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Investing/Strategies / Retirement Investing
|Subject: Re: Talk me out of a Financial Advisor||Date: 6/5/2013 1:32 PM|
|Author: ptheland||Number: 72456 of 73918|
Interesting take on attorney fees vs. the value they provide. This helps me to put your FA fee comments into perspective.
Yeah. The attorney I refer my clients to (or used to, as she just retired), charged less than $2000 for a fairly basic trust. Yes, the bulk of it was boilerplate.
But the value was in the customizations to that boilerplate and in the advice and suggestions on dealing with the specific situation. (Including my own - she prepared a trust for my wife and me, although for various reasons that she approved, we eventually never implemented it.)
Having said all that, there is a big difference between using an attorney for drawing up a trust and using a typical percent-of-assets financial advisor. With the attorney, you're basically looking at a one time project. Prepare the trust, pay the fee, and you're done. At least for a few years - as you really should get a "check up" on your trust every few years to make sure it's still doing what you need and to account for any changes in the law. With a FA who charges a percentage every year, that fee never ends. And their performance is much harder to measure.
If you overpay for poor advice from the lawyer, it's a one time fee. And it's not terribly hard to fix - just get a better lawyer and start over. If you overpay for poor advice from a FA, you may never know because their performance can be hard to measure. The fee never ends. The amount lost can be orders of magnitude higher than the amount paid to a lawyer for a trust. If you can measure the losses at all, because it's not just the losses to the fee, it's the underperformance of the investments as well.
I'm not completely against using a FA. There have been a couple of persuasive arguments here for using one in certain situations. I would say it's better to learn to manage your own investments, even if it's just sticking the money in an index fund or two and leaving it alone. But there are times when even that simplicity is not possible.
So I think it's better to find a good FA before you need one than to just take the best salesman to come along when your capacity to make important decisions may be limited.
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