Annuities that Are Most Liquid

[Drifting]

But ETFs have risks that normal Index Fund investing (or MFs) do not carry.

ETF's are index funds. Passively managed mutual funds. VOO, SPY, AGG, BND, etc.

Many people who have responded to your posts are CFPs which means they are fee based financial planners... one of the highest, toughest, & comprehensive financial designations an advisor can have.

Fee-based means that they are still motivated by commissions. The Boglehead buy and hold philosophy is something that a fee-based adviser is going to be against because there's no commissions and no ongoing fees to charge. I would want a fee-only adviser if I was a senior in need of advice.

 

[Stephen]

ETF's are index funds. Passively managed mutual funds. VOO, SPY, AGG, BND, etc.


Fee-based means that they are still motivated by commissions. The Boglehead buy and hold philosophy is something that a fee-based adviser is going to be against because there's no commissions and no ongoing fees to charge. I would want a fee-only adviser if I was a senior in need of advice.

Another untrue statement. I am Fee based and prefer fee business over commissionable products, however I am not going to turn a client away, or charge them a fee for a transaction that an insurance company should be paying for, just to call myself fee only.

To be clear, I think that you are doing a great job managing your own investments and seem to be a sophisticated investor, but I don't think that you fully grasp managing the investments and making recommendations for others with varying tolerances for risk. It is a completely different ballgame.

 

[Drifting]

To be clear, I think that you are doing a great job managing your own investments and seem to be a sophisticated investor, but I don't think that you fully grasp managing the investments and making recommendations for others with varying tolerances for risk. It is a completely different ballgame.

Again, I looked at an entire thread in which everyone ignored the obvious choice for a farmer who specifically said he was concerned about liquidity. I will continue to share my experience with others. The liquidity risks of annuities FAR FAR outweigh the "risk" of losing money over long time periods when diversified into bonds and stocks.
To say that "I'm a financial adviser. You're not, so be quiet" to shut down a debate is a cop out. Again, the chart that I posted speaks for itself. It has nothing to do with anyone's opinion. The open markets when age-diversified into bonds have never been "risky". And again ONE year that lost 5% is just ONE year in the grand scheme of many years of retirement. 5% is never going to devastate a portfolio when the other following years are positive. Usually the markets snap back and gain more than usual.

 

[DHK]

ETF's are index funds. Passively managed mutual funds. VOO, SPY, AGG, BND, etc.


Fee-based means that they are still motivated by commissions. The Boglehead buy and hold philosophy is something that a fee-based adviser is going to be against because there's no commissions and no ongoing fees to charge. I would want a fee-only adviser if I was a senior in need of advice.

Are commissions evil?

Let's see... I can earn up to 9% on an index annuity up front... or I can earn up to 2% portfolio management fee for as long as the client has their account with me. 10 years = 20%.

Commissions or any other method of compensation does not make an advisor ethical or not.

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Usually the markets snap back and gain more than usual.

Blind faith in the markets again.

Market returns... and investor behavior are two completely different things.

 

[jmarkk1]

The farmer is concerned about liquidity up until a point. He will not be working the farm in 5-10 years. His diabetes is costing him a lot each year. Plus, he has a concern about long term care.
I'm worried about the risks he faces and I want him to know how certain insurance products can help. If he decides to do something else, I can respect that, but it's my job to at least present information.

 

[Drifting]

Are commissions evil?

Let's see... I can earn up to 9% on an index annuity up front... or I can earn up to 2% portfolio management fee for as long as the client has their account with me. 10 years = 20%.

Commissions or any other method of compensation does not make an advisor ethical or not.

Buying, holding and rebalancing does not require a full time asset manager. Save 2% per year!
Commission are a conflict of interest. It makes that adviser biased in favor of what they sell.

 

[Josh Landis]

Buying, holding and rebalancing does not require a full time asset manager. Save 2% per year!
Commission are a conflict of interest. It makes that adviser biased in favor of what they sell.

Honestly, you could argue this either way, commission or not. At the end of the day, unfortunately some advisors do present products that aren't in the best interest of the client for a higher commission, but I would hope that's not the case. FIA's can be a great tool (not the only tool) to help folks retire, I don't think there's any arguing that.

 

[scagnt83]

ETF's are index funds. Passively managed mutual funds. VOO, SPY, AGG, BND, etc.

ETFs have branched out to cover the broad based indexes these days. But they are no different and have very similar fees to a normal Index tracking mutual fund. Very little difference.

BUT the traditional definition of an ETF is a sector based fund. Meaning it covers a more specific sector than just the "S&P 500". Since you keep preaching diversity (which technically diversification should include non-security products) I assume you would diversify among many different sectors... not just the main Indexes which have always been able to be bought at a very low fee via an Index Fund. That is what makes ETFs unique... the fact that you can diversify above and beyond just the S&P/Dow/Nasdaq/Russel/Euro/etc. If that is all you are doing then ETF vs. Index Mutual Fund is a 6/half dozen argument.

Sector based risk is one of the largest risks of an ETF. Then when you get into more specialized sectors you can actually face liquidity risk if it is a thinly traded ETF.
ETFs are also subject to larger swings when there are broad market selloffs. This is because orders are actively traded in real time instead of at the close of the market. Because of this they are held by major hedgfunds and investment banks more so than mutual fund index funds.

There is also the greater good argument that sector based investing by large investment firms is killing the traditional risk/reward evaluation of the market... basically making the whole market either a reward or a loss, as opposed to the individual bad stocks that are actually tanking that index. While that does not affect your portfolio directly, it affects the market as a whole... kind of like the global warming of the stock market... of course I own a couple of ETFs myself... so Im to blame too.

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Fee-based means that they are still motivated by commissions. The Boglehead buy and hold philosophy is something that a fee-based adviser is going to be against because there's no commissions and no ongoing fees to charge. I would want a fee-only adviser if I was a senior in need of advice.

No actually Fee based means they do not take commissions. They take a flat fee and get paid the exact same no matter what stock/fund/bond/product they place the client in. So it makes them non-partial. There is a huge difference between commission based and fee based.

Then there is the other type of Fee based advisor (what you call fee only) who charges the client a flat dollar amount for advice. But then the client still must go and find a platform or person to purchase those recommendations from.... and when they make those purchases they get hit with trading fees which go into someones pocket.... so in actuality your argument is that you would rather pay a large faceless corporation for your securities purchases vs. a local individual.

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Market returns... and investor behavior are two completely different things.

The fact that he was burned once already by his bias against advisors and his choice to trust Vanguards 800 number vs. seeking help pretty much sums that up... it also sums up the mentality of the person we are talking to... if he ever gets audited he will be in for a surprise since he broke his sep payments.

Emotion vs. logic is why most "DIY buy and hold" investors average around 4% by buying high and selling low.

He keeps harping on bias but he is blinded by his own bias that has stemmed from a high fee VA and then bad advice from an 800 customer service number. But most people are not able to see past their own paradigm.

 

[Drifting]

No actually Fee based means they do not take commissions. They take a flat fee and get paid the exact same no matter what stock/fund/bond/product they place the client in. So it makes them non-partial. There is a huge difference between commission based and fee based.

Well I am getting conflicting information from this web site.
What is a Fee-Only Financial Advisor?
"A fee based financial advisor can receive fees paid by you, and commissions paid to them by a brokerage firm, mutual fund company, insurance company, or investment partnership."

 

[DHK]

Drifting,

You are correct. (Man, that hurts to say that.)

A fee-based advisor can receive fees in addition to commissions, trails, etc.

A fee-only advisor is only paid the consulting (flat fee) or AUM fee by the client.

If I had your mindset, the only place I would look for a fee-only advisor, would be here: Find an Advisor - Locate a Fee-Only Financial Advisor