I have approximately 230k with an Advisor that charges me 1.4% and he has my portfolio in a Genworth account. On top of the 1.4% that I am being charged and I also charged a fee from Genworth to cover the transactions and account management?

My real question is first of all am I being robbed by fees? And my second question is am I better off putting my account somewhere else to lessen the expenses and pay a CFP for a couple hours a year to make sure my account is allocated correctly?

Thanks so much for your help! Feel like I don't know who to trust with my money and I want to make smart decisions.

Yes.

Any other questions?

How does a fee only advisor also charge you a % of your money?

This is what I'm wondering too. Usually a fee only means a flat rate fee not a percentage of assets.

Sounds like you're getting robbed.

Where should I look to move my cash where I won't be eaten alive by fees?

GRS Forum history would indicate Vanguard would be the most common answer to your question.

Yes, you are being ripped off. Call Vanguard tomorrow and start the process of moving your account.

Ouch! Those fees sound brutal. I agree that you should call and start the process of moving your funds.

I moved my investments to a self-directed brokerage account. I haven't done any worse than my investment "advisors" from back in the day.

There is almost no standardization in the financial planning industry. Thus, "fee-based" or "fee-only" can have a variety of meanings. In most cases, the predominant meaning is "we're going to charge whatever fees we want, and there's nothing you can do about it".

I would highly suggest you get away from this firm as soon as possible. 240k is nothing to sneeze at... these people are stealing $4,800 from you yearly. Why not transfer your assets in-kind to a low-cost online broker like Vanguard or T. Rowe Price? Odds are the financial advice you're being given isn't worth much, and you'd be better off with the diy approach.

I agree. And T. Rowe Price will give you free advice if you bring that much money in.

"Fee only" can mean EITHER fee per hour or portfolio based percentage.

First question: Is your advisor a CFP or CPA-PFS? Or a ChFC? If not, s/he probably doesn't have fiduciary duty to you. There are 14,000 titles of financial advisor and most of them aren't worth carp. Getting a good fiduciary advisor isn't easy - there's very few of them in total in the US - and it takes a fair amount of research and time that most people aren't willing to do (it can take several months, not inconsiderable when you're working to earn a living). Then after you find one, the REAL work begins.

Second: Your account is actually small potatoes in the financial services industry. Anything under $1M is pocket change. Most good independent CFPs have a $500K minimum and many have a $750K min. The good news? Times are hard for everybody, so some will take you if you're close to the minimum but not quite there yet.

Third: Don't confuse INVESTING with PLANNING. A good fiduciary advisor (I'll abbreviate that to "gfa" for this post) is a resource for all kinds of personal issues that affect your financial well-being but have nothing directly to do with investing ROI. A gfa's responsibility is not to give you better than average returns – it's to give you good or very good returns over the years with less risk.

A gfa is there to help whenever you have a life-changing event happen: defined in the industry as life, death, birth, marriage, divorce. They can advise and refer you to good professionals in the tax and legal areas, and work with them as a team to make sure you have the best chance of succeeding in your financial goals with the least amount of risk possible.

Fourth: Paying low fees is good, as long as you don't need advice in other areas equally important to your Investing ROI. But remember that what has tripped up a lot of Boomers my age (61) is that they didn't ask themselves the questions they should have, and when things went bad their plans – which were really just budget/savings/investing tools, and not a real financial plan – went south under the 2008 crises.

A gfa will raise issues you haven't thought of yet. A gfa can help stress-test your assumptions and help define your goals, which inevitably change as your life changes. A gfa is a working partner to help you succeed; s/he needs feedback and interaction with you on a regular basis (quarterly is fine) to make this work. You can pay by the hour or by percentage of portfolio….just remember, sometimes the lowest cost is not always the best answer. Everybody's situation is absolutely unique, and it takes time to properly analyze and become familiar with it, to get the best results.

If you can get a specific CFP assigned to your account from a brokerage, great, do it. But getting general advice from a rotating array of CFP's who are relatively inexperienced, isn't worth much more than reading a "Dummies for Finance" book. This is, for example, a consistent criticism of TIAA-CREF, where I have a small account. People can't get good long-term advice, because they're constantly explaining their basic situation over and over again to someone new every time the phone is picked up.

I don't do business with any CFPs with under 20 yrs experience, which pretty much means independent CFPs, not brokerage-based. A good ethical CFP is worth their weight in gold – precisely because there's so few of them, and they're hard to find. But they are definitely worth every penny, because they're there when you need them. The trick is, you need to have enough money to need them, and be willing to put in some of your time to make sure that relationship is precisely what you want it to be. Believe me – they can make planning easier, and when you are deceased, it's a whole lot easier on the family because they have someone who will help with the necessary paperwork (and there's a lot of it!) and knows exactly what needs to be done, in what order.

I find this post to be generally very good advice though I have a few comments...



I don't think a "gfa" should be the one recommending the attorney, or the tax planner for that matter. There are many reasons for this but they basically come down to the simple fact that there have been a few blowups with products offered by financial firms over the last 25 years or so that likely would have been caught by a competent and independent attorney or accountant. I'm not one of those who thinks hiring a planner is bad or unnecessary for everyone, and I think that professionals deserve to be paid for their experience, but I also think that a little independence is also desirable.

I know of a personal situation when a relative died that the "gfa" that relative had had for decades tried to tell us that all sorts of paperwork had to be filled out, waiting periods had to be respected, etc. One call to our attorney and the money was transfered away in 48 hours. The point is, there is not necessarily that much to do LEGALLY. But many financial firms create as many roadblocks as they can get away with to prevent transfers away at death. I think an outside, independent legal representative is what is needed.

As far as meeting needs while minimizing risk, I agree that a "gfa" can help with that. But an educated person can do it fairly well on their own now. I have spoken to at least half a dozen "fa's" (perhaps not "gfa's") over the years and they all cam from mostly a sales background or business. They rarely had the math skills to understand the true nature of risk. Risk was a qualitative thing for them rather than a concrete, measurable variable. Basically, their math skills were far poorer than the typical engineer or scientist.

I think most of what you said is true. But I also think you oversell the need and role of a gfa these days and for many educated people.

Good points, however:

1) If you ask an independent CFP to refer you to a tax or legal advisor, they SHOULD give you three names, minimum, for you to interview. You are free to use any or none of them. This is a courtesy professional referral only; no money is exchanged between advisors.

2) I repeat, Boomers have done a crap-a$$ job of planning. The highly educated, skilled, mobile generation that was supposed to be the wealthiest ever, has instead seen trillions of $$$ evaporate from under them.

If you have NEVER used a fiduciary advisor, you have no idea what you are missing. Literally. I don't mean that in any sarcastic fashion. Until I went to work for a top-notch independent CFP, I had no idea what an amazing breadth of service is available to those who use one. It wasn't just hand-holding; it was focused on making busy people's lives easier and more efficient.

Unfortunately, it is like any other good personal service provider - whether a doctor, a mechanic, a contractor, etc. - it takes almost as much time to analyze a small account as it takes to analyze a multi-million dollar account. So the better service almost always goes to the wealthy, not to the middle-class.

But sadly, it's the middle-class who need good planning services the most. A good fiduciary advisor, I repeat, is not there solely for investing advice. An advisor is there to help you strategize for areas of risk you know very little about.

The biggest mistake people make is NOT using a professional when they should. "Taking charge of your personal health", for example, doesn't apply to setting a broken bone or operating on a cardiac infarction. Changing the oil in your car isn't the same as replacing the front axle.

Certainly knowledgeable people can do financial planning themselves. I did it for myself and my spouse, and twenty years later can say I did a darn good job. But I also have a lot of financial services knowledge OUTSIDE of investing, such as insurance risk analysis. And that's what a CFP brings to the table – the ability to help you do a holistic risk analysis for your personal financial situation.

If you have never looked into what the training is for a CFP or ChFC, you might find it interesting. In a good year maybe 50% who take the CFP exam can pass it, after a two-year course of study. Even after passing it, you have to work a three year internship for a financial services firm, before you are able to actually claim CFP certification and list it as a credential.

Many, many years ago we did have a financial planner through a big brokerage. This started well over 20 years ago and ended about 15 years ago. This person is still an acquaintance of ours who we see socially on occasion. I would not exactly say that we were unhappy with the service, we just saw no reason to pay the fees/commissions when alternatives became available. Back then if you wanted to buy a mutual fund, stock, or bond you basically went to a broker.

After moving to etrade we had to do a lot more on our own. We had to learn a lot. We did. We read widely, not just popular fluff but a lot of very technical stuff. I got an MBA in finance and learned a great deal about derivative analysis. In the late 90s I came close to taking a job as a credit risk analyst for a big derivatives firm in London. But I decided I wouldn't like the weather even for 250+ GBP a year. And even then I could see that the house of cards would be collapsing soon.

Now, I'm not a boy wonder or anything, I just took it upon myself to learn the stuff. I'd say it wasn't rocket science but, well, actually, it was. The Ito calculus came pretty easily to me as an engineer that actually had studied rocket science. I think anyone with a decent math background can learn necessary skills.

I actually did dig up an actual CFP exam a couple of years ago, not exactly through kosher means but I was curious enough to spend a couple of bucks for it. I found it very easy even without any kind of prep course. But as I said, I do have an MBA, a strong mathematical analysis background, and I've read one of the standard law school texts from the late 90s on securities law so I probably have a slight advantage. But again, there is nothing about that that anyone can't do.

Boomers have not done so well. Part of that is because they thought the rules had changed. They thought that stocks valued at 200 times earnings were cheap and real estate prices would go up forever. I never thought any of that made sense. But my observation is that almost no one in the financial services industry was running for the exits at the peak. The party line was that things could keep growing. Do you think those who used planners did any better than those who didn't?

We've got a lawyer and an accountant to take care of our specialty needs. We do our own insurance analysis because we understand our needs. We are well insured in the areas that we need. The insurance people try to convince us that life is scary and we need more. A honest discussion with our lawyer and our own analysis says otherwise. I noted your post about LTC insurance. That's something that could be of interest but, contrary to your experience, for those attempting to buy now, even at a young age, the prices are not attractive.

Now, we might actually be looking into some specialty services in the near future, likely a private bank rather than a CFP (think Northern Trust or JPM). I've been doing some research in that area. There are some interesting independent professionals out there as well. Our reason for looking has nothing to do with investing per se or seeking expertise but I won't go into what it is here. I note though that they all seem to want to draw in as much of your life as possible. Inquire about a checking account and their response invariably tells you that they will also get you a new lawyer, plan the succession of your business, and tell you which charities to support. That's a major turnoff!

But I'm not knocking what you are saying. A good financial planner could probably be helpful for many people and could be worth their cost. I would just caution people to be very careful to make sure the planner has their best interests in mind and is not just a salesman with a rolodex. If you got $100000 and spend 1%, $1000 a year on financial guidance that's probably better for your well being than spending $1000 a year on a gym membership, yoga sessions, and a personal trainer and many people do just that. I also think that it is in everyone's best interest to learn to manage their own affairs even if they do hire a CFP because they will always have their own interests in mind.

>>.But my observation is that almost no one in the financial services industry was running for the exits at the peak. The party line was that things could keep growing. Do you think those who used planners did any better than those who didn't?>>

Depends on how good the CFP was. Both of the CFP firms I know, felt the markets were getting too frothy and reduced their clients' exposure to equities in mid-2008. That can be the advantage of using someone who has seen markets rise and fall, then rise again.

And frankly, even if someone DID or DID NOT use an advisor and saw his/her accounts fall, what did they do? Hold on because markets can fall but they also bounce back (which is what we did), or get panicked by headlines and tell their "advisors (any type)" to sell, sell, sell? A good advisor is going to try to keep you calm, because investing done emotionally seldom works out well.

But again - you should not be using a fiduciary advisor for better-than-average returns. You should be using one because you have sufficient assets for which you need to reduce your overall risk profile, in order to succeed at your goals, which often include planning for one's family.

It's great that doinghomework found the CFP exam easy. But most people don't (me, I'm absolutely horrible at math, LOL). And if you don't understand how to do risk analysis, it's a severe handicap in planning. It's why most people are usually under-insured or over-insured.

The first question my boss asked when I started working for him was, "Do you have long term care insurance?" When I said, "Yes, it was recommended to us for our retirement planning," he was very pleased. During the time I worked for him, I pulled life and LTCi quotes for about a dozen clients (it was a very minor sideline for him). Half of those people couldn't qualify medically, so he knew they would need to keep a portion of their assets reserved for eldercare.

All of our friends and family thought we were crazy for buying LTCi in 1999. Now that we're all retirement age, they're really envious instead. They're terrified of what they see coming in terms of lifestyle risks, that they refused to plan for. Now they realize that just concentrating on how much they saved and investment ROI was just a part of what they needed to plan for, but it's too late.