Funny, George. I've found this is a (humourously exaggerated) version of what I hear from some people at workshops. They've picked up an idea or two from the financial media but don't have a clue how to put it together.
High Net Worth? Get Thee To An Advisor!
Re: High Net Worth? Get Thee To An Advisor!
Regards,
Pickles
Pickles
- freedom_2008
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Yep. Don't think many (non-advisor) FWFers would be that silly, regardless men or mowen.CathyF wrote:Pretty condescending.
“Life is 10% what happens to you and 90% how you react.” — Charles R. Swindoll
Re: High Net Worth? Get Thee To An Advisor!
Investors don't understand fees
No suprises here. At least not to me.
No suprises here. At least not to me.
For the fun of it...Keith
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Sedulously eschew obfuscatory hyperverbosity and prolixity.
Re: High Net Worth? Get Thee To An Advisor!
That article is from Gordon Pape. IIRC, wasn't he a shill for a reverse-mortgage company a while back? Something like that, I think.kcowan wrote:Investors don't understand fees
No suprises here. At least not to me.
It seems a bit hypocritical of him to talk about avoiding RESP and insurance products, while pushing reverse-mortgage schemes (which are almost always bad deals).
He's just another example of people in the financial industry. Anything for a buck.
I never had much respect for him, anyway. He was always stating the obvious about the market in his articles, and always 6 months too late. IMO, if you took his advice, you would be buying high and selling low.
Re: High Net Worth? Get Thee To An Advisor!
Very very true!CathyF wrote:That article is from Gordon Pape. IIRC, wasn't he a shill for a reverse-mortgage company a while back? Something like that, I think.kcowan wrote:Investors don't understand fees
No suprises here. At least not to me.
It seems a bit hypocritical of him to talk about avoiding RESP and insurance products, while pushing reverse-mortgage schemes (which are almost always bad deals).
He's just another example of people in the financial industry. Anything for a buck.
I never had much respect for him, anyway. He was always stating the obvious about the market in his articles, and always 6 months too late. IMO, if you took his advice, you would be buying high and selling low.
“The search for truth is more precious than its possession.” Albert Einstein
Re: High Net Worth? Get Thee To An Advisor!
Geez. Pape's just the reporter. The report is here: http://www.getsmarteraboutmoney.ca/en/r ... liefs.aspx
Re: High Net Worth? Get Thee To An Advisor!
I'm okay with shooting the messanger!Insomniac wrote:Geez. Pape's just the reporter.
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See this story in today's FP:freedom_2008 wrote:kcowan wrote:I have a suspicion that a higher risk tolerance is something that many FWFers share. Conversely, people that go with bank and other high cost advisors might well have lower risk tolerance and so would rather pay 2% or 3% than have to blame themselves for investment decisions. Comments?
I came here to learn and to share, not because we have higher risk tolerance, but because we have lower risk tolerance. Since we haven't be able to find ANY advisor who can truly put clients interests over his/her won, so going with an advisor like gambling for us, with unknown (=higher) risk, especially when there is no penalty and no insurance against advisors' errors, as other professions often have.
http://business.financialpost.com/2012/ ... ring-toll/
Where are the good (who can truly put clients interests over his/her won) Advisor?
“Life is 10% what happens to you and 90% how you react.” — Charles R. Swindoll
Re: High Net Worth? Get Thee To An Advisor!
The FA did what he was supposed to do. Sadly, the client believed him. But the good news is that nearly $80k in COLAd pensions will tide them over. They could have followed a Real Estate Investment Advisor (aka broker/agent) and lost even more money an a leveraged property play.freedom_2008 wrote:See this story in today's FP:
http://business.financialpost.com/2012/ ... ring-toll/
Where are the good (who can truly put clients interests over his/her won) Advisor?
(As an aside, are they deducting all the costs on investing?)
For the fun of it...Keith
Re: High Net Worth? Get Thee To An Advisor!
There are many in the industry. The challenge is telling them apart from the good salespeople that are really focused on sales. This group is often more engaging and speak more authoritatively becaue they're in sales pitch mode. Those that are more diligent, more aware of their own limitations and, most importantly, that truly try to do what's best for clients will seem more cautious, will make fewer promises and generally have to work harder to 'sell themselves'. Or perhaps I'm just projectingfreedom_2008 wrote:See this story in today's FP:
http://business.financialpost.com/2012/ ... ring-toll/
Where are the good (who can truly put clients interests over his/her won) Advisor?
I know what you're saying but that's not what any advisor should be doing. Even the leverage proponents I know personally would only suggest leveraging where clients have lots of equity in their homes (>50%) and no other debt.kcowan wrote:The FA did what he was supposed to do. Sadly, the client believed him.
kcowan wrote:But the good news is that nearly $80k in COLAd pensions will tide them over.
I wasn't as clear in the article about this point, which maybe they just simplified for space reasons. Usually, defined benefit plans are integrated with CPP/OAS. In other words, if you retire before 65 you often get a bridging benefit - i.e. where the corporation pension is temporarily 'bumped up' to bridge the time between retirement and receipt of gov't pensions. But once the pensioner hits 65, the corp pension drops by an amount that - in theory - equals the amount of gov't pensions. (Also, in this case this couple is young enough that they won't get OAS until 67 according to the scheduled phase in announced last month.)
But the gov't pensions wouldn't add much if anything to the corp pension in most DB pension cases.
Probably yes.kcowan wrote:(As an aside, are they deducting all the costs on investing?)
Re: High Net Worth? Get Thee To An Advisor!
Dan I appreciate your thoughts here. How does the prospective client tell the difference -the difference between the good advisor and the good salesperson?DanH wrote:There are many in the industry. The challenge is telling them apart from the good salespeople that are really focused on sales. This group is often more engaging and speak more authoritatively becaue they're in sales pitch mode. Those that are more diligent, more aware of their own limitations and, most importantly, that truly try to do what's best for clients will seem more cautious, will make fewer promises and generally have to work harder to 'sell themselves'. Or perhaps I'm just projectingfreedom_2008 wrote:See this story in today's FP:
http://business.financialpost.com/2012/ ... ring-toll/
Where are the good (who can truly put clients interests over his/her won) Advisor?
I fear that to truly understand and recognize the difference betwen the good advisor and the good salesperson - the client has to know much more than than the average client does. If they do understand the difference - they are on the way to being a DIY for most issues - and so may not need the advisor. Methinks that makes it very tough for the good advisors.
“The search for truth is more precious than its possession.” Albert Einstein
Re: High Net Worth? Get Thee To An Advisor!
Don't feel too bad for us George. You're right though that it seems that you need a good amount of knowledge to be able ask the right questions and then assess the answers you get in return. But since knowledge itself isn't enough to be a successful investor, there is plenty of opportunity for diligent client-focused advisors. My earlier comment was a bit tongue in cheek but still making the point that top sellers can often be more persuasive.
However, I think that tendency is lessened in the market segment in which we're active (high net worth, ultra high net worth, and institutions). They tend to be more knowledgeable or be advised by those more knowledgeable. Many of our individual clients are current or former business owners. They're more likely to sniff out the slick salesperson and gravitate toward the kind of advisory firm that will take good care of them.
For the rest of the investing public I admit to being challenged when asked for good advice on how to find a good advisor. But I posted the following on Rob Carrick's facebook page on this topic of how to find an advisor:
However, I think that tendency is lessened in the market segment in which we're active (high net worth, ultra high net worth, and institutions). They tend to be more knowledgeable or be advised by those more knowledgeable. Many of our individual clients are current or former business owners. They're more likely to sniff out the slick salesperson and gravitate toward the kind of advisory firm that will take good care of them.
For the rest of the investing public I admit to being challenged when asked for good advice on how to find a good advisor. But I posted the following on Rob Carrick's facebook page on this topic of how to find an advisor:
I wrote:I've been asked by friends how to find a good advisor and here are four questions that I suggest.
1) Describe the profile of your ideal or target client. See how well this fits with your view of yourself.
2) Can you give me an overview o...f the process that will be used to get to know/advise me?
3) Will I get your advice in writing so that I have a document to refer to over time? If so, can I have a sample financial plan or investment proposal.
4) Once you implement your advice initially, what kind of follow-up or periodic reviews can I expect?
5) Who will be my primary advisor? What might cause me to be assigned to another advisor on your team?
6) What kind of monthly or quarterly reporting can I expect? Can I see a sample of your client reporting package?
7) How are fees structured? In this particular case, it's worth asking if fee-based includes trailing commissions or if it means only those fees that are paid directly by clients.
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Good thing they didn't ask how to find a good mathematician.I've been asked by friends how to find a good advisor and here are four questions that I suggest.
Sic transit gloria mundi. Tuesday is usually worse. - Robert A. Heinlein, Starman Jones
Re: High Net Worth? Get Thee To An Advisor!
As a thorough professional Dan delivers more than he promises.Shakespeare wrote:Good thing they didn't ask how to find a good mathematician.I've been asked by friends how to find a good advisor and here are four questions that I suggest.
George
The juice is worth the squeeze
Re: High Net Worth? Get Thee To An Advisor!
Had a little chat with one of the neighbours yesterday.( 75 year old retired accountant, no idea what an ETF is) I don't have to many details but he had a conversation with his advisor the other day.good amount of knowledge to be able ask the right questions and then assess the answers you get in return
PIM at RBC full discretion 1.5% AUM. I have no idea how much $ involved or how much of this is really true or just exaggerated.
You've got me in banks and utilities and haven't done anything?
Advisor sold everything and now has him in all junior oil & gas stocks.
Got to be careful what you ask for.
This information is believed to be from reliable sources but may include rumor and speculation. Accuracy is not guaranteed
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Brian,
If that's a true story - without lots of missing information - that's not only a sad statement of that advisor's knowledge but of his firm's compliance and oversight. Being invested ALL in banks and utilities can be awfully risky too - though going ALL into junior energy doesn't exactly scream 'diversification' or 'risk control'.
If that's a true story - without lots of missing information - that's not only a sad statement of that advisor's knowledge but of his firm's compliance and oversight. Being invested ALL in banks and utilities can be awfully risky too - though going ALL into junior energy doesn't exactly scream 'diversification' or 'risk control'.
Ah yes, I gave you my unedited version You can't edit Fbook postings. I only had four questions when I started typing but thought of a few more before I finished.ghariton wrote:As a thorough professional Dan delivers more than he promises.Shakespeare wrote:Good thing they didn't ask how to find a good mathematician.I've been asked by friends how to find a good advisor and here are four questions that I suggest.
George
Re: High Net Worth? Get Thee To An Advisor!
I could tell my neighbour was worried about it. I'll see when the weather gets warmer if he can define ALL a little clearer. Maybe the advisor only has a part of the whole portfolio but sure didn't sound like it. Good point about the KYC. PIM has a minimum of $200,000 so it's at least that much. I will ask him if this is all within the bounds of what his IPS states see what kind of answer he gives.Brian,
If that's a true story - without lots of missing information - that's not only a sad statement of that advisor's knowledge but of his firm's compliance and oversight. Being invested ALL in banks and utilities can be awfully risky too - though going ALL into junior energy doesn't exactly scream 'diversification' or 'risk control'.
When would this actually take place? Before trades are made?firm's compliance and oversight
This information is believed to be from reliable sources but may include rumor and speculation. Accuracy is not guaranteed
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The systems will only catch these things after they happen.BRIAN5000 wrote:When would this actually take place? Before trades are made?firm's compliance and oversight
Nothing can protect people who want to buy the Brooklyn Bridge.
Re: High Net Worth? Get Thee To An Advisor!
Shakespeare wrote:Good thing they didn't ask how to find a good mathematician.I've been asked by friends how to find a good advisor and here are four questions that I suggest.
As an aside, why is it that when I read about these kinds of financial disaster stories, the couple involved usually works for the government? Is it that government workers are well paid and have lots of money to invest (and thus dominate the number of investors), or is it that government workers generally have poor financial skills (perhaps because governments themselves are poorly managed)?
We can try to blame the horrendous financial advisors in these situations, but ultimately it is the couple who is at fault. A few hours effort on their part could have saved them 6-figures (and counting). "A fool and his money is soon parted."
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Dunno.CathyF wrote:As an aside, why is it that when I read about these kinds of financial disaster stories, the couple involved usually works for the government? Is it that government workers are well paid and have lots of money to invest (and thus dominate the number of investors), or is it that government workers generally have poor financial skills (perhaps because governments themselves are poorly managed)?
Why is it that when I read about these kinds of financial disaster stories, the couple involved usually works for a large corporation, runs a small business or is a professional? Is it that these workers are well paid and have lots of money to invest (and thus dominate the number of investors), or is it that these workers generally have poor financial skills (perhaps because they're too busy managing their own businesses)?
Or is it possible that we both labour under some form of confirmation bias?
Sedulously eschew obfuscatory hyperverbosity and prolixity.
Re: High Net Worth? Get Thee To An Advisor!
Bylo Selhi wrote:Dunno.CathyF wrote:As an aside, why is it that when I read about these kinds of financial disaster stories, the couple involved usually works for the government? Is it that government workers are well paid and have lots of money to invest (and thus dominate the number of investors), or is it that government workers generally have poor financial skills (perhaps because governments themselves are poorly managed)?
Why is it that when I read about these kinds of financial disaster stories, the couple involved usually works for a large corporation, runs a small business or is a professional? Is it that these workers are well paid and have lots of money to invest (and thus dominate the number of investors), or is it that these workers generally have poor financial skills (perhaps because they're too busy managing their own businesses)?
Or is it possible that we both labour under some form of confirmation bias?
The inherent vice of capitalism is the unequal sharing of blessings. The inherent virtue of Socialism is the equal sharing of miseries.
Winston Churchill, October 22, 1945
Winston Churchill, October 22, 1945
Re: High Net Worth? Get Thee To An Advisor!
Could be. I honestly don't know. It just seems that a lot of professionals that get into financial trouble work for the government. There could be many reasons for that. I personally have my own anecdotal evidence, but I don't claim it to be scientific.Bylo Selhi wrote: Or is it possible that we both labour under some form ofconfirmation bias?
If true, it may simply be that guaranteed pensions mean they don't have to be concerned about money, so perhaps they are more careless than those that have to save for their future.
I know if I had a guaranteed indexed pension for life, I'd only save enough money for an emergency fund, then blow the rest. That still wouldn't put me in financial trouble, but it would put me closer than now.
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Q.E.D.CathyF wrote:I honestly don't know.
Sedulously eschew obfuscatory hyperverbosity and prolixity.
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Re: High Net Worth? Get Thee To An Advisor!
Here is a Statistics Canada report with data for 1999. Page 91 looks at RRSP contributions by pension plan members.CathyF wrote: I know if I had a guaranteed indexed pension for life, I'd only save enough money for an emergency fund, then blow the rest. That still wouldn't put me in financial trouble, but it would put me closer than now.
-- 61% of taxfilers reported no RRSP contribution and had no pension plan membership
-- 16% of taxfilers made RRSP contributions and had no pension plan membership
-- 13% of taxfilers had both RRSP contributions and pension plan membership
-- 10% had pension plan membership and no RRSP contributions
Note: Public sector employees -- who dominate the pension plan population -- typically get maximum PAs which wipe out all but $600 of RRSP room. So many don`t bother making RRSP contributions while others contribute every few years after letting this room accumulate. Still, there were almost as many pension plan members making RRSP contributions as non-members. Before the introduction of the PA system, the StatCan analyst who had tracked this stuff for decades told me that pension plan members had much higher RRSP participation and contribution rates than non-members. He attributed this to two factors:
1. Pension plan members were generally unionized and typically got paid more, thus having more discretionary income
2. Educational programs sponsored by pensions and unions made them more aware of retirement savings issues.
That said, over the years I've advised a number of long-service public employees with secure jobs -- mainly cops and teachers -- to stop making RRSP contributions and focus on paying down debt such as home mortgages.
The above-linked report states that households with public sector employees have more in retirement assets than other households, but that's clearly due to the value of the DB credits. I know of no study that compares the overall financial well-being of public- and private-sector employees. If your view is based simply on the frequency of profiles in newspapers such as The Globe and Mail, consider that most public sector employment is white collar, so those people likely have more education than the general workforce and are more likely to read newspapers, especially The Globe.
FWIW, during the decade over which I wrote The Financial Post's personal finance column, my keenest readers ranked as follows:
1. Financial industry professionals
2. Engineers in both public and private sector
3. Civil servants
Anecdotally, excluding manual laborers, of all the people who've consulted me over the years, the worst personal money managers were commissioned salespeople. That makes sense since, by nature, a salesperson has to be overly optimistic about his/her income-producing ability and there is great pressure on them to "dress for success."