UnThreaded | Threaded | Whole Thread (124) | Ignore Thread Prev Thread | Prev | Next | Next Thread
Author: ptheland Big gold star, 5000 posts Feste Award Nominee! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 75890  
Subject: Re: Talk me out of a Financial Advisor Date: 6/5/2013 1:32 PM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 7
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.

--Peter
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Print the post  
UnThreaded | Threaded | Whole Thread (124) | Ignore Thread Prev Thread | Prev | Next | Next Thread

Announcements

The Retire Early Home Page
Discussion on accelerating retirement day.
Pencils of Promise - Back to School Drive
"Pencils of Promise works with communities across the globe to build schools and create programs that provide education opportunities for children."
Managing Your Wealth
Our own TMFHockeypop from Rule Your Retirement fame on the TV show Managing Your Wealth.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
Community Home
Speak Your Mind, Start Your Blog, Rate Your Stocks

Community Team Fools - who are those TMF's?
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and "#1 Media Company to Work For" (BusinessInsider 2011)! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.
Advertisement