people prefer some guidance.
Now for the math (you knew it was coming).

$1 million dollar account at 0.3% is $3,000/year with unlimited phone calls to speak to a CFP fiduciary.
$1 million dollar account at 1% is $10,000/year.

Assume 25 years in retirement and your account does not increase or decrease but is the same $1,000,000 each year (I realize that this is an overly simplified example but still makes my point).
Vanguard at 0.3% - $3,000/year X 25 years is $75,000
Advisor at 1% - $10,000/year X 25 years is $250,000
A difference of $175,000!
This is before we calculate the lost opportunity cost of what the additional 0.7% (1.0% minus 0.3%) could earn over 25 years.

Stay away from the micro advisory companies and free dinner salesmen in The Villages. IMO, their fees are exorbitant. Also, my example doesn’t include the high commissions they earn when they peddle an annuity or insurance on top of the 1% AUM fee. ALWAYS check on FINRA and click on “brokercheck”. You will be appalled at some of the disclosures.

Fidelity has an office in Lake Sumter Landing if you desire face to face meetings.

[FloridaGuy66]

Originally Posted by OrangeBlossomBaby

Screw investments. Spend it and enjoy. Leave your kids with enough money to bury you when you go.

Coming from someone that apparently lives in one of the cheapest villages, seems funny to hear advice that we should all spend our money.

Most of us don't have pensions and don't have millions of dollars stashed away. Investing allows the rest of us to let our money run out at a slower rate and allows us to spend a lot more on the things we care about than if we just had the money sitting in the bank and had to pinch pennies to make sure things don't run out.

[manaboutown]

Originally Posted by Plinker

This is correct.
Vanguard and/or Fidelity are hard to beat. Their representatives are fiduciaries and can manage your account for a very low AUM fee. Also, their funds charge some of the lowest expense ratios on the planet. Vanguard is at 0.3%. Personally, I am a DIY guy but understand that many people prefer some guidance.
Now for the math (you knew it was coming).

$1 million dollar account at 0.3% is $3,000/year with unlimited phone calls to speak to a CFP fiduciary.
$1 million dollar account at 1% is $10,000/year.

Assume 25 years in retirement and your account does not increase or decrease but is the same $1,000,000 each year (I realize that this is an overly simplified example but still makes my point).
Vanguard at 0.3% - $3,000/year X 25 years is $75,000
Advisor at 1% - $10,000/year X 25 years is $250,000
A difference of $175,000!
This is before we calculate the lost opportunity cost of what the additional 0.7% (1.0% minus 0.3%) could earn over 25 years.

Stay away from the micro advisory companies and free dinner salesmen in The Villages. IMO, their fees are exorbitant. Also, my example doesn’t include the high commissions they earn when they peddle an annuity or insurance on top of the 1% AUM fee. ALWAYS check on FINRA and click on “brokercheck”. You will be appalled at some of the disclosures.

Fidelity has an office in Lake Sumter Landing if you desire face to face meetings.

I use Vanguard, Schwab and Ameriprise. For whatever reasons I have had difficulties with Fidelity so I no longer do business with them. The Ameriprise accounts go back to Olde Discount days and I trade very little in them. Schwab allows its account holders to both buy and sell Treasury bills and bonds which the other outfits do not accommodate.

[rsmurano]

Originally Posted by DAVES

Wow. REALITY I did not work for free. Did other readers?

We make money when the clients make money is word SPIN like all advertising . If, the clients balance goes up and they are making one percent, One percent of 10,000 is 100
Assuming a 7% normal market return one percent of 10700 is 107.

Few people understand math. Thought SPIN gains compound. So do losses.
Example 10,000 and you make 10% one year and loose 10% the next year. Many think they are even. 10,000 plus 10%=11000. 11000 less 10%=9900 you are short 100.

Now no commission trades. Again no one works for free. They do not do this because they so love ME that they company spends money and does not charge me. The numbers are so large that a penny of millions of trades is serious money.

Buffetlike has become am adjective and or an adverb. We at least I am not allowed to swim in the same market-pool-where Buffet buys.

Nobody works for free as a broker! You are right and that’s part of the problem. How many bad brokers out there that still make a great salary but their customers lose their shirts? I bet quite a few. If somebody doesn’t do their job well, they shouldn’t have a job, in any profession.
But with a broker, he will always make his firm money.

I don’t follow about the buffet-pool comment. I bought Apple many times during the last 15 years just as buffet did. I could have bought other companies he invested in.