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Subject:  Re: Retirement Plan - Which Way To Go? Date:  11/30/2005  6:07 PM
Author:  DrTarr Number:  48530 of 96184

I am wondering what the differences would with respect to a retirement plan prepared by a fee-only (NAFPA) firm that would charge $4,000 for the plan, and a retirement plan prepared for free by a full-service brokerage.
Welcome back!

The answer is: Total depends on the "Advisor."

In theory, [initial plan] the only difference is in the way the preparer is paid. The fee only, up front $4K, the full-service broker on commissions for you buying the products that are recommended. BUT, theory does not make a good bed partner with anyone in SALES.

If I had to stereotype -

The fee only will look at the whole picture of your dream and then plan where you can put your money, that would historically have brought you the return you need, comensurate with your risk, to get to the dream. - They show you why/were/how or will help you to buy the products which would probably be a significant portion in mutual funds, or similar (in diversification) vehicles. Then you go out and buy the ones you like within the targets set. And you may get some review times.

The brokerage will also have a line up of products that meet an asset allocation model they believe will get you the most return with the least risk. You will buy those vehicles and then they will montior the progress for you. When you buy, they will make the money, (which they deserve if you take their advice)-some of it from commissions or loads, which is straight out of your pocket - so it is not FREE. Of course they will call you on the phone when they think it is time to change--- and that is where a huge controversy comes in. Are they calling because you need to change or they need a boat? This will probably be in a wrap account, where they get a percentage of assets under management, and then invested in portfolios that the brokerage has.

So, as I recall you had $400K inherited to invest. $4k is one percent of that (and seems high but) do you want to spend 1% once. And then probably an hourly rate if you feel it is not tracking well, or do you think that the full service broker has enough better ideas to get a higher return and end up paying probably 2% a year?

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