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Reasonable expectations of Financial Adivisors

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  • Reasonable expectations of Financial Adivisors

    Full disclosure.  I have a basic understanding of this world, so forgive any ignorant questions or assumptions

    I believe in the WCI's prerequisite of a financial advisor (from the book and site).  Now, what do financial advisors do, assuming a flat fee, paid for service, fuduciary advisor.  Would (for this flat fee) they do your taxes, paperwork associated with retirement accounts and investments (including going online, picking stocks, rebalancing etc) AND be available for questions, discussions and concerns, OR is it just "advice" and you do the leg work?

    And, concerning this flat fee, is it paid once, like, per year? And, what is a reasonable fee?

  • #2
    psych007 - that varies from firm to firm. You have pretty much explained what we do (you left out estate planning advice, assistance with insurance planning, college planning, and help with cash flow planning/budgeting). Your minimum threshold should be a fee-only CFP, imo. Much has been written on this site about fees, so I'll leave that for others to discuss. You'll find fee schedules and configurations all over the map, though, and fees paid do not necessarily align with services provided,at least for the more expensive firms.

    Edited to add: To find out more about fee schedules, look up the ADV, Part II of any firm you are considering and go to Item 5, Fees and Compensation.

    Good luck in your search.
    Working to protect good doctors from bad advisors. Fox & Co CPAs, Fox & Co Wealth Mgmt. 270-247-6087

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    • #3
      What is included is what is included. It's different with every advisor. Some just do financial planning. Some just do investment management. Many do both.

      You will have a very hard time finding advisors willing to work for flat fees. I only know of a handful of them. There are also a few that charge hourly and many that charge as a percentage of your assets under management. There are also many that charge commissions- primarily mutual fund loads and insurance product commissions. I recommend you avoid getting advice from those "advisors".
      Helping those who wear the white coat get a fair shake on Wall Street since 2011

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      • #4
        I have a few MD friends who have FA's that charge 1% - I know most of us here would balk at that. But they think the 1% is justified because they have made "over 8%" in returns in the "past few years". I don't know what funds they are using (and their expense ratios), but how do I convince my friends to get rid of their FA and do it themselves, or at least switch to fee only? They know how much they are ultimately paying these FA, but maybe they really don't ...

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        • #5




          I have a few MD friends who have FA’s that charge 1% – I know most of us here would balk at that. But they think the 1% is justified because they have made “over 8%” in returns in the “past few years”. I don’t know what funds they are using (and their expense ratios), but how do I convince my friends to get rid of their FA and do it themselves, or at least switch to fee only? They know how much they are ultimately paying these FA, but maybe they really don’t …
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          Most fee-only advisors charge by AUM (1%, more or less). A fee-only advisor must receive all of his/her compensation directly from the client and cannot sell products. I realize there is some confusion with the AUM as there can be inherent conflicts of interest.

          Due to the influence of this site, I have begun offering fixed-fee services (for doctors only), but still advise most clients based upon AUM. It's a very simple model and easy to explain. I'm not defending AUM and can see that it can be abused in some instances (advising a client not to pay down a mortgage in order not to lose AUM), but I believe those cases are the exception to the rule.

          Your friends will almost certainly be hard-pressed to find great, experienced advisors offering fixed-fee services without pretty high minimums. RTD (Roy Diliberto's firm) starts at $10k/year for Financial Life Planning and investment advisory based on net worth of < $1M. Clients with net worth of $3M pay $25k in "fixed fee" services.  Michael Kitces' group, Pinnacle Advisory, still charges AUM.
          Working to protect good doctors from bad advisors. Fox & Co CPAs, Fox & Co Wealth Mgmt. 270-247-6087

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