While there is a lot of good information in this thread and some things I don't agree with, this above is my number one complaint about advisers.

HOW IN THE HELL DOES A CFP JUDGE THE MARKETS BASED ON FROTHINESS? A CFP knows just as much as the homeless guy about what the markets will do tomorrow. Or my tea leaves for that matter. If an adviser has to call their clients to get them out of the market because of last nights news or their crystal ball, they have set up a piss poor plan for their clients.

What is stated above means to me the CFP's are no where near "good."

I agree with what I think is your premise...that a CFP (or anyone for that matter) cannot time the market. Nor predict exactly what's going to happen the next day. But a homeless guy or your tea leaves? Really?

This post has some good info in it for me personally. I'm in a situation where I'm deciding whether to keep managing my own investments or hand them over (with very watchful eyes) to an advisor.

Forget the homeless guy. If I use someone like myself, with a family, job, and many other commitments, as an example, I have to believe a CFP would likely do better. Not all because I'm sure there are some bad ones as others have alluded to, but I don't follow the markets all-day every day. I have to believe that someone else, like a CFP or similar professional, who does this stuff every day would do a better job than I could. How much better can be debated, but it should be better, especially if I was a homeless guy. If no CFP can do better than a homeless guy, why even have the industry around?

Also, I'm looking for an advisor not just for investment purposes. Some of the things Jaiko mentions are additional reasons. Estate planning, college planning, tax planning (especially with the laws changing in the US with every election it seems), caring for aging parents, etc. The list goes on. If there are professionals who deal with this every day, I have no qualms about researching a good one and paying a reasonable fee.

The issue is finding a good one. If I can't, then I'll just go back to doing it myself, as long as I don't end up with another Bernie Madoff

my point wasn't that a CFP is as useful for planning as a homeless person, but rather that they cannot predict what will happen in the markets tomorrow. An admission of this, plus doing their job of getting know their client's and their goals, and then setting up a plan around that is what makes a good financial planner. And if they have to call anyone because they think the markets are going to tank (for whatever reason), they have not set their clients up in the correct plan. As always, it makes for great fodder at parties, "My adviser called me to get out of the market..." but it is nothing more than you paying someone to gamble with your money.

I agree that a good adviser should help with all financial goals. getting you in and out of the market is not helping. it has been proven that more than likely, you are loosing money if you find yourself in this situation.

Feh on homeless guys or tea leaves. Everyone knows you should find a good waitress to tell you what to buy on the market.

No one can time the markets. Nor would any good advisor, or even a good broker, ever suggest that they could!

I have no idea why you would think a professional with a contrarian view would be caught by surprise when the markets panic. Markets have always been emotion-driven. There were a fair number of warning signs and analyst opinions in 2007-2008 that conditions were ripe for a bubble/bust. People just chose to ignore those warnings. I did as well, but I also knew better than to sell when everyone was panicking, because otherwise I would miss the "bounceback", which we rode for good gains in 2009 and 2010.

I met a CPA/PFS with an extensive clientele who said he had gotten his clients out of the market probably too early, having done so in late spring 2008. When the market kept spiking up, he had to assure them that he was being cautious and preferred to be on the conservative side.

And of course, when the market started to fall in October and keep falling, his clients were very happy! But yes, they missed the "highest highs"....but also the "lowest lows". The CFP firm that handles my MIL's portfolio saw a dip but not as severely as we did (without using a CFP) - OTOH, our portfolio bounced back faster and higher than hers, afterwards. That kind of steady, more even performance is better for an 84-yr-old whose distributions are 1/3 of her monthly income. Whereas we don't care as much, because although we're retired we don't take any distributions.

As I've mentioned before on other threads, this is why we use a good independent CFP firm for MIL's portfolio. She has dementia, no family close by (most are in another country), and yet is quite healthy. Her body will probably survive much longer than her mind. She also has what I estimate to be a 50-50% chance of outliving both of us, with our impaired morbidity risks.

Therefore, it was imperative we set up our (and her) legal docs, as well as ensuring that any successor Trustee will have the advice of a competent and experienced firm to help deal with the many issues that would arise with the combination of her aging and our death/disability. I have dealt with settling estates and elderly care issues, and they are not inconsiderable. Having a neutral third-party to assist is invaluable.

First off, Bernie was an anomaly. I have to believe that there were very few like him and any that were running pyramid schemes have cleaned up their act to avoid his fate.

But I'll reiterate that a CFP is not the best person to help with estate planning of tax planning, or even caring for aging parents. A CFP might be useful for investment advice or even to recommend (but not sell) insurance. But you have to decide if the cost is worth it.

An estate plan from a competent attorney will run you around $1000 once and maybe $500 every few years to update. Tax planning from a competent CPA will be at most $500 a year for individuals with less than about $5 million. If you pay a CFP for this either as fee only or as a percentage then you'll likely pay much more.

With investment planning we seem to have a consensus that no CFP can beat the market and that their main role is to calm. Perhaps a therapist would be better to deal with the emotional issues. If they can't improve upon market performance then you'd be better off buying the market in the form of a low cost index fund like VTI.

Edit: If you take $100000 to a planner you'll pay at least 2% fee or $2000. You might get the fee % down to 1% with half a million and maybe 1/2 of 1% with a million of more but that is still far more than you would pay using competant independent professionals.

>>But I'll reiterate that a CFP is not the best person to help with estate planning of tax planning, or even caring for aging parents. A CFP might be useful for investment advice or even to recommend (but not sell) insurance. But you have to decide if the cost is worth it.

An estate plan from a competent attorney will run you around $1000 once and maybe $500 every few years to update. Tax planning from a competent CPA will be at most $500 a year for individuals with less than about $5 million. If you pay a CFP for this either as fee only or as a percentage then you'll likely pay much more.>>

Ummmm….not where we live. Our RLT cost $2500 and that was four years ago. And I don't think anyone said a CFP is for tax planning. I said they work WITH your tax advisor, who doesn't have to be a CPA. CPA's are only required to take 1-3 courses in taxation as part of the curriculum. It actually isn't their specialty. CPAs who go into tax practice usually take specific tax classes on a continuing education schedule.

An estate plan from a competent attorney? For what? For really large estates, you need an attorney to set up an ILIT, but I doubt you could find an attorney who would know how to determine that someone NEEDED one.

"Financial Planning" is a legal term regulated by the SEC. It used to be called "Estate Planning", BTW. It has to always be done by a fiduciary financial adviser with the correct certification. No attorney I've ever heard of has such certification. I'm not saying there aren't any, just that I've never encountered them. Perhaps you have?

Anyone caring for aging parents is taking on a huge financial burden. If you don't talk about with a good fiduciary adviser, there are a lot of mistakes you can make. The biggest is that most people just start writing checks instead of researching for appropriate resources, such as Area Agencies for Aging.

Both CFPs I informally work with have a long list of referrals available for clients, including home healthcare aides. One of them negotiates reduced fees for his clients, at no cost.

As for "General Agreement On The Board" – please. Most of you haven't worked with a good independent CFP. You've worked with what used to be called brokers and sales reps. Even if you've worked with one of the 50% of CFPs associated with a brokerage, believe me, there's a huge difference when you work with an independent. The vast majority of really competent, experienced CFPs have their own practice. They invest a lot of time with their clients, because it's part of the package.

A lot of people used to come for their free interview with my ex-boss. At least 70% of the time, he wouldn't take them as clients even though they had enough money. He is good enough that he doesn't have to take anyone who walks through the door. He prefers to have fewer clients that he can personally manage.

He's the preferred witness for the defense in any arbitration hearing in a 300-mile area, for grievances against brokers. You can find him in the phone book – in a simple line listing. No big fancy boxes touting his firm. No lunchtime "seminars", no mass-mailing flyers. Only publicity is when he's being interviewed for trade magazines or the WSJournal.

Even $2500 is less than you'd be paying the CFP to either use a junior attorney or to give you a boilerplate document that may not be suitable. But the only way to truly know is to die.

True about CPAs. But some do specialize in tax. And those are the ones you want if your tax situation is complex. If your tax situation is simple then you don't really need a CFP for that either, right?

Again, I really have nothing against CFPs as long as they are fee only and do not sell anything. But since even you seem to agree that they offer no investment advantage, what's the point? They can't time the market yet they effectively got their clients out before the crash? That seems contradictory!

>>They can't time the market yet they effectively got their clients out before the crash? That seems contradictory!>>

Not at all. Two of the three have full time permanent financial analysts on staff and regular quarterly meetings with clients. They look at the markets from a 6-18 month perspective going forward. Adjustments are relatively minor. None of them make "wholesale" changes, yanking portfolios around to generate fees.

Again, it goes back to the fact that an ethical fiduciary adviser HELPS LOWER YOUR RISK. You are kidding yourself if you think there is not a lot of risk in your life that has "crept" in. Unless you are experienced in risk management and analysis, chances are you won't be as good as a neutral third party in evaluating how to mitigate it. I have yet to meet anyone who knows how to judge their insurance underwriting risk, for example, unless they've worked in the industry for several yrs.

Same with finances - INVESTING IS NOT EVERYTHING. Never has been, never will be.

This is an old thread, but I found it very interesting that Northern Trust and JPM were specifically mentioned as private banks of note. Due to a recent business sale, we've had a significant windfall, my parents especially (>$20MM), and they've been looking for advisers to help with a broad range of planning services. They've looked at both of the above and a few more, and we'll be able to tag along with them despite not quite being at the wealth level they would normally manage.

I suppose my question is about the reputation of these groups, things to look out for, and what the specific advantages are of working with them. Do they, for example, have access to special funds, or is it primarily their expertise, attention, and custom solutions? How does a private bank differ from an advisory firm, etc...

If any of you have had direct experience with these or other similar HNW advisers/private banks, I'd love to hear about it.

thanks

First off, I do not have direct experience and I do not have anywhere near the amount of money your parents have. So I'll just offer a few comments:

First off, that is serious money. Assuming no major debts, they are set for life even if they do nothing more exciting than put the money in appropriately insured CDs. (It's possible to get 2% right now which is $400,000 per year. I think most people can live on that. If you go to a private bank you will likely pay that much in fees alone.

That said, they worked hard for that money building a business and there is no reason they shouldn't enjoy it now. That means spending it and working out a plan to leave it to their heirs and/or their favorite causes without undo taxes. Appropriate advice, and it may not come for a private bank, could easily be worth that fee.

I know one person who was a private banker for a private bank and I know a person who is an attorney for one of the companies you mentioned in their private client operation. The banker is not very experienced and is little more than a sales person wrapped up with a clerk. The lawyer (who I really only know socially) seems nice and reasonably competent but she also does not have much experience. She has been out of law school about 5 years (even though she is in her early 40s) and her role is mostly to process paperwork according to the banks pre-formulated estate products. In other words, mostly what she does is work with the clients' own attorneys to help them draft wills and trusts with the bank's preferred wording. She also advises clients on charitable giving which is how I know her. I'm not saying their is anything wrong with that but, in my opinion, that advice is not worth too much.

If I were you I would tag along with your parents, listen carefully to what you are told by the banks, and ask pointed questions. You've asked some good ones here: what are the fees? Specifically what do they get for the fees. If you cant get a clear, honest, and satisfactory answer then you should not do business with that bank.

With that kind of money I would also bring along my own attorney to any meeting. The attorney's role is partly political, to keep the bank from putting on too hard of a sell, but also practical. The attorney can often a second opinion for anything you are told.

In my opinion, most people do not need advisors like that. But having major amounts of money as your parents do means the stakes are higher and also makes you a target. I don't see any harm in talking with a few companies to see what they can offer. I'd suggest meeting with at least three major international firms including those you mentioned as well as a couple of smaller, more private or specialized firms. You might find that you prefer the approach of one over the other.

Good luck and please don't rush into anything.

On a personal note, I'd be curious to hear what kinds of services they offer and what kind of fees they charge. Please let us know.

Your parents would be a prime target for any bank's investment management services. Whether they would be BEST SERVED by a non-independent IMS, is another matter.

It isn't easy finding a good independent CFP. So it is very tempting to take the easy way out and use a recognizable institutional name. The problem is that you are actually 'small potatoes' to them, and the FinInsts know very well that such customers as your parents (and you, by default) are usually the less demanding, most timid, least knowledgeable about the extra services that should accompany the paying of high management fees.

First of all, there is NO rush to move the money around. None! Don't let any advisors pressure you into the whole "This is the best time to get into the market" bullsh$t. You want advisors that take the long view; not the short, commission-heavy churning attitude.

If the family attorney has not had experience dealing with large estates, it could be a good time to find a new one. No matter what happens, your parents are likely to incur estate taxes. They need advice, BUT….

They need to set some goals FIRST. Only they can do that, although a neutral advisor can help. But you'll have to pay that advisor, and honestly, you and they can do that groundwork yourselves. Use the advisor to "vet" those goals and assist in prioritizing them.

An advisor can help determine longer-term issues: How much flexibility do they need in terms of future potential family crises (taking into account current assets and income)? What are the various ways to move excess cash out of the estate to avoid estate taxes? Which ones will work better within the framework of achieving those goals?

What a good advisor does is think of all the bad things that could happen, not just to your parents but to you, any siblings, your current or future children. Then you prioritize those issues, and find out what the risk mitigation will cost for each one. Some will be affordable, others may fall into the "we'll accept that risk" category. But you ALWAYS want to be prepared. Money gives you the options of what to do, but it's the mindset that's important. Feeling prepared is, as the Boy Scouts believe, 75% of the battle.

It isn't uncommon for a couple to have strong differences of opinion on how extra money should be handled. Sometimes a neutral third party can help avoid a lot of hurt feelings and "whose side are you taking, anyway?" disagreements.

Do they want some 'mad money' on a regular basis? What kind of family issues do they want to address that they couldn't do before? How good is their own health? Do they want to set up a trust for current and future generations, or let the future generation fend for themselves (sometimes a good idea, LOL)?

And what people who have never used an advisor don't understand, is that a good fiduciary advisor takes the long view of building wealth. They are always there not only for advice but as a sounding board for anything that affects your financial health, which is a whole lot more than just investments.

Marriage counselor, psychologist, therapist – a successful advisor with fiduciary responsibility has many of those qualities. It's a service-oriented business. Most people with "new" money have no idea how much service you can buy for $15M. Believe me, that's a whole new world of service available, but most FinInsts don't go out of their way to let you know about those details, because that would mean spending time to earn the money they charge you.

If you (or your parents) don't enjoy investment research and freak when markets go down, then use a professional advisor. But with the inheritance of such a substantial sum, I would strongly suggest that you will learn far more from a good independent CFP who is willing to spend time helping your parents prioritize their goals, advise on the best methods of preserving the estate to achieve those goals, and be an active part of the team of professional advisors (financial, legal, and tax) that will help safeguard their wealth.

In summary, I am saying that a good fiduciary advisor wants input from the client, in order to help with their holistic financial well-being. A lazy advisor assures you that "they will take care of everything." Which they will…but their goals might not be aligned with yours, especially if they have no idea what your goals are, nor will they offer any opinion about them (which a non-fiduciary advisor would be careful about, because they are NOT allowed to do financial planning by the SEC).

The CFP.net website has an excellent list of questions you should ask any advisor. This website also has a search function for finding a CFP, and they are more geared towards asset-based mgmt CFPs. I would advise going to the Garrett Planning Network ONLY for their downloads on financial checklists and their own version of "what to ask an advisor?". GPN is an international network of fee-only financial advisors and planners and although very good, they are not 'in the game' in the investable portfolio size your parents have.

Good luck, and as I said, don't let anyone push your parents into making any quick decisions. It takes a long time to interview advisors and check references, something they absolutely MUST do. A good advisor takes time on this, because they have to determine which of their clients is in a similar situation as your parents asset-wise, get permission to be contacted, as well as giving the prospective client copies of the types of reports they will be receiving (which sometimes have to be redacted, if they are copies of real client reports).

Once they find someone who is comfortable with the 'hard questions' and has the right personality and qualifications your parents want, I think they will find all the effort is worth it. A fiduciary advisor who can be trusted and relied upon to actively work with you is worth their weight in gold, because there's very few of them.

That's key. You are BUYING the service because you are paying high fees. If you don't need the service then you can get what you need elsewhere - legal and estate planning from your attorney, at an hourly rate, tax advice from CPA or tax accountant, and investment management from Vanguard. Why pay a % of total assets to CFP? Just hire the CFP for few hours to vet you plan then move on to Vanguard.

I've thought about this. The things I don't understand well involve tax planning, insurance, risk mitigation strategies, etc.. and I want to see first hand how they handle those things. If, after I see what they do I feel like I can do it myself, I'll probably go on my own, but for now I can't tell exactly what I don't know. One big benefit of this might be the education.