Do you have a "Trusted Advisor"?

[jIM_Ohio]

Buy Low sell high

how much better could a trusted advisor do?

I have a few people I talk to
for example one friend about real estate
another about taxes
another about legal issues

but not one single person which I rely on.

For investing, I have met few people in person which make as much sense as what my instincts tell me to do.

[disneysteve]

For investing, I have met few people in person which make as much sense as what my instincts tell me to do.

Very true.

I'm in an interesting investment situation right now unrelated to my personal assets. I sit on the board of a non-profit organization that is in the process of evaluating options for a new investment approach. We have had presentations of proposals from three different investment firms - a discount brokerage, the investment arm of a major bank and a full-service brokerage, all well-known national companies. It is amazing how dramatically different the proposals are even though all three were given the exact same information to work with in preparing their proposals. Personally, I don't think any of the three proposals are ideal, though each has their pros and cons. I know which one I will pick when the time comes, but I will choose it with some reservations about what they are proposing.

My point is that I don't think any one single advisor exists who can provide the best answer to all of your financial questions. You need to gather information from a variety of sources and then use your brain and instincts to do what feels right to you.

[elessar78]

My point is that I don't think any one single advisor exists who can provide the best answer to all of your financial questions. You need to gather information from a variety of sources and then use your brain and instincts to do what feels right to you.

I think this is why I search for a trusted advisor. I do a lot of research, but I don't have anyone to bounce my ideas conclusions off of.

I started that thread on SA about Toyota stocks for example. Not a unique idea but I don't have anyone whose judgment I trust to parley with. This is coming from a guy who has close friends who work for big, Wall St. investment firms (who are also the aforementioned dummies in college).

[EEinNJ]

This year I'm going to "break up" with the tax preparer/investment adviser I've used for many years (as soon as I do my own taxes!). I've done OK on my own with investments, so he's looked at my portfolio but there's been no need to make changes. He's given mixed advice to my wife with handling retirement accounts.
Unfortunately as his tax prep business has expanded over the years, it's gotten expensive and I've caught some mistakes the last couple of years.

I would say it's good to have an adviser if you just getting started or are facing changes. I would add that you should re-evaluate how well even a "trusted adviser" is working out for you.

[Beppington]

CPAs do not have any investment training, and it is usually a conflict of interest to have a CPA who recommends investments.

Where's the conflict of interest? Because they might recommend something that has complicated tax consequences so I have to use a CPA instead of doing my own taxes?

My own profession aside, I have a lot of real life "Millionaire NExt Door" mentors - my parents and boss being the main ones that come to mind.

This is my situation and experience.

... had an account with a big broker, and the fees were just insane. I finally convinced him to drop the guy a few years back. Ugh! We do MUCH better on our own.

Me too. Had a high-cost Merrill Lynch account. Not sure exactly how my performance has compared to what it would've been at ML now that I've moved entirely to Vanguard, but I'm not concerned; All I know is I cut out a middle man (ML) & feel like handling my investments myself is the best I can do. As they say: Nobody cares more about my money than I do. That ML account felt like a serious burden; I had serious dread any time I had new money to invest because I knew they were gonna take a cut before it even got invested, then again during the holding period, then again at the sale. At Vanguard I feel like streamlined, free-minded, serious investor with a plan! I chomp-at-the-bit when it's time to send in new money to invest at Vanguard.

3 - Estate Lawyer/Legal service - "Millionaire NExt Door" types do not go cheap when it comes to legal fees.

x2 "A good man (woman!) know his/ her limitations, & the wealthy folks I know realize the things they are better off letting somebody else do, whether it's taxes, legal issues, etc.

[Beppington]

I'm not quite there yet but I anticipate doing the same when I'm about 10 years out from retirement. My cousin, who is retiring in May, did that about 5-7 years ago just to have a pro look over everything and tweak things here and there. I don't want to turn over management to anyone but I wouldn't mind sitting down and laying it all on the table and getting a second opinion.

In 2006 I paid a fee-based financial planning firm $1,000 to do just that. While they recommended no big changes*, having an un-biased "expert" (I love that term!) analyze it & confirm was pretty satisfying.

* They did recommend I get a $1M umbrella insurance policy, so I did; It's cheap. They also recommended I add mid-cap index fund exposure to my portfolio, which I didn't do since historical stock market analysis shows that mid-cap stocks don't add enough diversity to bother with.

[Beppington]

Ugh, I have really got to get going on finding some experts. I just wish I knew where to start. (I'm one of those people who has very complicated scenarios, so even though I don't have much money to work with yet, I need to do my planning and self-education on the front end or else I might end up making some costly mistakes.)

Thank you for starting this thread. I think it was the kick in the pants I needed. I'm just going to start calling around for starters, I think.

I find that many complicated issues can be simplified with the use of a spreadsheet. Just start entering your info & organize it as you go. Your spreadsheet will probably evolve as you realize better ways to organize it, more or less things to enter into it, etc.

I would imagine someone who doesn't know the details of my financial situation & plan would be pretty confused by my finances, but my spreadsheet has it all clearly laid out. I can update prices, quantities, account balances, track performance, etc. quickly & easily.

Edit: Of course this was fun from late '02 to late '07 when the stock market was almost doubling! Now it's less interesting.

[jIM_Ohio]

Where's the conflict of interest? Because they might recommend something that has complicated tax consequences so I have to use a CPA instead of doing my own taxes?

I cannot answer for the OP

but a CPA and financial advice will not be objective for some reasons I can think of


1) the certification of the CPA is in accounting standards. Those accounting standards have nothing to do with investment decisions.

2) A CPA at most accounting firms will make 10X-100X-1000X more doing taxes and accounting than they will investing or providing advice on investing, implying its tough for a CPA to stay current on what feeds them (being an accountant) and what an investment professional does.

3) A CPA by certification is still not allowed to handle other people's money for purposes of investing (that is what a series 6 and series 7 licensing is for).

4) As a matter of point, I would like to know anyone in a "moderate" sized city which can make a living off giving financial advice alone. Meaning they do not prepare taxes, do not sell anything, and do not provide anything except fee based advice services.

Most professionals which charge for investment advice can also sell something- whether it be insurance, investments, tax services or something else. There is just not a huge demand for investment advice professionals.

[creditcardfree]

I find that many complicated issues can be simplified with the use of a spreadsheet. Just start entering your info & organize it as you go. Your spreadsheet will probably evolve as you realize better ways to organize it, more or less things to enter into it, etc.

The poster you responded to will have tax issues that can't be solved with a spreadsheet. International tax issues, specifically.

[Beppington]

but a CPA and financial advice will not be objective for some reasons I can think of

1) the certification of the CPA is in accounting standards. Those accounting standards have nothing to do with investment decisions.

2) A CPA at most accounting firms will make 10X-100X-1000X more doing taxes and accounting than they will investing or providing advice on investing, implying its tough for a CPA to stay current on what feeds them (being an accountant) and what an investment professional does.

3) A CPA by certification is still not allowed to handle other people's money for purposes of investing (that is what a series 6 and series 7 licensing is for).

I understand a CPA may not be the best qualified financial advisor, but I still don't see the conflict of interest. Doesn't matter I guess: "not the best qualified" is about as bad as "conflict of interest".

4) As a matter of point, I would like to know anyone in a "moderate" sized city which can make a living off giving financial advice alone. Meaning they do not prepare taxes, do not sell anything, and do not provide anything except fee based advice services.

Most professionals which charge for investment advice can also sell something- whether it be insurance, investments, tax services or something else. There is just not a huge demand for investment advice professionals.

You realize you're a do-it-yourselfer who's probably not really a candidate to use a financial advisor very often. I would guess plenty of wealthy, especially elderly folks, who are not DIY'ers use them. They sometimes charge a percentage. I don't know the actual figures, but 3% of a $5M portfolio is $150K = Not bad. I don't claim to know how much business they get, but they're apparently out there: Home Page - NAPFA - The National Association of Personal Financial Advisors

[jIM_Ohio]

I understand a CPA may not be the best qualified financial advisor, but I still don't see the conflict of interest. Doesn't matter I guess: "not the best qualified" is about as bad as "conflict of interest".



You realize you're a do-it-yourselfer who's probably not really a candidate to use a financial advisor very often. I would guess plenty of wealthy, especially elderly folks, who are not DIY'ers use them. They sometimes charge a percentage. I don't know the actual figures, but 3% of a $5M portfolio is $150K = Not bad. I don't claim to know how much business they get, but they're apparently out there: Home Page - NAPFA - The National Association of Personal Financial Advisors

My point was the list of CFP/ Financial advisors is long
but just because a person has the CFP does not mean they do not sell anything or do sell anything. For example its possible your insurance agent has a CFP or your tax professional has a CFP- meaning the CFP is not what pays their bills, its the "other thing"- the CFP gives them a domain of business, but that domain might not be enough to live off of, or gives the customer the illusion the advice is objective..

I know there are lots of people which call themselves a financial advisor. And most of them make a living at it. We were discussing "objective" advice and I think we can "agree" that if a person is selling something, the advice might not be as objective relative to another advisor which sells something different. That link probably has insurance salesman, stock brokers and other occupations on its list and its tough to tell who sells advice only, and who sells advice and other stuff too.

[sandrark]

So that's why you look for a FEE ONLY CFP.

My brother has a CFP, and he works for Fidelity. He definitely has a sales aspect to his job. A fee only CFP would not have that conflict.

Sandi

[cptacek]

We have a tax lady, an investment guy and the VP of the bank we get our farm loans from also is a good resource. We also have a "mentor" for the actual farming portion, as well as our two dads to bounce ideas off of for the farm.

[~bs]

generally speaking (long story short) the more money you make and the more complex your financial situation, the greater the need for professional services. For instance, take that other thread with the guy making $400k/year - people were telling him to simply max 401k and dump money in a roth - generic, and partially incorrect advice. What works for joe shcmoe making 40,000 a year is not the same as someone making 400,000/year or 4,000,000/year. If your time is worth a lot of money, then you're wasting it trying to become proficient in a whole different profession, when you may be better off doing what you do best, while having enough knowledge to ask the right questions and go to the right people. If you get a paper cut, you slap on a bandaid. If you get a limb sheared off, do you still slap on a bandaid? Do you ask your CPA or attorney what to do?

Hence, "trusted advisor" and getting advice from within their area of expertise.