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Subject:  Re: Talk me out of a Financial Advisor Date:  6/5/2013  10:35 AM
Author:  intercst Number:  72444 of 88504

MurrayS writes,

<<The Captain brought in several financial planners and stock brokers and had them make their pitch. Then he dissected what they were trying to sell us and how much we'd be screwed. Very entertaining and quite an eye opener -- even for an 18-year-old Freshman.>>

Just so I understand, you were presented with a handful of planners not recommended to or selected by you and a biased teacher pointed out flaws in their products. Based on this, you've determined all planners are crocks that offer no value to an investor.


I don't think it matters who recommended or selected them, you just need to dispassionately look at the cost of what's being presented and see if it makes sense. The more the advisor is skimming off in fees and costs, the less it makes sense.

As several others have suggested, if you need an advisor, pay him by the hour. You shouldn't be paying an hourly rate any higher than an accountant or attorney. A 1% advisory fee on a $1 million account is $10,000/year. If you'd pay an attorney in your area $250/hour that's 40 hours of "work". It takes a fraction of that (maybe 2 or 3 hours/year, on average) to allocate $1 million across 8 to 10 mutual funds and do occasional tax loss harvesting and rebalancing. You could be paying the guy $3,000/hour.

What are your thoughts on trusts?

Trusts are fine. (I have one myself) But again the question is what does it cost to prepare one? I'm not going to pay an attorney thousands of dollars to spool-off a standard form from his word processor.

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