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Old 12-30-2016, 07:04 PM   #14
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Join Date: Dec 2006
Location: Calgary, Alberta

Originally Posted by pseudoreality View Post
I'm not trying to beat any market. Meeting the index works just fine for me. I disagree about the fees not being hidden. I've sat down with many financial advisors and all they do is go through a planning checklist prior to pushing high fee mutual funds based on your level of risk. The MER's are in the fine print, but not one has specifically pointed it out to me or told me how much he or she gets out of selling me that product.

I guess for me, I don't like the model of financial planners getting compensated based off of pushing high fee/low performing mutual funds. That would kind of be like if doctors were compensated based on a percentage of the price of a brand name drug when there are cheaper generics or non-drug treatments that would be more effective for the patients. I think professionals should get paid for the service they provide and not kickbacks.
Well I am a financial planner (CFP) who doesn't just push mutual funds. I use funds sparingly overall, but there is a time and place where they're the best option.

I do find that general view of the industry discouraging though because there are some advisors who are doing that, and they're in general doing a disservice to the industry as a result. I don't know when you met with advisors, but over the past couple of years rules surrounding disclosure have changed significantly. People are made aware of exactly what the fees and costs are, and this is tightly regulated. That disclosure applies specifically to mutual funds and in my practice I disclose as much as possible regarding fees and commissions.

And meeting the index is fine. I have a lot of clients who are in ETFs and I use them a lot, so my point isn't that people should 3% for a foreign mutual fund. I just hear all the time that people should just "buy the index" which I think is a little misleading. Its great for someone like heep above with a CFA to say that no one needs an advisor or advice, but its incredibly unrealistic. And I also think that there is something significantly different between buying the index and letting the chips fall where they may in the accumulation phase and its something completely different when you're now going to move from that to relying on it for income. At that point in particular a lot of people want and need advice on how to structure things, and how to make sure that when its time to buy groceries the money is in the account. I also see a lot of people in that group, or nearing it, who want this looked after and don't want to do it for themselves. They have finished working and its time to enjoy life, which for them is something different than worrying about what the markets are doing.

Again for the guys like Buffett who continue working and have billions this isn't a concern. But those aren't the type of people who are clients of mine anyway!
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