Financial Planning

Flying_Nun

Flying_Nun

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Flying_Nun
Anyone use a Fee-Only financial planner? Are the fees a percentage of assets under advisement or an hourly rate?

What was your overall experience?

Thanks.
 
These days they have numerous levels of service. Two major types are active financial planning and ad-hoc/flat fee services. Active planning generally involves a percentage of managed assests and/or a percentage of growth. Ad-hoc is usually flat fee but only recommends actions and won't actually manage the funds.
 
I use one of the large brokerage house's services. I interviewed several and found them to charge somewhere between .5% and 1 3/4%. They meet with me at LEAST quarterly and advise specific trades, then if I approve they make the trades with no additional commission over the annual percentage of the portfolio.

As it turned out, I liked the guy that charged the .5% and went with them even though it is usually against my philosophy to take the cheapest bid. But I am glad I did because they have made me quite a bit of money and kept me from doing some stupid things, like liquidating all my equities for cash at a scary time or selling all my gold at one point. But I think they have a minimum of about $1million or something like that.
 
Interesting comparison of Berkshire Hathaway as investment vehicle v. "2-plus-20" fee arrangements.

http://blogs.telegraph.co.uk/financ...-fund-illustrates-rip-off-management-charges/
If you had invested $1,000 in the shares of Berkshire Hathaway when Buffett began running it in 1965, by the end of 2009 your investment would have been worth $4.8m.

“However, if instead of running Berkshire Hathaway as a company in which he co-invests with you, Buffett had set it up as a hedge fund and charged 2 per cent of the value of the funds as an annual fee plus 20 per cent of any gains, of that $4.8m, $4.4m would belong to him as manager and only $400,000 would belong to you, the investor.
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There's a bell curve in investment advisors, just like pilots, plumbers, cops, sysadmins...

I prefer advisors who have skin in the game (fee-based single-fee advisors can just say, "Sorry, you got what you paid for, once..."), but the ones who take a percentage do have to be watched like a hawk.

They'll choose whatever best benefits them vs what benefits you if they're not confident they're on the right side of the curve.

Bottom line, nobody cares about your business more than you do.
 
Buy a no load mutual fund with lots of options within the fund family with not restriction on moving among them. After going to many free dinner seminars, they all wanted between $900 and $45K to manage my money. No guarantees and if your investment get smaller, the rate goes up. None has ever made me any money. I have done quite nicely doing it myself with a $75 per year monthly news letter with recommendations. Don't get greedy.
 
HBCox@aol.com said:
Buy a no load mutual fund with lots of options within the fund family with not restriction on moving among them. After going to many free dinner seminars, they all wanted between $900 and $45K to manage my money. No guarantees and if your investment get smaller, the rate goes up. None has ever made me any money. I have done quite nicely doing it myself with a $75 per year monthly news letter with recommendations. Don't get greedy.
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I agree with Buddy, although you didn't ask about this approach. I have done ok with Vanguard and Fidelity no load funds and picking my own stocks using advice from Peter Lynch books.
 
I've done alright investing in mutual funds, stocks and such. I'm just at a point where it would be nice to know if I'm missing some opportunities around tax savings, etc. Since I've done okay on my own I'm looking more for advise than active management.

The Fee-Only advisor's skin is in the ability of you the client to easily move on if they screw up. If they do you right, you keep going back and they make more money.
 
My advisor is fee based. If you are in the Northern Virginia area I can make a recommendation. He's done good by me and periodically I know something is going on with the markets when he calls or emails a "don't panic" message.

The only downside was the powerball ticket he handed me during one of his client appreciation events (it was the last time it was up to big numbers) didn't match a single number :)
 
Fee based is the way to go.

Never invest with the guy/gal who earns a commission on what they sell you.
 
I would only pay a financial planner a percentage of net gain over what you would get from a 5 year CD. . . . .

I do that for my friends. And they are generally happy. But I'm not a CFP and I did not stay in a Holiday Inn Express last night
 
Flying_Nun said:
if I'm missing some opportunities around tax savings, etc. Since I've done okay on my own I'm looking more for advise than active management.
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Then you probably need a good CPA who is well versed in tax laws. Hire one on a per hour basis.
 
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