Regarding references...

I asked for references from the financial advisor I'm considering, and
he said that he can provide "character references" but not for him to
ask any of his clients to discuss their investing history with me. He
said that this would be a "testimonial" and the NASD has deemed them
out of bounds. However, he said that at future client appreciation
events, I can initiate conversation with other clients and talk about
whatever I want.

I did a little research on NASD regarding testimonials:

2210. Communications with the Public

http://nasd.complinet.com/nasd/displ...ht=testimonial

As I interpret this, it agrees with what he's saying. But I just have a
hard time believing that I can only get a "character reference". A lot
of their business is based on referrals, right? I guess it's a very
fine line, but it must be different for *me* to refer someone to *him*,
versus *him* asking one of his customers to step up and tell me what a
great job he's done.

Also, I just want to clarify for others who've mentioned it -- we
*have* completed our overall financial plan with this advisor, taking
into account insurance needs and various savings goals (short and long
term). I was especially impressed with the research they did so we
could estimate the retirement benefits my husband can expect as a
teacher -- right now he's back in school to become a teacher, and since
he's not yet employeed, we have no "employee benefits" material to tell
us what to expect. Previously, we had tried talking to several of our
friends who are also teachers, and either they don't fully understand
their retirement benefits or are reluctant to talk about it, because we
never got the kind of specific information from them that we did from
the planner during our analysis. Of course, there could be differences
between school districts, which he was up front about, but the
estimates were based on our state employees' benefits, so it's a
reasonable ballpark figure.

I *have* done quite a bit of reading and research, and I understand the
arguments both for and against working with a money manager. That's why
I'm so torn on this decision. On the practical "dollars and sense"
side, my brain tells me that I should be able to continue to do fine on
my own without paying someone. However, I see the benefits to working
with the advisor NOT because I think he can pick better investments,
but because he can 1) Engage both me AND my husband in our financial
affairs -- right now I'm primarily responsible for the money management
in our household, and I'm not very good at explaining the choices I
make, and sometimes I just forget to explain what I've done, and 2)
keep us focused on our goals -- we have a tendency to whine amongst
ourselves about what the "Joneses" have, and "maybe we ought to put
some money toward" -- oh let's just say a plasma TV. With someone
looking over our shoulders, it will be even more incentive to stick to
our goals, rather than chipping away at it to buy something to give us
instant gratification

Thanks everyone for your input!
Lori

<<I'm considering moving my investments to a financial planner.> Investments is a piece of financial planning. A CFP has to understand
your insurance needs, your investment needs, your tax needs, your
retirement needs and your estate needs. Expand your horizons and
develop comprehensive financial goals. Of course, if you just want to
deal with investments, try the S&P 500 funds, they Will outperform
investment advisors.

If you believe that in most situations normal people do what they
believe is in their own best interest then your question answers itself
doesn't it.<g
--
_Bill_

Michael Sullivan wrote:

- quote -

Bill <no[at]no.com> wrote:

- quote -

If they aren't scamming you, that's really true no matter how they are
paid, don't you think?

Yes, there are people whose goal is to get you to pay a lot more than
they are really worth because you don't understand what you are really
paying. Too many. That's why I recommend running fast from anybody who
isn't 100% upfront about exactly how they get paid, and exactly what
that means for your account.



Michael

If you believe that in most situations normal people do what they
believe is in their own best interest then getting financial advice
from someone who is paid by commission is a virtual guarantee that you
will not get the best advice and pay too much for it. A broker does not
make money by giving you the best advice. He makes money by selling you
the products that pay the highest commission, not the products that
best meet your needs.

If you pay a financial advisor by the hour or by a flat fee and that is
the advisor's only compensation then his only motivation is to keep you
as a client as long as possible to keep the fees rolling in. The best
way to keep the fees rolling in is to give you the best advice possible.

In his latest annual report Warren Buffet makes a statement to the
effect that an investor's two biggest enemies are expenses and
excitement. Minimizing expenses is second only to getting appropriate
advice in determining the success of your long term investment program.
Before you make a decision get a copy of "The Only Guide to a Winning
Investment Strategy You'll Ever Need" by Larry Swedroe and read it. If
you still think your broker is the best source of advice after reading
the book you will at least be better prepared to deal with him/her.

--
_Bill_

<bsllas[at]yahoo.com> wrote:

- quote -

There's no such data. For pretty much any load fund, you can get an
equivalent expected result (except for not paying the load) in a no-load
fund.

Loads are about paying your advisor/broker. I would run, not walk, out
of the office of anyone who suggests that loaded funds are inherently
better than no-load funds.

You buy a load fund because that's how (or part of how) your advisor is
paid and you want to work with that advisor. There is no other good
reason.

There's no reason to avoid someone merely because they recommend load
funds. They have to be paid somehow and an advisor who doesn't get
commissions from funds will make you pay more per hour/year/X$.

The key is finding out how they are paid, how much that represents to
you and deciding whether their advice and other services are worth that
money. If they are fairly compensated and good, and you don't intend to
make investment a personal hobby, then they should be worth the money,
no matter how they are paid.

There are a number of investment advisors who don't really want you to
know or understand exactly how you are paying them, and yes, most of
those are being paid primarily via commission. I would avoid them.


Michael

--
"Every gun that is made, every warship launched, every rocket fired,
signifies in the final sense a theft from those who hunger and are not
fed, those who are cold and are not clothed. -- Dwight Eisenhower
"In Christ there is no killing" -- St. Patrick

Thanks everyone -- the information been very helpful. He's a broker,
which I pretty much knew. We've had a preliminary meeting about
goals/objectives, and another for next week, and I'm pretty happy with
the approach he's taken and what we've discussed -- it's given me a lot
to think about.

As for the recommendations -- I know he can sell load or no-load funds,
but I've already explained that I would need to see some convincing
data that would indicate why a load fund would be a better choice than
a similar no-load fund. But I'm trying to be optimistic and hope that
he recommends things that are good for me, not just for him. That's why
I thought "if I can see the portfolios of other clients, I can look at
the funds he's chosen for them, and if the majority of them are load
funds, that would be a big red flag". I will see if he'll share
portfolios with me, but if not, I'll just ask for references.

Thanks again,
Lori

bsllas[at]yahoo.com wrote:
- quote -

Hi Lori-
I'm an investment advisor, figured I'd throw in my two cents.

I think it's absolutely a fair question to ask about investment strategy
and preferred funds/securities for implementing it. That should be a big
part of your introductory discussions and every planner/advisor is
prepared to answer it.

Giving out information on individual portfolios is kind of a tough one.
It could be a lot of work to put together, especially if you wanted to
see performance numbers. The latter triggers a bunch of requirements
about how the data are presented. And really he'd need to show you a
client that is "just like you" which may be difficult. My sense is you
could accomplish your purposes without seeing live client data. Or as
someone said, a reference client could help with this too.

You mentioned that you want to find out if he's using a lot of load
funds...that you should find out right now, without seeing any
portfolios. This is a basic point about how he's getting paid and should
be described to you (commissions, hourly fees, percentage fees, a
combination?). Ask him straight-up, but be sure to ask for a copy of
"Form ADV Part II" which is a disclosure document all advisors are
required to give to clients. You should be able to find information
about his firm (on "Part I" of that form, which is filed online) here:
http://www.adviserinfo.sec.gov/IAPD/...d_SiteMap.aspx

If the firm isn't there, and/or he doesn't have an ADV-Part II to give
you, then you're probably dealing with a broker rather than a registered
investment advisor. Your funds are going to be load products and from a
legal perspective he doesn't need to act in your best interest when
giving advice, just recommend "suitable" investments. You can research
brokers here:
http://pdpi.nasdr.com/PDPI/

If he's in neither place, I guess he's...CPA? Insurance agent?

Hope that's helpful.

-Tad

BMS wrote:
- quote -

I agree. Also, I'd pick up a few books and educate yourself a bit so
that you can more easily talk turkey with the FP. If the FP can't
explain what he/she is planning for you in terms that you can
understand, I'd find another person who is interested in teaching me
and not just selling to me.

References are a good idea.

The question is what will he do for you. I want to know how he work with me
to my goals and objectives.

<bsllas[at]yahoo.com> wrote in message
news:1113847789.418444.267780[at]o13g2000cwo.googlegroups.com...
- quote -

Hello,

I'm considering moving my investments to a financial planner. I'm not
looking for the pros/cons of doing this, as I've already read much of
what's posted here, and I'm still undecided.

I was wondering if it's appropriate for me to ask to see other
portfolios he's done for his clients -- not names of the clients, just
the portfolios he's set up and his rationale in the choices he's made.
This information will help me see if he's recommending a variety of
options based on individual needs, or if he's using a lot of load funds
in his recommendations. I figure, if I was building a house, I'd ask to
see work the builder has done. So couldn't I ask to see work the FP has
done (as long as people's names aren't disclosed)? But, I don't want
to ask the question if it's just too outrageous.

Thanks for your input.

Lori