Financial Planning Talk

[MoneyGuy]

Wow, very long thread that only just started. Here are a few comments that stand out from memory.

- All debt is terrible: not so. I paid off my mortgage a long time ago and soon after too on very large volunteer debt (investment loan). My net worth is much higher despite the volatility - in some cases aided by the volatility.
- As an advisor I dispute the contention that almost all of us are lousy and people are better off as DIY'rs. I content that maybe 5% of you have the ability to go it alone, but one mistake can wipe away a couple of years or returns. I know Slava well and guys like him and me can save your bacon.
- I disagree with the statements that people have to make choices between saving for retirement and spending it all. You can do both (see next point).
- It's not always best to collect CPP at 60. If you're still working (as I am in my early 60s) or if you are confident of a very long lifestyle, it may be best to defer (as I have).
- I've always felt that we create our own future - good or bad - by our choices. P1ss your money away on crap and, guess what, you risk being poor and you got what you deserve. Avoid spending hundreds of dollars a month on crap (as most people do) and you can build a moat around your family and create the worry-free, comfortable retirement of your dreams.
- Most professionals having $1.5 million at 50? LOLOLOLOLOLOL!

That's all but great discussion.

[V]

Originally Posted by Slava

I don't want to get into the whole debate, but that bolded line makes you a complete outlier. So while its something everyone could do, its something that a very small percentage of the population actually does.

I honestly don't think it's that hard if you don't have a mortgage or rent.

If you add up my savings, my mortgage and my charitable donations it equals 49% of my gross pay. And I have four kids. People don't know how to live frugal anymore, and when they see how someone does live frugal it just astonishes them as some terrible way of life.

[rubecube]

Man, if I could turn a profit off of selling humble brags, this thread would be a goldmine.

[Slava]

Originally Posted by heep223

Fair enough, I will concede this to you. If you will concede to me that 90% of investment advisors are horribly underqualified and place their interests ahead of their clients. Okay, maybe 80%? I am not including you in this category from what I've seen.

I would add that this is all really interesting debate and I hope that it provides value for people.

Lastly in response to Enoch I will admit that I've never been directly in a retail client facing role, and perhaps that would change my views as it did his somewhat.

I have to be very careful about how I characterize other advisors. I will say that I would like to see more stringent requirements about who can hold themselves out as an advisor (or planner or other titles). I know that ideally I would say that every advisor should have to have both a CFP and CFA (but that rule shouldn't come into effect until after this June!), but I know that other advisors would say that is self serving and disagree!

[flamesfan1297]

Originally Posted by rubecube

Man, if I could turn a profit off of selling humble brags, this thread would be a goldmine.

You could probably even make enough to have 1.5 million dollars saved by the time your 50

[MoneyGuy]

CFA, Slava? Really? There would be almost no advisors. Not sure if serious.

[bizaro86]

Originally Posted by MoneyGuy

CFA, Slava? Really? There would be almost no advisors. Not sure if serious.

That would weed out the "I sell mutual funds from a bank office with no education or understanding" though, which I think would be beneficial, and benefit the industry on average.

[Slava]

Originally Posted by MoneyGuy

CFA, Slava? Really? There would be almost no advisors. Not sure if serious.

Nah, just knew that would get you riled up! I think there is a lot that advisors offer that has less to do with picking investments and more to do with structures and planning, so the CFA doesn't completely apply. Plus, from a purely self-serving angle it would be great. I could be one of a small number in the city!

I do wish the qualifications were more stringent though. Really anyone handling something as critical as peoples financial well being and giving advice on how people should best plan should be heavily scrutinized and well qualified. Like the CFP should be an absolute minimum and people without that should have to use titles like "mutual fund salesperson" or "insurance salesperson". I know that is not likely well received by some in the industry, but I think it should be a hard line.

[heep223]

You know that when someone can decide to become a financial advisor and be selling advice on people's livelihoods in 6 months, there's a problem.

[IliketoPuck]

Originally Posted by polak

I wish the gf and I could combine incomes. Oh man. Life would be so much easier.

Just tell her rent is going up next month.

[Cecil Terwilliger]

Originally Posted by bizaro86

That would weed out the "I sell mutual funds from a bank office with no education or understanding" though, which I think would be beneficial, and benefit the industry on average.

99% of those people don't have a CFP either. In fact, your regular old mutual fund advisor at your local bank is forbidden (technically) from doing financial planning if they are just MFDA licensed or whatever.

The biggest problem, IMO, is people don't understand the difference between different types of financial advisors. And since the whole business revolves around money, something people are very hesitant to talk about without bragging, you tend to get a lot of keeping up with the jones's type situations. People want the illusion of some high priced wizard who can time the markets and make them 30%. They think lots of transactions means the advisor is doing a good job. They don't know the difference between designations and don't understand the difference between a good plan and a bad one.

Even within banks it'll vary widely. Usually they have their base level bankers doing stuff lower than $100k, they also do loans, mortgages etc and are by no means experts.

Then you'll have an in between person who probably just does investments and probably still only is licensed to sell mutual funds and probably has their CSC or PFP or CFP. They are probably good for some good planning as long as it isn't super sophisticated. Honestly I feel this is probably good for 90% of people. Often they'll have a floor and ceiling of $$ amounts they deal with. Maybe $100k to $500k.

After that you'll have the actual brokers who charge per item commission and offer true customized stock portfolios.

I think having someone like Slava manage your money, a proper advisor, is a great idea. Don't let my posts convince anyone otherwise (and they probably aren't anyway). I just feel that having one person picking each individual stock is a risk/reward strategy, just like investing. Put all your money in a safe, balanced portfolio and you probably won't get personally tailored advice, but I also think your chances of getting ripped off are lower.

I'm not even sure how the industry can regulate better. There are new statement rules being rolled out but I don't think they'll help. Even if the designations and titles were clearly defined, 90% of the public wouldn't bother to learn the difference. Like anything, when there is money to be made, it is crucial that you not jump into anything, deal with a trusted professional and always get a second opinion if you have doubts. Take time and make a logical, not emotional choice.

[MoneyGuy]

Originally Posted by Slava

Nah, just knew that would get you riled up! I think there is a lot that advisors offer that has less to do with picking investments and more to do with structures and planning, so the CFA doesn't completely apply. Plus, from a purely self-serving angle it would be great. I could be one of a small number in the city!

I do wish the qualifications were more stringent though. Really anyone handling something as critical as peoples financial well being and giving advice on how people should best plan should be heavily scrutinized and well qualified. Like the CFP should be an absolute minimum and people without that should have to use titles like "mutual fund salesperson" or "insurance salesperson". I know that is not likely well received by some in the industry, but I think it should be a hard line.

Originally Posted by heep223

You know that when someone can decide to become a financial advisor and be selling advice on people's livelihoods in 6 months, there's a problem.

I agree with all of this. There is a problem when pretty much anyone can spend a couple of weeks reading a book and pass an easy exam then get a licence. However, as Slava says he could be the only advisor left in Calgary and I'm not sure that isn't a bigger problem. It's not about you, Slava , but it's a comment about people who need advisors not being able to get one.

The requirement to have a designation is coming and as far as I'm concerned it should have been here years ago.

I had this conversation recently with a Primerica goof (as I always lovingly call them) who said a designation isn't important. It's about relationship building, she said. Yes, I agreed, but it's also about knowing your professional and she doesn't know what she doesn't know until she has a designation.

My concern is even when a designation is required (soon, I hope) that "advisors" who won't have one will have to put something different on their business cards and people won't understand the difference and they'll still be considered financial planners/advisors. Would we be much better off? I'd prefer if non-accredited advisors were drummed out of the business.

[MoneyGuy]

Originally Posted by Cecil Terwilliger

.... In fact, your regular old mutual fund advisor at your local bank is forbidden (technically) from doing financial planning if they are just MFDA licensed or whatever....

Is this true? I've heard it before but I've never verified it.

[CroFlames]

I am pretty good at home budgeting, saving, discipline & the like.

But if I wanted to take the next step, what does a guy like Slava charge to help? (That website looks pretty swanky) Is it worth going to one of these guys?

I'm pretty sure I have no interest in visiting with a 25 year old financial advisor who works at a bank and would just stuff money into mutual funds, GICs and bonds.

[heep223]

All-in costs including fees for service, commissions and MERs from products such as ETFs or funds should be less than 100bps. That's just my opinion.

[flamefan74]

Originally Posted by CroFlames

I am pretty good at home budgeting, saving, discipline & the like.

But if I wanted to take the next step, what does a guy like Slava charge to help? (That website looks pretty swanky) Is it worth going to one of these guys?

I'm pretty sure I have no interest in visiting with a 25 year old financial advisor who works at a bank and would just stuff money into mutual funds, GICs and bonds.

As someone who uses Slava, I would absolutely say its worth it. The cost is minimal for the advice you receive and he has helped reduce the stress of wondering if I'm doing things right compared to if I was doing it on my own. Especially in market downturns. Like you mentioned, the 25 year old kid at the bank would just end up telling me that X mutual fund returned Y last year and I should go with that. Everybody is different on what they value, but less stress and good advice is worth the cost to me.

[DoubleF]

Originally Posted by CroFlames

I am pretty good at home budgeting, saving, discipline & the like.

But if I wanted to take the next step, what does a guy like Slava charge to help? (That website looks pretty swanky) Is it worth going to one of these guys?

I'm pretty sure I have no interest in visiting with a 25 year old financial advisor who works at a bank and would just stuff money into mutual funds, GICs and bonds.

Personally, I find such guys at parties and just chat them up over a few beers/coffees. I don't generally ask for advice though, but ask them the fundamentals behind good advice, "ie: How would I know a financial advisor is giving me good advice?" many are happy enough to start a monologue regarding their thoughts on how to design a financial plan that fits the different needs of individuals. I generally also try only to limit such discussions to 5-15 minutes or less unless they are super passionate about it.

I don't want to paint all financial advisors with the same brush. I personally feel I can make good decisions, but wouldn't be above a quick "Hey, for a fee, what are your thoughts on what I am planning now?" later in life. They are professionals who can offer perspective on something I may have overlooked from a guy that seems to have my best interests at heart.

DoubleF "Cool story bro"

Spoiler!

I had a financial advisor when I was younger. One I was ridiculously upset with. Her advice was so horribad that when I purchased stock A (over her suggestion of stock B) she had the gall to call me up several months later to tell me my stock was doing ok, but I'd be better off if I had listened to her with stock B
(Stock A was down perhaps 20% from time of purchase due to '08 recession and her stupid stock buying ways. Stock B would have been down nearly 35%. Furthermore, she somehow found a way to charge me a $65 fee for the transaction AND purchase the stock nearly 5 dollars higher than the day I said I wanted the transaction done. I couldn't even figure out how she purchased it at that price because it wasn't at that price for two weeks before and after the purchase date. Not honest at all).

She also tried to sell me on a 5 year bond mutual fund when I said I needed the money in 2-3 years and when I asked about the fees, she literally answered multiple times with either "not very much" or "We will deal with them when you need the money out of the mutual fund". I don't have anything against financial advisors but people like this are the ones that flick black paint into a huge bucket of white paint.

[MoneyGuy]

Originally Posted by CroFlames

I'm pretty sure I have no interest in visiting with a 25 year old financial advisor who works at a bank and would just stuff money into mutual funds, GICs and bonds.

Quoted for truth.

[Sr. Mints]

This thread depresses the #### out of me. I wiped out my entire savings and accumulated a lot of debt after a prolonged injury and some dumb financial decisions. Turned 34 yesterday . . . so I guess I'm working til I'm 102.

[Enoch Root]

Originally Posted by Slava

Really good advice for a guy who loathes giving it!

lol

I said I loath giving it blindly!

Like most people, I find my own opinions/advice to be pretty spot on.