Ram Samudrala wrote:
....
- quote -

Not necessarily.

Bruce Steiner, attorney
NYC
also admitted in NJ and FL

Will Trice wrote:
- quote -

I got a kick out of skimming that site. I'm one of the loathed
moderators from Financial Planning magazine's online discussion boards.
The magazine is for people in the business & the boards are meant to be
an info-swap kind of thing, and have people from different parts of the
business participating.

There are some familiar names on Brent's site, it's kind of like the
most-wanted list. "Top Gun Producer" and ddfam704 are handles we've
needed to boot a lot - these guys and maybe a half dozen others are the
reason there are site moderators at all. Ditto FatTony and a couple others.

They'll whine about censorship but the reality is, it's
kindergarten-level stuff...abusive language, racial slurs and
obscenities got them banned. In "TGP's" case it got to the point where
everything gets the boot, he just wastes too much of our time.

But looking at the posts there, I think you're seeing some of the locker
room talk on the other side of the telemarketing phone line. If it makes
you think twice the next time you get a cold call, then I'd say the site
is an excellent contribution to the world of financial services. If it
makes you think everyone in financial services is a crook, that's a shame.

- quote -

Not even remotely close to true. Please don't think of that as being the
mainstream, and please don't equate it with "financial planning," it's a
different business entirely.

The way I view it is that you can either get really good at some aspect
of planning, or get really good at selling, and the weaker one skill-set
is the stronger the other needs to be. For certain products, where the
rep is essentially "representing a packaged product," the sales skills
are very important. In other cases it's not about sales skills at all. A
heart surgeon needs no sales skills, but has patients showing up every
day regardless.

But as a client, which would you rather pay for? Well it depends what
you're looking for. If you've never saved a dime, for example, it almost
doesn't matter where your money goes, and you need someone that will
song & dance you into saving & planning ahead. Sales skills are actually
helpful there and your financial questions may be very easy. Also I've
found that people with sales personalities do well when being advised by
other sales personalities - it's a way of communicating really.

Of course if you have a very specific tax problem to address most of
these guys can't help you, at all - they haven't the foggiest idea. You
might need a CPA or attorney or investment advisor (I'm the latter two).

But to answer your question no, this isn't the way it works universally.
Back to that doctor comparison - does a surgeon need to "beat up the
phones" to find "buying units"? Does any branch of the medical
profession describe its top people as "producers"? No, of course not.
Caveat emptor.

-Tad
[5 1/2 years, 0 cold calls, referral only]

Brent D. Gardner, ChFC wrote:

- quote -

I didn't mean to imply that he was pestering me. But I visited
www.topgunproducers.com anyway. No offense, but I don't think I could
stomach doing business with anyone who I knew utilized the site. It
seems to be primarily about door-to-door selling (and telemarketing) and
making "the close" (i.e. selling product). There seems to be little
interest in the welfare of the client. To quote ddfam704, 'Today some
fat bitch said in a smart tone "how did you get my name?" I said, "from
an unqualified list of business owners.(really fast)" I don't even think
she could define qualify?'

Clients are occasionally referred to as "buying units". Kind of smacks
of conflict-of-interest, but I'm sure that is in appearance only. There
are other racist and homophobic posts that I won't quote here. An
interesting point-of-view from the moderator of most (or all?) of the
forums: "I didn't invite any NAPFA members, so I suspect most of the
[slur omitted] planners will stay away [from this site]. They are too
busy selling each other on how ethical they are."

I understand that you guys have to make a living. And there was
actually one post that detailed the failings of Primerica (I actually
interviewed with them for a job and promptly left when it became clear
that it was a pyramid scheme - sorry, I mean they used "performance
based compensation"). Two posters actually mentioned considering the
needs of the client. Besides, more power to you if you can make the bucks.

Just to assess how naive I really am, for the other FPs that are reading
this, are there successful FPs that do not use the tactics described on
www.topgunproducers.com? According to the site, an FP cannot be
successful without these tactics. Is this true?

- quote -

Yes, this is exactly the kind of language I was referring to in my
previous post. Why bother seeing a doctor when you're going to die
anyway? (I suppose this applies to car mechanics as well - your car is
going to die anyway.) But be sure to see an FP. Other more
sophisticated scare tactics are outlined on www.topgunproducers.com as
well (the use of scare tactics is called "disturbing the client"). And
I guess my original question was answered by looking at your site,
people do believe this stuff, because some of the posters believe that
they are successful.

- quote -

I completely agree. I hope that I did not give the impression that I
think FPs are unnecessary. Clearly there are people who either don't
care about their financial planning enough to handle their finances
themselves, don't have the time to handle them, or don't have the
aptitude to do the research required. These people all may need FPs.
So do all the others that may run into various planning situation
(windfall of cash, planning for something new, just want to have the
reassurance that they're doing the right thing, etc.). I was only
making the point that for someone like me, whose finances are relatively
straight forward, and I have the interest, the time, and (arguably) the
aptitude to figure this stuff out, I may not need help. But I may in
the future when it comes to estate planning, retirement fund drawdown,
or a host of other things (heck, I may just lose interest in the field
altogether).

-Will

"Will Trice" <wwtrice[at]paragondynamics.com> wrote in message
news:41C2FF00.1000806[at]paragondynamics.com...
- quote -

Will,

Here's how I view it:

When I have a cold, I don't really need a doctor. That is, as long as I
just have a cold. Maybe I have something else? The flu can turn into
pneumonia, which still kills millions around the world. A stomach ache can
be cancer (BIG business owner around here just died last week, with
virtually no notice -- tummy ache turned cancer -- POW, he's gone).

Financial planning -- or, the craft of advice -- covers a very broad
spectrum of issues and topics. Merely picking investments for one's IRA is a
teeny-tiny part, but that's what the average lay person thinks a financial
planner does. Unfortunately, there are financial planners, even ones with
letters after their names, that think that's their primary purpose in life.

How boring, I say. And myopic.

I wouldn't dare walk into court for any reason, other than to pay a traffic
fine, without legal counsel at my side. A good attorney will tell you what
you need, or don't need.

Good doctors can generally ask a few questions, poke and prod a little, and
dismiss the common cold and send one home to recover the old fashioned way.

A good financial planner can ask a few questions, see if there is any need
or want that should be addressed, and send you on your merry way if you're
doing well on your own. The guy that pesters you, trying to persuade you
that you need him, should visit my web site -- www.topgunproducers.com --
for a lesson in the proper use of the consultative sales process. Obviously,
he's trying too hard, and doesn't realize how much time he's wasting chasing
after people who don't want his services.

Believe me, MILLIONS of others DO want help, and willingly pay for it. A
good financial advisor, be he commission only, fee-based, or fee-only,
doesn't need to waste breath trying to persuade people to do business with
them. A master prospector finds those who WANT help, and merely meets the
demand. That's why the best financial planners, or financial advisors, stock
brokers, or insurance agents are ALSO the best prospectors. Prospecting is
the HARD part of the job. Everything else pales in comparison, which is why
a master prospector can hire all the top intellectual talent in this
business for a song, and still take home more income than most.

Can you compare financial advice to medicine? In some ways, yes, in others,
no. No matter how good your doctor is, you're still going to die. A good
financial advisor can have an impact that lasts many generations. Its a fact
of life that less stress leads to better health, and the #1 cause of stress
in America is money, or lack thereof (usually, lack of financial
discipline).

The most common mistake I see among lay people is overconfidence in their
ability to perform financial self-maintenance. The biggest boo boos are made
by well intentioned, but ill informed consumers, often using free advice
from sources like this very forum, self-help books or other financial
pornography, and good ol' urban legend. But, to each his own, I say. There
is no way to legislate common sense, and we cannot outlaw ignorance. One of
the key elements of capitalism, and economic freedom, is the right to fail.

- quote -

salesperson that won't leave you alone. Both think they know what's better
for you, and both are absolutely wrong.

Brent D. Gardner, ChFC
Chartered Financial Consultant
http://members.cox.net/brentdgardner1378/
http://www.topgunproducers.com/

Si vis pacem para bellum!

"Be ever questioning. Ignorance is not bliss. It is oblivion. You don't go
to heaven if you die dumb. Become better informed. Learn from other's
mistakes. You could not live long enough to make them all yourself." - Hyman
George Rickover (1900-86), Admiral, US Navy, advocated development of
nuclear subs & ships

The Chartered Life Underwriter (CLU) and Chartered Financial Consultant
(ChFC), designations owned and exclusively offered by The American College,
signify the highest standards of academic study and professional excellence
in the financial services industry.

John A. Weeks III wrote:
- quote -

I have a friend of mine that is a financial planner and has been trying
to convince me that I need his services. I'm like the OP and don't
think that at this point in my life I need him. When I told him this he
used an argument similar to the one that John uses above. Do people
really believe this? I mean, I use the services of other people for
fields that I don't want to take the time to understand. Like medicine,
law, real estate, gardening, plumbing, and electrical. To me, financial
planning and tax planning are interesting so I've taken the time to
learn them. But like car maintenance, some day I may run into a problem
that I'm either not smart enough to handle or where I don't have ready
access to the appropriate tools (or I decide that I would no longer like
to invest my time). That's when I go get help.

Besides, can we really compare medicine or law to financial planning?

-Will

It may it be just my impression, but it seems that there was a large increase
in the number of "financial planners" at about the same time there was a large
decrease in the number of "full service" brokers. Perhaps this was due to the
birth of the discount broker? Could "financial planners" be just a...., well
you know, dressed in sheep's clothing?

And when it comes to tax advice, the same thing applies. The IRS, believe it
or not, is trying to simplify matters. That is why such programs as Turbo Tax
work so well. If you need more help than that, see a professional tax man or
CPA, but not a financial planner. If you need even more, add a tax attorney to
the mix.

Of course, this advice is worth what you are paying for it.

There are several tasks for a financial planner. For starters there is
the general understanding of your needs, the proper asset allocation for
your position in life, and the legal papers to prepare for the transer
of your assets after you die. These items can be reasonably explained
in inexpensive books that will give you time to digest the contents at
liesure.

Another task for the financial planner is the selection of investments.
Toward that goal I would point out that relatively few mutual funds
outperform the index funds. This tells me that the financial experts
frequently have little real expertise. We once had an office contest
where people established imaginary portfolios. My own was a dartboard
selection which outperformed the others.

A few years ago I divided my assets in two and allowed a financial
planner to handle one half. I have indepently handled the other half.
I have significantly outperformed the financial planner. I must admit
that his choices probably carry a lower risk element so I am not totally
unhappy with the results. My only guidelines are to stay fully invested
and try not to be stupid.

Dick

Ram Samudrala wrote:

- quote -


I also use a tax preparer to get my taxes done. I don't know if
a CPA is any better than Turbo Tax for my situation, but I'd much
rather have a professional make sure things are right and sign off
on the return.

- quote -

I think I got the basic books prior to the web really taking off,
so that's where I was coming from. But now I do buy a few more
advanced books occasionally. But, you do have a point -- you can
get all of the basic stuff on the web for free. I don't think I
learned any of the no-brainers until I got my first job.

- quote -

I don't meet a lot of people that deal with stocks and bonds
on a daily basis. I don't think I've ever met anyone (other
than financial planners) that could talk to me about bonds.
I have some friends that are quite savvy about stock-investing,
but I don't have the stomach for trying to time the market.

- quote -

Over 20 - 30 years it looks like all of the US-based indices
have near identical performance. It's possible that mid caps
outdo large caps in one year, but then the large caps catch up.
Is it really worth diversifying within US-based stock indices
for a long term investment? I think diversification matters
only if one is trying to reduce the volatility of the portfolio
which becomes an issue only when one gets closer to needing the
funds.

Anoop

anoop <ghanwani[at]gmail.com> wrote:

- quote -

Exactly. In contrast, I trust my tax advisor so much to a point that
I barely read IRS publications like I used to when I did my own taxes.

- quote -

Is there anything in books that you see that's not available on the
web? The "no brainers" are things I learnt at a young age in a
general way (insurance as a way to spread out risk in a collective
manner, having a plan for emergencies, etc.). In this regard, I also
feel parents should be the ones teaching these general principles, as
opposed to schools (the latter has been bandied about.)

- quote -

This is an even more difficult problem since doing well with stocks
and bonds doesn't correlate so well with prior education and is highly
dependent on temperament. For example, people who manage funds have
different performances and different opinions based on their
personalities. My general strategy is to talk to a lot of these people
who deal with stocks and bonds on a daily basis and try to decide the
best possible course of action.

I tend to advocate a combination of buy and hold, indexing, DCA, along
with diversification. So I personally index into the total stock
market and S&P 500, a value index fund, an international fund, and a
REIT index.

--Ram

Thanks for your detailed response. Answering it has made my issues
more clear. The reason I posted in part was to ask those who used FPs
why they used them and what tangible benefits they've received and
what the FPs did that they couldn't have done themselves.

Ed Zollars, CPA <ezollar[at]mindspring.com> wrote:

- quote -

I certainly don't, and this is my problem with both financial planners
(FP) and general practioners (GP). I don't want to get into too much
as to what's wrong with medical doctors/GPs (I don't think they keep
up with enough basic research), but I do sometimes spend time training
them when they are learning to be one, and it's a good analogy.

The FPs I've seen (4 of them thusfar) seem to want to give one or two
answers, based on their canned programs/training. Furthermore, they
are not knowledgeable enough to answer highly specific detailed
questions (just like my GP): all they are able to do when things get
complex is to tell me to see a tax advisor, or a mortgage broker,
etc. This I am smart enough to do myself: I already said for tax
purposes, I totally rely on my tax advisor (who only really does my
taxes but is available year around to chat with me), and sometimes on
my mortgage broker (for any housing/land related issues - he's
extremely knowledgeable about land and housing).

I usually see my GP (who is very good) and then ask for a referral to
a specialist whose advise I then trust more. I've now started
self-referring a lot (since I can do this with my insurance plan) and
it's a little more efficient. I've pretty much done my FP this way. I
am not opposed to trusting a person with highly specialised knowledge
capable of handling complex issues, I'm saying the FPs that I've met
lack it.

- quote -

Or c) I know enough that if the issue is complex, I can identify the
type of specialist to consult. Unlike the tax code, which is highly
complicated and requires constant updating of knowledge, I don't see
FP in this manner. Also, the tax code is pretty fixed: even if I
disagree with my tax advisor (which I never do) there's a "factual"
answer". Whereas a particular FP is somewhat subjective (like a course
of treatment can be). The person provides the general bird's eye view
which I'm not sure requires specialised training. Likewise with a GP
where I have enough medical/scientific knowledge that I can
self-refer. This kind of personalised and preventive with FPs (and
with GPs, which we're trying to change professionally) is what I find
lacking at least in the initial meetings. But if I don't see evidence
of that, I see little incentive to go back.

I will say that my experiences with FPs has been ones who belong to
the big banks (like Amex) but who do seem to have a good reputation
(as does my GP). But given what I've seen an FP does, what is their
purpose if all that's going to happen when you raise a complex issue
is that you get sent somewhere else.

--Ram

It's funny, but I'm pretty much of the same view. I've talked
to several financial planners, but none of them has been able
to make me comfortable enough to have them manage my money.

I wouldn't say I necessarily rely on free advice only. I tend
to buy a lot of books on this subject. The "starter" books cover
the basics well making one aware of all the no-brainers -- max out
on 401(k), get enough insurance, build an emergency fund, etc.

The part that I've been having some trouble with is coming
up with a good method for asset allocation. I'm almost at the
point where I feel that something as simple as a combination of
an S&P500 Index fund and a bond index fund is good enough for
retirement assets, and i-bonds looks like a great place to park
some cash.

It's hard to measure the performance of a financial
planner because of the long-term view that one has to take; by the
time one realizes the planner was wrong, it might be too late :-)
So, if I have to keep on top of things anyway, I might as well
manage things myself. I do take advantage of getting a courtesy
portfolio review every year from the brokerage that I use -- this
is to give me peace of mind that I'm not doing things that
are completely counter to conventional wisdom.

Anoop

Ram Samudrala wrote:
- quote -

Ram Samudrala wrote:

- quote -

I suspect that your problem is more with both your approach to
advisers and that of those who have recommended advisers to you,
rather than fully with the advisers. I suggest that because of your
point that you find the same problem with GPs--individuals who had
to go through years of very specific training in their area and
would appear to clearly be able to "beat" you on knowledge and
qualifications (for "financial planners" as a vague genre there's
not the same type of requirements, and even for those with
requirements they aren't as involved as the formal training for any MD).

However, one thing that is true both in the medical field and
financial planning is that quite often there is not a single "right"
answer and the biases and preferences of the patient/client have an
impact on which course of action should be taken. For instance,
let's take a treatment for a chronic medical condition. Virtually
all treatments have side effects of some sorts and all treatments
(including doing nothing) have certain risks. Whether a side effect
or risk is acceptable in exchange for relief of the condition is,
within wide boundaries, a matter of personal preference--what I find
acceptable someone else might find unacceptable.

However, much of the public looks to an expert to give them "the
answer"--that is, a single course of action that will yield the
"best" results. Those individuals will be extremely upset if the
adviser gives a set of *choices* and suggests that ultimately they
have to decide on the trade-offs (the "I came here to be told what
to do--so do it!" mentality that is looking at this as a way to deal
with a complex topic in 30 seconds). It's easy for an adviser to
eventually simply decide to apply his own values and preferences to
make the choice, and so present a single course of action.

If you have been asking people with that bias to tell you about
advisers, you are going to be disappointed if you want one who will
instead give you a set of solutions and discuss the pros and cons of
each.

Now, if you *really* want someone who can "read your mind" and still
come up with one course of action, you are the one not being
realistic. That's the other possibility that comes to mind
immediately about why you'd have the experiences you do, and there
is that class of client out there (they know the answer, and they
only want someone to give them that answer <grin> --and I've had
those walk in before in my tax practice). However, the fact that
you have found a tax adviser whom you are comfortable with suggests
to me you are more likely in the first category. Similarly, liking
online discussion groups would suggest someone who wants to deal
with the complexity.

What an adviser or a physician brings to the table is detailed
training in the technical issues involved and through that the
ability to surface potential complications of a course of action
that someone not as technically competent might not be able to find.
As well, that knowledge can help them diagnose what might be
getting in the way of where the client/patient is and where the
client/patient would like to be--or perhaps even that the
client/patient needs to make changes or they will have problems in
the future they haven't yet anticipated.

What you need to find is an adviser and physician that is willing to
present the complexities. What you need to understand is that doing
that work, especially to the extent it involves "educating" a
client, can get expensive fast--so you aren't likely going to find
this when dealing with the lowest cost options. Now I want to be
clear--paying a lot doesn't insure you *will* get the detailed
consulting you want, but paying little pretty much does insure you
*won't* get it <grin> . In medical fields, that likely means you
would need to worry if you are part of an insurance plan that works
on a capitation system for primary care physicians (they are paid to
handle X number of patients).

Next, I think you need to take an honest appraisal of your skill
level in the areas in question. If you truly believe you know as
much as someone with years of formal training, then it's likely
either a) you have managed to pick the village idiot as an adviser
or b) your view of your skill set isn't realistic. That doesn't
mean you accept advice on pure faith--but it does mean that you use
the information you gain "on your own" as a potential resource, but
not the gospel.

In the tax field what drives me crazy is when a client walks in the
door with a "left field" claim about the tax treatment of some
transaction that either they picked up from a "friend of a friend"
or from an article that contains no authoritative reference and then
want me either to prove it wrong or complain about why I didn't tell
them about it. A perfect example that makes the rounds each year is
the "firefighters get to deduct all payments made for meals" line.
Sometimes the profession changes or maybe the expense is
modified--but it's offered as that one liner.

In that case I *DO* know the original source of the statement--and
know it's a court case that noted, in the text of the opinion, that
it absolutely does not stand for the proposition that all
firefighters get to deduct all meals in all cases. But the hitch is
that to "prove" that isn't right to a client who doesn't have the
training to recognize the hierarchy of authorities in tax law, or
the relative impact of different types of court decisions gets
difficult--especially when the client *wants* to believe a certain
answer.

Those types of experiences (which I'm sure financial planners and
physicians also have all the time) are what can raise the
frustration level when dealing with clients who come in with the
attitude that they now "know" the answer unless you can prove them
wrong.

--
Ed Zollars, CPA
Phoenix, Arizona

In article <cpg5vg$k35$1[at]gnus01.u.washington.edu> ,
Ram Samudrala <ram[at]sp1.compbio.washington.edu> wrote:

- quote -

There is an old saying that a person who acts has his own
attorney has a fool for a lawyer. You have extended this to
the point where you have a fool for a financial planner and
a fool for a doctor. These are complex subjects that take
a life long dedication to learn and keep current. You may
have gotten by on your own so far, but I suspect that you
either haven't faced any complex issues yet, or you have had
unusually good luck.

-john-

--
================================================== ====================
John A. Weeks III 952-432-2708 john[at]johnweeks.com
Newave Communications http://www.johnweeks.com
================================================== ====================

This is just my personal opinion and about what works for me. I've had
discussions about this in the past in this newsgroup. I've found
professional financial planners to be kind of useless. Perhaps it
takes a while to develop a long relationship, but in the initial
meetings, it seemed like I knew more than they did (and I'm talking
about people who do come recommended and who do know their stuff)
about my specific scenario. Overall, since I've started financial
planning (which is a game to me), I believe I have done as well as a
financial planner would've. (I also feel this way about medical
doctors (general practioners), for the record--they're the ones
capable of doing certain tests and prescribing stuff, but I prefer to
tell them what do.)

I'm curious to know what other non-financial planners think in this
regard (i.e., what works for them).

However, I do think I couldn't have done what I did without the free
advice over the Internet that I've gotten, including this
newsgroup. So I thank you for that.

The only person who has really been useful to me has been the person
who does my taxes. I no longer try to keep up with tax law like I used
to.

--Ram