Post: #1

For those of you who are well off and have plenty of cash or investments, do you use financial advisors to help you figure out where to park your money, or distribute it among different asset classes?

Or do you just do all the homework on your own?

I have some cash sitting in my checking account from my divorce/house sale settlement and a recent bonus payout from my company.

The amount I feel is too much to keep it in a checking account that pays peanuts in interest, but at the same time, too little to put it into real estate.

Post: #2

I am not well off, but I don't trust financial advisers.

Check out these forums/sites for starters:
bogleheads (forum and wiki)
mr money mustache (forum and blog)

The main idea is that you keep it as simple as possible (3-4 low cost Vanguard etfs, long term buy and hold) and minimize your taxes now and in the future.

Post: #3

My 2 cents: No Financial Advisor will take care of your Money as good as you can.

Do your home work and Invest accordingly to what you can risk.

If you are looking to Invest in real estate, you still can with little. put 10-20 % down, get a rental property and let the renters pay the rest. If you are going in and out of country try using an agency to occupy the property with good tenants and for maintenance.

Post: #4

Agree with the above, especially Brodiaga. Financial advisors usually make their money by getting commissions from putting you into certain investments, which may not be best for you. Even if the financial advisor is someone close, like your brother, you know what they say - never mix business with friends & family.

For more detail on Mr. Money Mustache (but not the complete detail), check out the first post of my relocation thread: /thread-47239-...20051.html

Post: #5

Are those websites provided lists of reputable financial advisors? I don't mind giving them a bit of % my cut if they do a great job. IMO it's just about sifting through the bogus ones, which would be difficult without reviews (hell, even doctors have reviews now). But as brodiaga said, passive investing is usually the way to go.
.

Post: #6

I was a financial adviser and worked in private banking once.

You should not trust them unless you have a good knowledge of investing and financial allocation. Then you can go to the better ones since you know what pitfalls to avoid and they can help you sometimes.

Usually it's better to do the basic groundwork yourself and get some basic knowledge. Steer clear from Newbie advice dished out by the investment banking PR offices and the media. You won't regret upping your knowledge. Better look at some professional Trading forums and educational material that CFA students go through. Before you invest rather let it sit for a longer period until you can deal with it on a higher knowledge level.

Post: #7

(05-13-2015 07:32 PM)Zelcorpion Wrote:  I was a financial adviser and worked in private banking once.

You should not trust them unless you have a good knowledge of investing and financial allocation. Then you can go to the better ones since you know what pitfalls to avoid and they can help you sometimes.

Usually it's better to do the basic groundwork yourself and get some basic knowledge. Steer clear from Newbie advice dished out by the investment banking PR offices and the media. You won't regret upping your knowledge. Better look at some professional Trading forums and educational material that CFA students go through. Before you invest rather let it sit for a longer period until you can deal with it on a higher knowledge level.

What sort of relationship do you recommend to have with your friendly neighborhood banker? I did not go through them for my mortgage, I have a couple credit cards, a bunch in my TFSA and some RRSP. Just wondering if there is any advantage to having this relationship.

Post: #8

Advisor no, but a good accountant is probably better for you than most doctors.

Post: #9

I've been tempted to use a financial advisor for tax planning but I'm very hesitant as others have pointed out they make their money by putting you into certian investments. I question whether they are looking out for me or their pocketbook. I just started using wealthfront and betterment. I like both and will continue using both but also have a SEP IRA which is seperate and I've lately just been copying some of wealthfront and/or betterments etf's and recommendations.

Post: #10

(05-13-2015 07:46 PM)Laner Wrote:  What sort of relationship do you recommend to have with your friendly neighborhood banker? I did not go through them for my mortgage, I have a couple credit cards, a bunch in my TFSA and some RRSP. Just wondering if there is any advantage to having this relationship.

No professional relationship at all. They use knowledge written by HR and marketing divisions. I wrote educational material for the "friendly neighborhood banker" employees as young student in my 20s, when I was employed by the bank's central office. That should tell you how much they value the local branch workers.

Advice issued by most works even as a counter-indicator. I remember a couple of guys at a prop trading office I worked had fun with the terrible advice. They occasionally went to the local branch and asked some guy for investment advice. Then they did the opposite and compared how much money they made on a side account. The advice was that bad that the account almost always made money and the boys had a good laugh at that.

TFSA are fine of course - danger of bail-ins for the next bank crashes is low so far.
Would stay clear from RRSP / 401ks - better ways left to invest, but it all depends on a multitude of factors dependent on your individual financial situation, age, even mentality etc.

Post: #11

^Why would you stay clear from the 401K?

Post: #12

(05-13-2015 08:30 PM)Brodiaga Wrote:  ^Why would you stay clear from the 401K?

There are other reasons, but this is one of the main ones:

http://wallstreetonparade.com/2013/04/pb...your-401k/

Fee structure is way too high for products that have lower returns than completely passive products. There are some funds that are worth even higher fees, but you need to be sufficiently knowledgeable to differentiate between the two.

Post: #13

^Understood, but if your company matches contributions, it's generally unwise to leave money on the table. It's worth contributing at least up to the matching percentage even if the fees are relatively high.

But I know what you mean. Corporate assholes work with higher fee providers for their 401k plans, often several times higher than let's say Vanguard equivalents. I wonder if companies get kickbacks from the 401k providers, why else would they screw their employees like that?

Post: #14

Generally the fee based advisors (meaning you pay them for their time) aren't really bad at all. What they typically do is point you towards low fee index funds and help calculate a tolerable level of risk for your age. and goals. They can also bring in some nuance on what the tax implications are now and what future potential tax changes could do to your holdings. The sort of information they offer could be invaluable, even and especially if you aren't putting all of your assets with them. You can find solo practitioners, small groups, and a few big firms working this way. This kind of advisor may be able to offer some thoughts on market trends and such which would be well outside an accountant's scope of practice.

Any advisor that works on a commission is primarily a sales person, and should be treated as such. They will push you towards what they get compensated for and as such their information is almost entirely compromised by their need to meet goals. A lot of bigger firms, smaller firms, and even so solo practitioners work this way. Avoid these fucks if at all possible.

Post: #15

Would I trust my monies with a car salesman? fffffk no. I view "financial advisors" as the same. Except financial advisors probably spend a bit more on their suits. But for some reason still cannot afford a tailor. Ha...

Yeah, no. There are better options out there to park your funds.

(05-13-2015 07:13 AM)CleanSlate Wrote:  For those of you who are well off and have plenty of cash or investments, do you use financial advisors to help you figure out where to park your money, or distribute it among different asset classes?

Or do you just do all the homework on your own?

I have some cash sitting in my checking account from my divorce/house sale settlement and a recent bonus payout from my company.

The amount I feel is too much to keep it in a checking account that pays peanuts in interest, but at the same time, too little to put it into real estate.

Post: #16

Looks like the consensus is no. I'll hit up Money Mustache and introduce myself there. Thanks guys!

Post: #17

(05-13-2015 09:29 PM)BBinger Wrote:  Generally the fee based advisors (meaning you pay them for their time) aren't really bad at all. What they typically do is point you towards low fee index funds and help calculate a tolerable level of risk for your age. and goals. They can also bring in some nuance on what the tax implications are now and what future potential tax changes could do to your holdings. The sort of information they offer could be invaluable, even and especially if you aren't putting all of your assets with them. You can find solo practitioners, small groups, and a few big firms working this way. This kind of advisor may be able to offer some thoughts on market trends and such which would be well outside an accountant's scope of practice.

Any advisor that works on a commission is primarily a sales person, and should be treated as such. They will push you towards what they get compensated for and as such their information is almost entirely compromised by their need to meet goals. A lot of bigger firms, smaller firms, and even so solo practitioners work this way. Avoid these fucks if at all possible.

I agree 100%. If you are going to an adviser it needs to be an fiduciary adviser. They have a reasonably stringent annual third party review and they are legally required to act in your best interests as every other broker will act in a way that maximizes their returns.

With that being said, I don't use one. I pretty much invest 90% in index funds, and maybe 10% higher risk high dividend stocks.

Post: #18

(05-14-2015 09:16 AM)CleanSlate Wrote:  Looks like the consensus is no. I'll hit up Money Mustache and introduce myself there. Thanks guys!

One of your best bets is to do a sound analysis and long-term plan with a RVF member who is either a trader, works in investment banking or is a self-taught expert who has a good take on the issue (and best some actual success that is based on reasonable planning). If you meet up with guys you will likely come upon one of them and then draw up such a plan. But it does not hurt to become more knowledgeable yourself.

Post: #19

I agree with Zel and I work in finance. Second the CFA curriculum material recommendation (just read it, no need to study it) if you have the time.

That being said, if you're looking for a low maintenance account, check out Betterment or Wealthfront. They charge a small passthrough fee and put you into multiple low-fee mostly Vanguard funds based on your risk aversion, liquidity needs, and time horizon. It's low fee if you don't want to do it yourself.

Wealthfront is free for first 10k, and I believe with a referral code you can kick that up to 15k. I have an account with Wealthfront myself.

The biggest argument against advisors is their conflict of interest. They get fees on your investments. If the investments they pick you have a load (a fee you pay out of the money you invest), they get a big chunk. I know someone who was paying a 5% front load for an underperforming S&P tracker. The only reason to pay a load is if the fund has a track record for outperformance, and even then annual fees over 1% is quite expensive.

Once you're rolling in fat stacks (>$1m liquid assets), an advisor might make sense if they can optimize your portfolio from a tax perspective. But even then, it might be cheaper to pay an on-demand expert.

Post: #20

Here is a good web site i came across a few days ago: http://www.madfientist.com/about/

Very clear and concise articles about early retirement, financial independence, different types of investment accounts, etc. Highly recommended.

Post: #21

(05-13-2015 09:15 PM)Brodiaga Wrote:  ^Understood, but if your company matches contributions, it's generally unwise to leave money on the table. It's worth contributing at least up to the matching percentage even if the fees are relatively high.

But I know what you mean. Corporate assholes work with higher fee providers for their 401k plans, often several times higher than let's say Vanguard equivalents. I wonder if companies get kickbacks from the 401k providers, why else would they screw their employees like that?

Of course - 401k are beneficial up to a level - when a company backs up your payments even more. That goes without saying and I am not disputing that. Everyone should use the tax-code for optimization.

But I know some who invest additional amounts which could be used differently. It reminds me of some MDs I met who had "invested" in 10 life insurance policies. Sure they made some money, but if they had put their savings into other instruments, then they would have made much much more over 20 years - even with a low risk approach.

And yes - I think that companies get kickbacks or are connected through other means.

Post: #22

(05-13-2015 07:32 PM)Zelcorpion Wrote:  Steer clear from Newbie advice dished out by the investment banking PR offices and the media. You won't regret upping your knowledge. Better look at some professional Trading forums and educational material that CFA students go through.

This. There's a big difference between the content in the press releases and what you find a professionally prepared equity research report that you have to pay for. For starters most people on here wouldn't be able to follow a complete ER report.

(05-14-2015 09:45 AM)Zelcorpion Wrote:  

(05-14-2015 09:16 AM)CleanSlate Wrote:  Looks like the consensus is no. I'll hit up Money Mustache and introduce myself there. Thanks guys!

One of your best bets is to do a sound analysis and long-term plan with a RVF member who is either a trader, works in investment banking or is a self-taught expert who has a good take on the issue (and best some actual success that is based on reasonable planning).

Narrow that down a bit more. Investment bankers aren't all that focused on "the market". Their focus is in working with corporate clients to issue securities, advise on financial strategy, or work on mergers(among other duties).

The people you'd want are prop tradesr, successful hedge fund managers, or someone in PWM who can boast a high return on their portfolios.

What financial advisors are generally good for is that they're going to be well acquainted with the tax consequences associated with each investment option. For example, a corporate bond has to issue significantly higher interest than a government bond due to the preferential tax treatment that government bonds receive.



For general market/economic understanding I'd suggest reading up on Martin Armstrong's writings.

Blog here, his writings available through a link on the page:

http://armstrongeconomics.com/armstrong_economics_blog/

Post: #23

http://www.stansberryradio.com/

The free episodes are good

He is fairly honest. He tells you that most people like to gamble instead of invest. So they want him to pick that one stock that will make them rich. He says the key is to diversify your portfolio and hold it for long periods of time. He also rates all of his how all of his team did every year.

Post: #24

(05-13-2015 09:15 PM)Brodiaga Wrote:  ^Understood, but if your company matches contributions, it's generally unwise to leave money on the table. It's worth contributing at least up to the matching percentage even if the fees are relatively high.

But I know what you mean. Corporate assholes work with higher fee providers for their 401k plans, often several times higher than let's say Vanguard equivalents. I wonder if companies get kickbacks from the 401k providers, why else would they screw their employees like that?

At the risk of sounding NACALT (Not All Corporations Are Like That ... hehe), some (but not all) corporate 401ks do offer better expense ratios (if you look) than what you can get on your own (never mind employer contributions and tax advantages). It's usually fairly easy to find all this info, but it also depends on your situation (which company you work for, etc.).

Also note that some employers require you to contribute something from each paycheck throughout the year to get the full employer match. In other words, you may miss out on some employer match if you stop contributing during the year (ie, you hit the IRS 401k annual limit before the end of the year, and don't/can't spill-over to an after-tax 401k).

Post: #25

Nope. I follow my Uncle's advice: "If you can't handle a million $ or less on your own, you're an idiot."

He's a self made "millionaire next door" that had nothing to start out with in life.

Good enough for me.