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From a regulatory standpoint you are either subject to fiduciary standards or suitability. There is no switching back and forth.

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Unless you are a hybrid/dual-registered.

Then, you can switch back and forth. Example: Northwestern Mutual has a Wealth Management arm (their corporate RIA). So, if your advisor works for NWM, he may take your IRA and have their corporate RIA manage it as a fiduciary. You are correct, that the NWM RIA is subject to the fiduciary standard. But the advisor can still sell a whole life insurance policy and receive a very large commission and not be subject to the same standard as the corporate RIA managing the IRA. So, the advisor in this example (and in every hybrid firm) can put you in a fee-based account managed by their corporate RIA under a fiduciary standard and still sell you products separate from that account for a commission.

And as the link above shows, I still have an issue with the corporate RIA's of broker dealers. Dual-registered hybrids, on average, charge more and underperform. See also the link to the WSJ article on the topic.

TWTCK- we get it you're a hybrid guy....you're really trying too hard. What you'll learn if you're in business in a year or two is you're not going to be the answer for everyone and there's lots of supposedly smart Aggies who are going to talk down our profession. What I'd suggest as a 25 yr veteran, simply say you're available and in the area if they'd like to connect. Oh, and pay the money for TEXAGS if you're gonna post a dozen times on a thread.

Anyone doing business with NWM has already lost.

Stagecoach said:

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Anyone doing business with NWM has already lost.

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I don't work with, or ever have worked with NWM. That being said, your comment is idiotic....I never thought I'd defend them, but, There's a lot of good people who've helped complete families plans. Until you've delivered a check to a grieving family, or been in the room when a Dr. tells a loved one that they have an incurable disease, you're wading in an area that your have no standing in. Are they the cheapest, no...are all their representatives putting you first, who knows....

Rasslin Cheesehead said:

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Stagecoach said:

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Anyone doing business with NWM has already lost.

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I don't work with, or ever have worked with NWM. That being said, your comment is idiotic....I never thought I'd defend them, but, There's a lot of good people who've helped complete families plans. Until you've delivered a check to a grieving family, or been in the room when a Dr. tells a loved one that they have an incurable disease, you're wading in an area that your have no standing in. Are they the cheapest, no...are all their representatives putting you first, who knows....

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The folks at NWM, not all, but many, including their new folks, are taught to believe (and recommend) that life insurance is the answer to all things.

You're a 25 year old couple with jobs and two little ones you'd like to help with college one day? Great! 2 $1M permanent policies for each of you and a policy for each of your kiddos. You'll never be happier with your decision!

Some really unique products there and some great minds (veterans) about the application of permanent policies in retirement planning for various risk mitigation measures, but in my experience, with them...when all you have is a hammer, everything is a nail.

I've got no dog in this hunt but have to agree that many "advisers" put their clients into products that make significant amount of money for the logo on the door as well as themselves....but maybe most importantly, life insurance IS NOT CHEAP and IS NOT AN INVESTMENT.....It is insurance.

I'm a little late to this thread, but found it very interesting and informative.

My story...my first wife and I lost about $60,000 in the early to mid 80's with a financial planner that had a top selling book on the NY Times list. I can't imagine what we would have had had we invested in growth mutual funds. Because of my experience, I'm very wary of those in the industry.

Fast forward to today. I've done my own investing since then, and have beaten every metric over the past 12 years. I'm now close to retirement and looking for help, as this is not my strength. This past Thursday, I attended a seminar held by a local planner...who suggested that paying off a mortgage was not prudent, and that my best tax free investment was in a Whole life policy. I left that seminar both pi$$ed and disappointed.

I've been told there are good CFP's...but my experience says otherwise. All I can say is be very careful.

ToddyHill said:

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I'm a little late to this thread, but found it very interesting and informative.

My story...my first wife and I lost about $60,000 in the early to mid 80's with a financial planner that had a top selling book on the NY Times list. I can't imagine what we would have had had we invested in growth mutual funds. Because of my experience, I'm very wary of those in the industry.

Fast forward to today. I've done my own investing since then, and have beaten every metric over the past 12 years. I'm now close to retirement and looking for help, as this is not my strength. This past Thursday, I attended a seminar held by a local planner...who suggested that paying off a mortgage was not prudent, and that my best tax free investment was in a Whole life policy. I left that seminar both pi$$ed and disappointed.

I've been told there are good CFP's...but my experience says otherwise. All I can say is be very careful.

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That guy's a good bit late on his policy rec and it would absolutely be wise to have minimal debt/fixed obligations in retirement.

Something important to consider now is positioning yourself to not have to sell invested assets at a loss and be able to sustain a period of increased expenses.

My $.02

I would say it's unlikely to find a good financial planner at a seminar. Not impossible but really very few top notch advisors are out hosting seminars as a prospecting tool. Just my opinion. If I was doing a seminar it may be to communicate with my clients in a group setting but not to a group of prospects generally.

Also when you are searching for your planner I think you just need to be aware of what to look for and interview several.

Obviously you've shown you are making solid returns on your own. Now you should expect reasonable returns but I wouldn't put that as a top priority. I'd focus on risk adjusted returns and tax efficiency

ToddyHill said:

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This past Thursday, I attended a seminar held by a local planner...who suggested that paying off a mortgage was not prudent, and that my best tax free investment was in a Whole life policy

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This thread is a great example of why so many people never get around to investing.

So much different advice from so many smart people who all speak intelligently. They've all got their strategy and if you're doing something else then you're doing it wrong and you're going to lose everything including your first born.

Better get it right! But which person is right? Am I getting screwed with fees? How much of a fee is ok? Does this strategy perform well enough? Is there something better?

Man this is exhausting. I'm so confused. I'll figure it out later.

Then they never do.

I agree. It's interesting when you look at the investing/financial services industry. From discount brokerages, to insurance companies, to asset managers, to full service firms, to CFPs, everyone seems to market themselves more on telling people you are a fool for using the other channels rather than just stating their capabilities and value to customers.

Everyone can benefit in some way from any of those avenues, and they will all cost you something (not just talking dollars and cents with regard to costs). Bottom line, if you want help, seek it out, understand you will pay for it, and stay informed/engaged and always all lots of questions. If you have the time, desire, inclination, and discipline to keep up with it on your own, do so.

I do tend to agree that the biggest red flag is any entity that is selling a one size fits all product (that includes life insurance and annuities as well as index funds or mutual funds or real estate ideas). Not saying that may not be the right solution, but I'd definitely seek a second opinion if someone was pushing such a thing (especially to a group at a seminar). And the reason to go a certain route isn't just because it's the cheapest or because it offers some guarantee.

lotsofhp said:

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This thread is a great example of why so many people never get around to investing.

So much different advice from so many smart people who all speak intelligently. They've all got their strategy and if you're doing something else then you're doing it wrong and you're going to lose everything including your first born.

Better get it right! But which person is right? Am I getting screwed with fees? How much of a fee is ok? Does this strategy perform well enough? Is there something better?

Man this is exhausting. I'm so confused. I'll figure it out later.

Then they never do.

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This is the best post on this thread. Blue parachute for you.

All A&M said:

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Burner Username said:

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I'm looking for recommendations for Wealth Mgmt/financial advisors in the Houston area. I'm fortunate enough to have a business that I'm selling and will have somewhere in the neighborhood of 3MM in investable assets (after taxes) that I need to do something with. Up to this point I've handled all of my investments myself, but this is more money than I'm comfortable managing. I've met with a couple different guys already, but haven't really been blown away by any of them. Anyone have somebody they'd recommend?

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Safe withdrawal rate is 4% per year in retirement. If you pay your advisor the industry norm of 1%, you will have to reduce your annual spending by 25% just to pay your advisor. $30K per year is a massive amount of money going to advisor fees. If you can't (or don't want to) figure out basic asset allocation or if you need an advisor to help you manage your emotions during market swings, then maybe the fee is worth it. For me, it isn't worth it.

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*dis gon get good meme*

All A&M said:

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Burner Username said:

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I'm looking for recommendations for Wealth Mgmt/financial advisors in the Houston area. I'm fortunate enough to have a business that I'm selling and will have somewhere in the neighborhood of 3MM in investable assets (after taxes) that I need to do something with. Up to this point I've handled all of my investments myself, but this is more money than I'm comfortable managing. I've met with a couple different guys already, but haven't really been blown away by any of them. Anyone have somebody they'd recommend?

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Safe withdrawal rate is 4% per year in retirement. If you pay your advisor the industry norm of 1%, you will have to reduce your annual spending by 25% just to pay your advisor. $30K per year is a massive amount of money going to advisor fees. If you can't (or don't want to) figure out basic asset allocation or if you need an advisor to help you manage your emotions during market swings, then maybe the fee is worth it. For me, it isn't worth it.

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1) he's already said the fee is nowhere near 1%
2) your withdrawal rate is outdated and even then the logic is flawed and flat out wrong
3) at that account level, asset management is about much more than asset allocation or even behavioral finance and as many posted, should not include MF's or even ETF's.

This thread needs to end. Way too many experts giving unqualified opinions and I'd say the OP got the recs he was looking for with the names given.

AggieFanatic09 said:

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Merrill's private wealth group Has a network and ability of directly investing in PE deals.

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You generally need to be a Qualfied Purchaser (different ways to qualify but $5mm liquid is a good rule of thumb) to invest as an LP in most reputable PE funds. A broker might chop up access into a fund for Accredited Investors but you'll get killed in fees going this route.

Just finished reading the Simple Path to Wealth by JL Collins recommended in this thread, and I'm so glad I did. Thanks for the recommendation.

DIY

BarryProfit said:

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AggieFanatic09 said:

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Merrill's private wealth group Has a network and ability of directly investing in PE deals.

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You generally need to be a Qualfied Purchaser (different ways to qualify but $5mm liquid is a good rule of thumb) to invest as an LP in most reputable PE funds. A broker might chop up access into a fund for Accredited Investors but you'll get killed in fees going this route.

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not exactly sure how it works - we have LPs put in as little as $250k but we also do co-invest and sidecar outside our fund for situations like that.

Fund to fund investments are becoming more common - sometimes there's a double promote or the fund has higher mgmt fees (2 and 20 like many PE funds).

AggieFanatic09 said:

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not exactly sure how it works - we have LPs put in as little as $250k but we also do co-invest and sidecar outside our fund for situations like that.

Fund to fund investments are becoming more common - sometimes there's a double promote or the fund has higher mgmt fees (2 and 20 like many PE funds).

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Is there a translated version of this for those not in the industry?

They're all just ways to structure a reduced initial investment to have exposure to high level capital management. This typically comes with higher fees to have access vs being a true limited partner, but that's the cost of having access.

The more money you have, the more cost effective management becomes in both advisor fee structure as well as internal costs. Believe it or not, even 300k in an account and an advisory fee should get you a lot more than mutual funds or etfs.

All A&M said:

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investorAg83 said:

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lotsofhp said:

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This thread is a great example of why so many people never get around to investing.

So much different advice from so many smart people who all speak intelligently. They've all got their strategy and if you're doing something else then you're doing it wrong and you're going to lose everything including your first born.

Better get it right! But which person is right? Am I getting screwed with fees? How much of a fee is ok? Does this strategy perform well enough? Is there something better?

Man this is exhausting. I'm so confused. I'll figure it out later.

Then they never do.

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This is the best post on this thread. Blue parachute for you.

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Agree 100%.

It's really not very complicated but the industry sure makes it seem like rocket science.

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I would add, to some it is very complicated (just not their thing, complicated scenarios). The industry (and politicians and journalists) go out of their way to shame people for even considering paying someone to help them.

investorAg83 said:

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They're all just ways to structure a reduced initial investment to have exposure to high level capital management. This typically comes with higher fees to have access vs being a true limited partner, but that's the cost of having access.

The more money you have, the more cost effective management becomes in both advisor fee structure as well as internal costs. Believe it or not, even 300k in an account and an advisory fee should get you a lot more than mutual funds or etfs.

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All this I understand. It was the jargon used I was more curious about. Seemed like it meant some specific detailed things. If this is all it meant that's cool, thanks for explaining.

cjsag94 said:

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All A&M said:

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investorAg83 said:

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lotsofhp said:

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This thread is a great example of why so many people never get around to investing.

So much different advice from so many smart people who all speak intelligently. They've all got their strategy and if you're doing something else then you're doing it wrong and you're going to lose everything including your first born.

Better get it right! But which person is right? Am I getting screwed with fees? How much of a fee is ok? Does this strategy perform well enough? Is there something better?

Man this is exhausting. I'm so confused. I'll figure it out later.

Then they never do.

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This is the best post on this thread. Blue parachute for you.

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Agree 100%.

It's really not very complicated but the industry sure makes it seem like rocket science.

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I would add, to some it is very complicated (just not their thing, complicated scenarios). The industry (and politicians and journalists) go out of their way to shame people for even considering paying someone to help them.

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This. Its ok to pay for help if you dont want to do it or learn how. I'm sure some of you DIY guys pay people do mow your lawn, right? Are you wasting that money on "fees" when you could do it yourself, and better?

Plumber? Pool guy? Pest Control? A/C Repair? Painter? Haircut? Pedicure? Pest Control? Car maintenance and repair? We all could name several things we pay others to do that we do not do ourselves. Why the taboo on paying someone to help you with your finances?

If you want to DYI it, more power to you. There is no need to shame others though.

Paid a guy to paint three bedrooms for me this week. What a waste. Guess I should have saved the money and did it myself. I could have done just as good of a job. He should have charged me less. Straight robbery is what it was. Imagine how much richer I would have been 50 years from now if I hadn't spent that money.

There's also not a Bernie Madoff of the lawnmowing business.

CaptnCarl said:

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There's also not a Bernie Madoff of the lawnmowing business.

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HA! You know how I know you haven't paid someone to mow your lawn lately? I had to sell my firstborn!!

CaptnCarl said:

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There's also not a Bernie Madoff of the lawnmowing business.

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Wait...what?

The DIYers may be the biggest shamers of the bunch.

All A&M said:

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investorAg83 said:

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lotsofhp said:

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This thread is a great example of why so many people never get around to investing.

So much different advice from so many smart people who all speak intelligently. They've all got their strategy and if you're doing something else then you're doing it wrong and you're going to lose everything including your first born.

Better get it right! But which person is right? Am I getting screwed with fees? How much of a fee is ok? Does this strategy perform well enough? Is there something better?

Man this is exhausting. I'm so confused. I'll figure it out later.

Then they never do.

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This is the best post on this thread. Blue parachute for you.

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Agree 100%.

It's really not very complicated but the industry sure makes it seem like rocket science.

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It's not complicated to invest. But the overwhelming majority of people underperform not only the index, but their own investments over the course of their life, and by a very very wide margin.

Index investors also underperform the indexes they're invested in.

This is proven fact, and will never change.

ehrmantraut said:

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All A&M said:

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investorAg83 said:

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lotsofhp said:

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This thread is a great example of why so many people never get around to investing.

So much different advice from so many smart people who all speak intelligently. They've all got their strategy and if you're doing something else then you're doing it wrong and you're going to lose everything including your first born.

Better get it right! But which person is right? Am I getting screwed with fees? How much of a fee is ok? Does this strategy perform well enough? Is there something better?

Man this is exhausting. I'm so confused. I'll figure it out later.

Then they never do.

---

This is the best post on this thread. Blue parachute for you.

---

Agree 100%.

It's really not very complicated but the industry sure makes it seem like rocket science.

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It's not complicated to in invest. But the overwhelming majority of people underperform not only the index, but their own investments over the course of their life, and by a very very wide margin.

Index investors also underperform the indexes they're invested in.

This is proven fact, and will never change.

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Also, investing is one thing and planning is quite another. There are a lot of folks who simply aren't aware of the tax implications of their investing or may not be aware of some areas that could be valuable given their situation.

Vanguard's study of the value an advisor adds concluded to 3% per year. Of that, asset allocation accounts for 0% and that's what all the DIY'ers put all their focus in. If that's the only reason you'd pay for help, there's no doubt they're better off.

The value comes from discussions about behavioral finance, asset location (read more as tax and risk management), spending strategies and to a much lesser degree, being able to do it cheaper than most investors on their own. The last bit is focused more on the fact that some investors find themselves in higher cost mutual funds, but it's still there. Asset allocation is no value add yet it's what most 'advisors' claim to help with the most.

'You got x% in your portfolio...I got x+2% over the same amount of time'. So tiring.

investorAg83 said:

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Vanguard's study of the value an advisor adds concluded to 3% per year. Of that, asset allocation accounts for 0% and that's what all the DIY'ers put all their focus in. If that's the only reason you'd pay for help, there's no doubt they're better off.

The value comes from discussions about behavioral finance, asset location (read more as tax and risk management), spending strategies and to a much lesser degree, being able to do it cheaper than most investors on their own. The last bit is focused more on the fact that some investors find themselves in higher cost mutual funds, but it's still there. Asset allocation is no value add yet it's what most 'advisors' claim to help with the most.

'You got x% in your portfolio...I got x+2% over the same amount of time'. So tiring.

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I am have no opinion or information on this topic whatsoever, but 3% compared to what? Are we talking ALL advisor-managed portfolios vs. ALL that do it themselves on average, or is it more of an apples to apples comparison based on portfolio size?