So a friend wants to put his money with a financial advisor who wants to charge 1% for the privilege.
First, let me make it clear, and it shouldn't be so hard to believe, I'm not asking for myself saying "a friend...". I am actually trying to help out a friend in spite of himself.
So is there some place I can go and plugin the name of the advisor company and then advisor and figure out if these guys are legit? I'm thinking there must be some website like that.
Comments
https://www.adviserinfo.sec.gov/IAPD/IAPDSearch.aspx
You should dig down for the form ADV Part 2
For brokers (as distinguished from advisors), you can use FINRA's search here:
https://brokercheck.finra.org/
yes, this is nonresponsive to your query
These days I'd definitely make sure they're a RIA and not a broker. When it comes to products, advice, and service the former has customer's best interests in mind; the 'broker' has their firm's best interests in mind. (although there are always exceptions to this sentiment)
One small RIA firm stocked by advisors I trust based primarily on their down-to-earth commentaries over the years is run by Barry Ritholtz up in NYC. If I didn't already have a very low-cost RIA handling one of my long-term accounts already, and if I wanted a broad-based allocation strategy, I'd probably consider them.
Your friend should work with a firm that treats him/her as an individual, not just one of thousands of clients. There are many ways to do an initial look by googling "fee-only financial planning", "fiduciary planning", "registered investment adviser" (note the spelling of "adviser"...that's how the government spells it). The company's web site should have direct links to its ADV, Code of Ethics, and any Disclosures it deems important. This is a lot to do, but we are talking about YOUR money.
it's a solid outfit that gives good and prudent service and advice, as you can tell from the lead guy's radio show, and would obviate the need for research
http://www.edelmanfinancial.com/
The lead guy may be good and prudent, but for that kind of money for a wrap account I'd expect them all to walk on water. In a firm this size (around $18B AUM, 300 advisers, 32K clients [nearly all individuals], 77K total accounts), it seems one would still need to do research on the potential individual adviser within the firm.
Spending a little time on research to save thousands of dollars in fees looks like time well spent. As always, YMMV.
The National Association of Personal Financial Advisors
https://www.napfa.org/
Thanks- OJ
Thank you all for this informative exchange.
Here is a Link that discusses " a dirty little secret " about investment advisors that is not very secret whatsoever:
https://www.forbes.com/sites/robertberger/2016/12/19/the-dirty-little-secret-investment-advisors-dont-want-you-to-know/#afaf3bc6f966
I hope this Forbes article adds to the various points already presented.
Best Wishes
I'm no enthusiast of the Dalbar reports. See, e.g. Prof. Snowball's comments in the 2015 link, or this 2017 analysis by Wade Pfau: "Investors may behave badly. But the DALBAR study does not demonstrate this empirically. Its calculations are wrong and the financial services profession should stop using it as a way to market the value of financial advice."
But Dalbar is where you've chosen to hang your hat. In doing so, you have you acknowledged that a 1% advisor fee can generate net positive results for average investors (directly contradicting Forbes' "dirty little secret").
Regardless of your comments about the Dalbar conclusions, that conclusion easy to extract directly from the Dalbar data (to the extent that one trusts Dalbar's methodology). The 2016 version (the latest version that seems to be available "for free") states that "Voluntary investor behavior underperformance" amounts to 1.50%. That is more than enough to overcome a 1.00% fee paid to an advisor who helps an investor correct this bad behavior.
Even Vanguard has published a series of papers stating that "Paying a fee for advice and guidance to a professional who uses the framework described here can add meaningful value compared to the average investor experience." That's from the 2016 version of Vanguard Advisor’s Alpha®
If the whole paper's too long to read, here's a Marketwatch column ("Vanguard: When advisers add value") from 2013 discussing the Vanguard report.
Thanks for your detailed review of my earlier postings. I surely do not remember them. I do like the DALBAR summaries. They do useful work.
Like most investment decisions, the usefulness of a financial advisor depends on the individual investors who might positively deploy their services. No single size fits all Investors. Some of us need them, but many others do not. And those assessments themselves are subject to huge errors. A carefully documented scorecard helps to resolve those poor self assessments.
Thanks once again.
Best Wshes
See, e.g. Prof. Snowball's comments in the 2015 link, or this 2017 analysis by Wade Pfau: "Investors may behave badly. But the DALBAR study does not demonstrate this empirically. Its calculations are wrong and the financial services profession should stop using it as a way to market the value of financial advice."
please do not be vile in your responses, even if you don't believe in the industry.
respectfully, fa
I completely agree with everything that you said in your excellent post. I not only concur with the general thrust of your comments, but with every single claim. Your profession does provide a useful and meaningful service to many investors.
When I started to invest in circa 1960, I knew very little of market mechanisms, realized my many shortcomings, and employed a financial advisor. He not only provided a needed service, he was also a superior teacher.
After a few years I gained sufficient knowledge and confidence to do my own investment sorting and decision making. I still apply many of the lessons and bits of wisdom that he taught me. In no way do I regret that learning experience. That advisor definitely earned his pay.
I fully understand your cautionary comment that closed your post. There are a few MFO members who harbor deep personal grudges for unspecified and unreasonable reasons. Pity these poor souls! Their comments are easily discounted and discarded.
Best Wishes for your continued success in helping hapless investors. They do exist, even on this fine website.
How do I find if something bad has been reported against Advisor Company/Advisor? And is no news good news? There's nothing much on that website.
>> This must be a good one.
It is a good outfit, but, as msf pointed out, excessively expensive.
Some more checking resources:
https://www.thebalance.com/financial-advistors-credentials-2388438
http://www.campaignforinvestors.org/have-other-investors-filed-complaints-against-my-financial-advisor/
From quick googling, so perhaps you are aware.
I do not use Edelman myself, never have, and have no other connection; just a radio listener.
@Maurice
You would have to listen to the show several times to get the nuance of what RE is saying, the soft sell, the offering of impartial advice, the disinterestedness. You 'hard time' is understandable.