Source of funds - Series 65

Sep 24, 2018

  1. JJ2713
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    A person can implement many trading strategies on their own; no need for overly-complex strategies from institutions. But yes, if someone doesn't want to implement a trading strategy on their own, then using an advisor or institution to do so is fine.

    My issue is not charging a fee for advise or investment management; it's charging a % of AUM. Especially for simple index investing. A flat fee is more logical and more fair to the client.
     
    JJ2713, Sep 27, 2018
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  2. DHK
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    DHK "YOU CAN'T HANDLE THE TRUTH!"

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    DHK, Sep 27, 2018
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  3. JJ2713
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    You're correct. You can create your own portfolio. Most advisors just use index investing anyway; something you can do in 5 minutes per year.

    Charging a fee for advice is not the issue; charging a % of AUM is.

    And only charging a % of AUM and not giving the client another way to pay for advice. Or to just pay for advice just once in a while (like legal advice).
     
    JJ2713, Sep 27, 2018
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  4. Stephen
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    No I am interpreting exactly what you said:

    "Money management fees are a rip-off anyway. Money-management advisors don't do anything for the client that the client can't do themselves"


    If you meant to say that some Fee based money managers are a rip off and don't earn their fees ,then I can accept and agree with that. But you didn't say that , and you didn't recommend a flat fee alternative until after the fact (which I also offer).
     
    Stephen, Sep 27, 2018
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  5. JJ2713
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    Yes I've seen them.

    It's very difficult to justify charging a 1 -2% of AUM when only doing passive index investing.

    I know other advice is given, but people don't need financial advice year-round; just once in a while (like legal advice).

    Grouping everything together as a year-round % of AUM charge just doesn't make logical sense.

    Younger people like me (30s) don't use full-service advisors. For what? You can DIY or use a robo and pay very little. And even a robo is not necessary, especially if you're just index investing.

    Again... charging a fee for advice is fine, but AUM shouldn't be the factor. The complexity of their situation is.

    It's like a accountant charging someone more to do their taxes simply because they make more money, even though their situation is the same (complexity-wise) as someone making less money. That makes no sense.
     
    JJ2713, Sep 27, 2018
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  6. JJ2713
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    I don't think you read my post correctly.

    I didn't say advisors are a rip-off, I said money management fees are a rip-off.

    Let me clearer...

    Yes, money management fees are a rip-off. Only charging a % of AUM makes no logical sense.

    However, not all fees are a rip-off.

    If you disagree with that, then fine. No need to get upset and hostile.
     
    JJ2713, Sep 27, 2018
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  7. VolAgent
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    I won't say ripoff, but I would say most are not worth what they are charging. I remember back at Mass, the guys who did it and the guys we ran into who also did managed money. They were simply salespeople collecting assets and offered no value for their fees.

    Now, I'm not saying salespeople are bad, far from it. But if you are increasing the price and offer no value for it, then yes that is bad.
     
  8. DHK
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    DHK "YOU CAN'T HANDLE THE TRUTH!"

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    DHK, Sep 27, 2018
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  9. Stephen
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    That's why there is a fee schedule. The more money that you have , the lower the fee. A client with $1mm also typically has much higher expectations of the relationship than a $50k client.

    The same claim could also be made for insurance commissions. A $1k annual premium life case takes the same amount of time to issue and underwrite as a $1mm AP life case. Same for a big annuity , or a small one. Should we also standardize insurance commissions regardless of case size?

    Finally , I can tell that you are not a financial idiot . I would be willing to bet that if you were referred to me off of the street and asked me to look at your portfolio and what your financial life looks like , I might be able to offer a few pointers , but would ultimately tell you that you don't need me , or to pay me for ongoing services.

    What your personality type seems to have a hard time grasping is that everyone doesn't catch on to financial problem solving as easily as you do . There are people with much less understanding than you possess , that have much more money and complex situations than you. Just because ongoing fees aren't a good fit for you (which I agree they are not) doesn't mean that they aren't for everyone.

    What you also may not realize, is that an invoice to a client for a flat fee has to be submitted and processes just like a new account through RIA compliance. Most of the time I spend more billable time with compliance justifying the flat fee than I do solving the clients concerns.
     
    Stephen, Sep 27, 2018
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  10. Stephen
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    Stephen, Sep 27, 2018
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