Choosing a financial planner.
by JWIrish (2019-03-17 15:44:53)

Does anyone know how accurate the scores are on Wealthminder.com?

All replies will be appreciated.


It's a sad fact of the industry
by 89Swine  (2019-03-18 14:14:23)     cannot delete  |  Edit  |  Return to Board  |  Ignore Poster   |   Highlight Poster  |   Reply to Post

that most people who call themselves "financial planner" or "financial advisor" don't do any planning and render very little valuable advice. Most of the people with those titles are financial salespeople masquerading as planners or advisors. Sort of like the pharmaceutical rep posing as a doctor.

So it's largely up to each individual to try and navigate these shark infested waters to find a true financial advocate. Here's some basic information to point you in the right direction:

1. Narrow your search by focusing only on Certified Financial Planners. The CFP designation represents the highest level of competency in the financial planning profession. Only about 20% of people who call themselves financial advisors are a CFP. You can search for CFPs in your area at cfp.net

2. Then look for those who work for an independent Register Investment Advisor (RIA). An RIA is a legal entity that is regulated by the Securities and Exchange Commission. RIA employees are legally held to a fiduciary standard to put their clients' interest first. This is the highest legal standard in the profession. You can verify a firm's registration and learn about its operational practices at sec.gov.

3. Generally speaking, avoid brokerage houses, banks, insurance companies, and Ameriprise. While you might find someone good, the odds are stacked against you. These firms are designed for product sales and profit maximization. Their employees are measured largely on how much revenue they produce for their employer, not the quality of their advice.

4. Another good place to search for financial planners in your area who meet this criteria is the national Financial Planning Association. Go to plannersearch.org.


the CFP thing is kind of funny
by jt  (2019-03-18 18:10:34)     cannot delete  |  Edit  |  Return to Board  |  Ignore Poster   |   Highlight Poster  |   Reply to Post

you know who really encourages their reps to get the CFP?

(from your post)

brokerage houses, banks, insurance companies, and Ameriprise


This is complete B.S.
by The Magic Rat  (2019-03-18 14:52:32)     cannot delete  |  Edit  |  Return to Board  |  Ignore Poster   |   Highlight Poster  |   Reply to Post

Let me guess: you work for an RIA and have a CFP? Let me also surmise that you have never worked at a wirehouse, or, more likely, started at one and couldn't get through the training program and now have an axe to grind.

It is laughable that you RIA types actually believe that you are the only ones held to a fiduciary standard. Are you kidding? Do you even have an active series 7 license? It's like you guys were given a script your first day at work to use against the big bad wirehouse advisor and you are dumb enough to believe all of it.

Almost 100% of your post is myth.

1. There are plenty of competent financial planners who don't have a CFP designation. And there are plenty of idiotic scumbags who have that designation.
2. This is patently false. FA's at wirehouses, if under a wrap-fee platform, have the same fiduciary standard, not to mention several more layers of oversight.
3. I will agree with the notion that insurance-based planners often steer clients towards insurance products, but this isn't always the case. I do find it interesting that you seem to be making a claim that you are evaluated based on "the quality of advice that you give"? How so? Are you making 2 and 20? This is B.S. You, like everyone else, are getting paid based on fees that you bring in to the firm, not on how good your advice is to the client. To infer otherwise is completely disingenuous.

You reek of someone trying to sell something.

Edited for spelling/grammar


Whoa, looks like I struck a nerve.
by 89Swine  (2019-03-18 16:41:47)     cannot delete  |  Edit  |  Return to Board  |  Ignore Poster   |   Highlight Poster  |   Reply to Post

I'm not selling anything. On the contrary, I listed impartial websites where the OP could research financial planners on his own and draw his own conclusions.

Given your response is riddled with erroneous assumptions and insults, I think that might prove my initial point.


Well, when people say things that are completely wrong
by The Magic Rat  (2019-03-18 18:31:13)     cannot delete  |  Edit  |  Return to Board  |  Ignore Poster   |   Highlight Poster  |   Reply to Post

About my profession, and do so in a manner that suggests they actually know what they are talking about (when in fact you clearly do not), I tend to get frustrated. The OP came on here looking for advice and you gave him dogshit, slanted, inaccurate "facts", and you did so with so much confidence that people who don't know any better would possibly believe your drivel. So I am doing the board a favor by making sure people understand that you are full of shit.


Except it's not wrong.
by 89Swine  (2019-03-18 19:41:42)     cannot delete  |  Edit  |  Return to Board  |  Ignore Poster   |   Highlight Poster  |   Reply to Post

It's opinionated, yes. I pulled back the industry facade and presented an alternative approach to traditional, entrenched business models. But it's an approach that I think, after significant professional experience, is superior.

It sounds like I've threatened your business model. My apologies.


Well, if my business model consisted of trying to somehow
by The Magic Rat  (2019-03-18 21:03:57)     cannot delete  |  Edit  |  Return to Board  |  Ignore Poster   |   Highlight Poster  |   Reply to Post

Get clients by way of an Internet message board, then I suppose you would be correct. As stated previously, I am simply making sure that the OP and anyone else who happens to read this thread is properly educated and doesn't simply trust a blowhard charlatan like you when it comes to picking a financial professional for themselves.


Heh, it's the one time a year I'll come to Swine's defense
by dulac89  (2019-03-19 12:07:05)     cannot delete  |  Edit  |  Return to Board  |  Ignore Poster   |   Highlight Poster  |   Reply to Post

But your characterization and personal attacks are completely wrong. You are entitled to disagree with his opinion, but without going into details he is definitively and eminently qualified to have a highly credible opinion on this matter. And he hardly needs an internet message board or any advertisements for that matter to get clients.


On this we agree.
by BottleofRed  (2019-03-19 14:16:49)     cannot delete  |  Edit  |  Return to Board  |  Ignore Poster   |   Highlight Poster  |   Reply to Post

Swine may be a pig, but his professional ethics and principles are above reproach.


I can no longer trust your judgment on anything *
by dulac89  (2019-03-19 14:20:19)     cannot delete  |  Edit  |  Return to Board  |  Ignore Poster   |   Highlight Poster  |   Reply to Post


I recently let my financial planner go.
by Jellyfinger  (2019-03-18 13:12:16)     cannot delete  |  Edit  |  Return to Board  |  Ignore Poster   |   Highlight Poster  |   Reply to Post

He had me in 5 different mutual funds over the course of the past 8-9 years and made very few changes over those years. ~ yearly I would wire him another lump of cash to invest. He would regularly ask for more. I finally let him go when I realized that over the time he was with me, when the Dow had exploded, my portfolio had not kept pace with the index funds. It wasn't terrible, but I beat it with the few index funds I keep in a TD Ameritrade account. When I voiced my displeasure, his response was "Well I thought you wanted a conservative approach. With my higher wealth clients I can be more agressive and get higher returns...blah blah." Nice guy, but I came to the conclusion he didn't know much more than I do, which ain't much.

My guess is that a good tax advisor is as or more valuable.


be careful
by jt  (2019-03-18 13:17:22)     cannot delete  |  Edit  |  Return to Board  |  Ignore Poster   |   Highlight Poster  |   Reply to Post

it is first most important to know who you are as an investor and then to set up a portfolio that matches who you are.

comparing to the S/P 500 isn't necessarily the best way of doing it; taking an overall look at the alpha and beta of the portfolio (measure of risk and return relative to the index) is probably better. If your overall investment profile reflects a moderate to aggressive approach, you might not match the S/P (and it might not even be the proper benchmark).

With that said, only meeting with a guy periodically and then wiring cash isn't always the best bet either. Financial plans are living, breathing things that need to change with time; I would normally recommend meeting a lot at the beginning (establish a relationship, understand whom you are working with, get education on the different products that make sense for you) and then meeting at least annually from that point forward or as life events determine.


First sign of worry: mutual funds *
by airborneirish  (2019-03-18 13:14:05)     cannot delete  |  Edit  |  Return to Board  |  Ignore Poster   |   Highlight Poster  |   Reply to Post


What would that cause worry? *
by rflor  (2019-03-18 13:22:37)     cannot delete  |  Edit  |  Return to Board  |  Ignore Poster   |   Highlight Poster  |   Reply to Post


Because they under-perform index funds?
by NavyJoe  (2019-03-18 15:20:13)     cannot delete  |  Edit  |  Return to Board  |  Ignore Poster   |   Highlight Poster  |   Reply to Post

And can be loaded with fees?


the goal of every mutual fund is to outperform the index?
by jt  (2019-03-18 17:55:08)     cannot delete  |  Edit  |  Return to Board  |  Ignore Poster   |   Highlight Poster  |   Reply to Post

really?

It's that sort of analysis that can lead to problems, NavyJoe


I understand that
by NavyJoe  (2019-03-18 18:48:04)     cannot delete  |  Edit  |  Return to Board  |  Ignore Poster   |   Highlight Poster  |   Reply to Post

I'm not offering a perspective on how people should invest their money. I was simply offering an explanation as to why some scoff at actively managed mutual funds.


okay, but many can also scoff at index funds
by jt  (2019-03-18 20:45:49)     cannot delete  |  Edit  |  Return to Board  |  Ignore Poster   |   Highlight Poster  |   Reply to Post

to truly understand and evaluate money management, IMO, one really needs to start with a basic understanding of alpha and beta relative to the benchmark(s).

basically, you might be below the S/P but taking on 50% of the risk and generating 200% of the expected return (as an example). That might be the better situation for the investor, depending on their risk profile, time horizon, etc.


100% of mutual funds underperform index funds?
by rflor  (2019-03-18 15:50:09)     cannot delete  |  Edit  |  Return to Board  |  Ignore Poster   |   Highlight Poster  |   Reply to Post

Must be a rough market out there.


For the horizon of any investor building for retirement yes
by airborneirish  (2019-03-18 16:40:49)     cannot delete  |  Edit  |  Return to Board  |  Ignore Poster   |   Highlight Poster  |   Reply to Post

Considering the ridiculous fees charged for active management it's a no brainer to avoid like the plague.

A good financial advisor charges for his advice and doesn't make his money by earning scalps from the product he pushes.

Mutual funds have a limited role to play for most individuals. For example, there are some mutual funds that are sector specific that give you exposure that is hard to get through individual securities and impossible to get through a passive / cost efficient index fund. That said, if you have such a strong view about a category you should be running your own money. I would stay away from advisors who were doing things like buying defense sector mutual funds, etc.

I'm a FORMER Goldman Sachs wealth manager. I'm not registered or in the business any longer. I would listen to jt on this stuff but as he said he's busy.

If it were me I would want to find an advisor that I paid for advice and service. I would want him to be product agnostic and not have his compensation tied to what he's selling me. I would be hesitant to pay a % of assets because the work required doesn't vary much from $5 million to $10 million, but most advisors charge double for the latter because they take a % of AUM.

As jt said, there's a lot to look for here. For me, using exclusively mutual funds is a sign to look elsewhere.


As JT describes below, good money management
by rflor  (2019-03-18 19:19:00)     cannot delete  |  Edit  |  Return to Board  |  Ignore Poster   |   Highlight Poster  |   Reply to Post

Uses a variety of techniques, including mutual funds, ETFs, specific stocks, etc...all tailored to the individual’s risk level.

If your threshold for advice is 100% product agnostic, then what would you expect from an advisor? To me, it seems like an unattainable bar to clear.

I do not have a dog in this hunt....I’m an IT guy who enjoys doing his own investing/personal finance, but these type of absolute statements come across as unhelpful.


"mutual funds" is just an overused term that can lead to
by jt  (2019-03-18 18:02:43)     cannot delete  |  Edit  |  Return to Board  |  Ignore Poster   |   Highlight Poster  |   Reply to Post

confusion.

"Managed money" is probably the better term to use and it can encompass all kinds of things, including mutual funds, ETF's, etc.

I would say that a reasonable fee would be about 1% and that there might be other expenses tacked on there in the neighborhood of about .5%. Honestly, if people are going to pay any fees for this stuff they should be looking at things differently than just comparing to the S/P.


A sobering perspective of Actively Managed Funds linked (link)
by NavyJoe  (2019-03-18 16:09:09)     cannot delete  |  Edit  |  Return to Board  |  Ignore Poster   |   Highlight Poster  |   Reply to Post


not all investors have the ability/desire
by jt  (2019-03-18 17:59:45)     cannot delete  |  Edit  |  Return to Board  |  Ignore Poster   |   Highlight Poster  |   Reply to Post

to maintain a 1:1 correlation with the S/P 500.

they might think that they do, but in reality studies will show the opposite. In fact, in a period of time between 1987 and 2017, the average mutual fund was up about 8% whereas the average investor was actually up 1%. Why is that? It's because people cannot handle that sort of correlation and when the index went down, they went "active" and jumped out of their investments ("flight to cash") and then when things had calmed down and they were confident again, they jumped back into the passive strategy ("buy high").

Look, I work pretty closely at times with Janus, Vanguard, Fidelity, etc and I am all too familiar with the active vs. passive arguments. The reality is that every investor needs to find their spot, invest, and then follow their own proper benchmarks and allocation adjustments (on their own or with an advisor). Just looking at one index is lazy and misleading.


I absolutely cede to your knowledge of this industry
by NavyJoe  (2019-03-18 18:52:45)     cannot delete  |  Edit  |  Return to Board  |  Ignore Poster   |   Highlight Poster  |   Reply to Post

My intent was never to tell someone how to invest their money. I recognize that some people may not be able to deal with being correlated to the market; I also get that some folks may not want their fund correlated to the market whatsoever (or want to track a different index, commodity, etc.)


it's an industry thing
by jt  (2019-03-18 20:43:29)     cannot delete  |  Edit  |  Return to Board  |  Ignore Poster   |   Highlight Poster  |   Reply to Post

they've allowed this thinking of index funds and comparing everything to the S/P to go overboard and it's become silly.


just looking at the site briefly
by jt  (2019-03-18 08:50:32)     cannot delete  |  Edit  |  Return to Board  |  Ignore Poster   |   Highlight Poster  |   Reply to Post

I wouldn't say that it is very accurate. I've been in the business over 22 years and I'd never heard of it, and I went through the site and of course I can sign up and pay a fee and get leads from them, if I wanted.

I would imagine that if an advisor signs up, pays the fee, and keeps them updated the scores would be pretty accurate. Beyond that, it is a crapshoot.

In terms of the actual question of how to pick an advisor, I've posted on that before on this board and I am kind of limited on time now; I think some people have saved it and perhaps they can re-post. It's a long answer, but my basic answer is that you want to work with an advisor that specializes in people in your situation (you age, your income range, your profession, etc.). I would recommend working with someone that is independent (not tied to any large insurance or investment company directly) and someone who is able to (but doesn't necessarily) charge fees.


Ask your Planner to show you his portfolio over the years
by Paddy O'Furniture  (2019-03-18 05:41:38)     cannot delete  |  Edit  |  Return to Board  |  Ignore Poster   |   Highlight Poster  |   Reply to Post

and his tax returns and bank accounts.


If they are afraid to, take your business elsewhere.


this might be the most ridiculous thing I've ever read
by jt  (2019-03-18 08:43:31)     cannot delete  |  Edit  |  Return to Board  |  Ignore Poster   |   Highlight Poster  |   Reply to Post

on this board.


What's ridiculous about it? Seems reasonable to me...
by The Magic Rat  (2019-03-18 11:54:10)     cannot delete  |  Edit  |  Return to Board  |  Ignore Poster   |   Highlight Poster  |   Reply to Post

I kid. And I think (hope) Paddy was joking too.

I have been in the business as well for 10+ years, and I agree with much of what you said, although I don't think going with an independent advisor is necessarily better than going with someone from one of the big wirehouses. Independent advisors often claim that wirehouse guys like to push proprietary products to their clients, but that has not been anything I've ever seen in my time at 2 major wirehouse firms. Plus, there is a level of oversight at the major wirehouses that does not exist at smaller independent firms. A Madoff-like scenario is impossible at any of the big wires.

This isn't to say that everything is always great at big wirehouses-- there are plenty of crappy advisors who charge too much for what they actually provide. A lot of egomaniacs who think they are big time stock pickers when they are actually average at best (and sometimes much worse than average). But there are independent guys who fit the same profile. My point is, don't rule out a huge subset of advisors just based on the firm that they work at. We all do a lot of the same things regardless of our firm. Find a couple of trusted friends and ask them if they like their advisors, and if they do, ask for an introduction to see if they seem like a good fit. Beware of anyone that promises outsized returns-- in fact, I would be wary of anyone that focuses any of their presentation on past returns because: a) they are probably full of shit, and b) any discussion of returns should be from a goals-based perspective (i.e. what type of returns are needed based on your financial goals and is this commensurate with the level of risk you are willing to take on?).

Finally, I agree that the website the OP linked looks fairly bunk. I would google "finra broker check" and enter the name and firm of any prospective advisor. Obviously, any disclosures or events that show up should be appropriately treated as red flags (but not necessarily disqualifying events, depending on the scenario-- sometimes bad clients make ridiculous, baseless complaints that good advisors are forced to report, even if they did nothing wrong).


I guess I was in a rush
by jt  (2019-03-18 13:13:15)     cannot delete  |  Edit  |  Return to Board  |  Ignore Poster   |   Highlight Poster  |   Reply to Post

I should have also included "full service."

I don't have anything against the wirehouse guys, but in a lot of ways they come up short on being able to set up a true comprehensive plan.

The big thing about independence is to be careful when working with a guy from an Insurance company; it's been my experience that those guys tend to push their insurance answers first, but not always.

Working with someone you trust is the most important thing.