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Higher deposits are required to achieve a future goal at 3% inflation and 6% return than at 3% inflation and 15% return.

Higher deposits result in higher commissions - product marketing 101.


Yes, cdr46, people are silly to base their savings targets on hitting 3% over the historical market return while inflation stays 1.5% below historical averages. Far better that they save less, thereby keeping somebody like me from getting a commission. Of course, if inflation is at the historical average, or the return is the market average, the guy is out of luck, but I am sure that he will be comforted by the fact that you showed him how if he invests less and stakes his entire future on abnormal returns, he will have saved a few bucks in fees and commissions. Maybe he will even look you up and thank you for this.

Of course if he used the 3% return and 6% inflation (have you ever actually seen this for a long term illustration involving equities?) he will have given someone like me a few extra bucks, but greatly increased his chance of a comfortable retirement. Think of it, by basing his retirement goals on a worst case scenario he may be punished by having more money in retirement than planned. Maybe he will look me up and thank me, just like the guy who you advised to count on beating the average by 3% a year for 40 years may look you up if he only earns what he would investing in VFINX.

The point is not to BEAT an index - it is to mirror it. The illustration I gave was just that an illustration.

Yet you, cdr46, were willing to chastise the entire financial services industry for not illustrating a return beating the index by an annualized 3% over a 30 year period. The 12% that you decried was a much closer mirror of the index over a 40-year period (12.12%) than the 15% you cried for.

Give me a break! I will accept your claim that you have never seen a table like that. Are you asserting that they don't exist in "financial planning land"? I would suggest that virtually every "boilerplate" financial plan generated in the middle to late 80s and into the 90s have been generated at the above 3 and sometimes 4 percent spread.

Oh, I've seen 3% spreads, used them myself sometimes. That is close to mirroring the historical spread between inflation (4.46%) and 10 year T-Bonds (7.33%) over a 40 year period, so I will use a 3% spread if I am illustrating a fixed income portfolio. I have never seen it used in the manner in which you claim to have, with a 6% inflation and 9% return for an extended period when discussing equities.

I too would like to hear if anyone used a table like this.

"See, like many others on this board I'm one of those sticklers who follows the law. I find it helps me keep my licenses."

Congratulations, I hope you continue to do so while you pursue your work endeavors. By the way - is the CFP a license or a registered trade mark? Are you implying that you are licensed as a Registered Investment Advisor? I know that "someone" can register with the SEC? I do believe the SEC "frowns" when "someone" touts that they are licensed.


CFP is a trademarked designation. Why, did someone tell you different? Oh, BTW, I don't have it.

As far as how I am licensed, I possess the proper licenses to conduct my business, and have been audited on an annual basis with no fear. In these audits one of the first thing they do is check to see if you are properly licensed for the business you conduct. And in case you are wondering, these audits are routine, I have never had one for cause.

BTW, I am quite aware of the SEC and NYSE rules on “someone” touting their licenses. I also know that you are allowed to say that you are licensed and that registered persons are held to a higher standard of accountability are two statements well within the bounds of the rules. Now, “someone” might think that since this is the second time you have responded to “someone” with the above style statement, the implication may be violating either the law or securities regulations. However, last time I asked about this I got the following response, “Why do you continue to make obfuscated statements regarding material misrepresentation of material facts? I'm sure you are a professional financial planner and I in no way accuse YOU personally of not being in compliance with any Federal or State disclosure laws.” Now, I'm willing to overlook once as just poor sentence structure, but a second time leads me to believe that you are either a really, really bad writer, or you are a sniveling coward trying to backpedal away from a slur carelessly tossed.

Speaking of slurs carelessly tossed, are you ever going to reveal where the “material misrepresentation of facts” was you alleged in http://boards.fool.com/Message.asp?mid=15308813? Put up or shut up, tell us why you “suggest that the above assertion by the "financial advisor" is a material misrepresentation of facts” or admit that you were talking out your ass, as usual.

"BTW, I mostly work on fees. I get an average of 1% (sometimes more, sometimes less, depending on how the account is structured) of the assets under management. In this, I get no commissions. I make the same whether you trade 100 times a year or 5."

Wow, I only trade about 5 times a decade - since I view investing as a long term buy and hold endeavor!


Yes, to each his own. If you only trade 5 times a decade this would not be the right account set up for you. I am curious though, are your five trades a decade 5 buys into VFINX, or 3 buys of something else and 2 sales? It's just that 5 trades every 10 years seems awful low for such an experienced investor as yourself. I trade at least 24 times a year, because I do a monthly investment into two funds.


Are you saying you actively manage your clients money or do you suggest that he invest in this or that mutual fund - or do you place your clients in a "wrap" account? You'll have to explain that "structure" a little bit better for me to understand how you can charge someone MORE for "managing" their money somehow by structuring their account. I do understand your comment that commissions are the same within a mutual fund family. Structuring - sounds like a limited partnership offering.

Hmmmm 1%, plus the mutual fund fees, plus commissions if they trade stocks, plus ... (are there any more fees?)


I actively manage the money in these accounts. In this case the term “structured” means how the account is set up. Is it structured for growth? Income? Aggressive growth? Different objectives call for differently structured accounts.

As far as “Hmmmm 1%, plus the mutual fund fees, plus commissions if they trade stocks, “ you should have actually read the paragraph of mine that you quoted, where it says “In this, I get no commissions.

See, the phrase “no commissions” means that I don't get a commission if they trade stocks. Odd how some people actually say what they mean rather than play with innuendoes, huh?

"The reason that a 15% is not shown in an insurance policy is that in most states it is illegal to illustrate a return of over 12%. Therefore, if someone were to illustrate a 15% return, they would be committing an illegal act"

And just who and why don't the powers to be don't want anything higher than 12% to be shown? Could it be because in the stock market returns of 100%, 200%, or more happen. Have you never heard of AOL, ORACLE, IBM. Yeay they go down too - but you don't have to ride them down.


Actually the 12% was done as a consumer protection. You see, not everyone has your skill in beating the market by an annualized 3% over 40 years, so they chose to put the upper limit as the historical return of the market. Yes, there are some stocks that do return truly amazing numbers over short periods of time, but I haven't run across too many people who can post the 200% return you mention over a three-year period, or even the 100% return.

I must admit to some curiosity as to how you are getting in and out of AOL, IBM and others before the go up or down when you are only making 5 trades a decade.

For those investors who want to keep declining stocks in their portfolios there are things called PUTS & CALLS & OPTIONS, and ..., but you must know all that since you are in the business of investment advice - or do you just do insurance?

Now I am truly and deeply hurt. Not because of the negative tone you imply in asking if I “just do insurance,” graygreen, TTRoberts, your bestest buddy Mike and others daily show that that is an honorable profession, but because once again you don't seem to read my posts. Try rereading http://boards.fool.com/Message.asp?mid=15274703.

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