As an advisor, into the shark tank...

[Anonymous]

What are your credentials?

[Anonymous]

What do you of financial advisors that are paid an hourly fee? I'm comfortable making financial decisions on my own, but want an expert to spend time with me validating and/or challenging my choices.

No way I am paying somebody a 1% AUM fee. That's thousands a year.

[OTAlexFA]

Anonymous wrote:What do you of financial advisors that are paid an hourly fee? I'm comfortable making financial decisions on my own, but want an expert to spend time with me validating and/or challenging my choices.

No way I am paying somebody a 1% AUM fee. That's thousands a year.

By financial decisions, do you mean the holdings in your portfolio, as well as when to buy/sell? If we can presume that's what you're implying, then it depends on your activity. If you're very active or have an elaborate portfolio, the 1% or whatever the charge is may make sense because that should cover account and transaction fees, too. The amount of trades and quarterly or semi-annual rebalancing, combined with the justification of those choices all wrapped up in the fee, may work itself out.

If you're more of a set-and-forget, the 1% makes ZERO sense. Also, how often are you meeting with this hourly advisor? It's all cost analysis. Not to mention, with the AUM fee, you should just get on-demand access to your advisor instead of having to set meetings. Again, all depends on your activity within the account(s).

[Anonymous]

Anonymous wrote:

OTAlexFA wrote:

Anonymous wrote:OK, so here is your opportunity to help someone i. Your line of work keep a client. If my net of fees return on my investments so far this year is 5.2% and the S&P 500 Price Index return for the same period is 6.1%, why am I not better off just putting all my money into an S&P 500 Price Index fund?

Especially given your earlier comment that advisors can't beat the market.

Because I would hope that you hired an advisor for something more than picking stocks. That's only a portion of what they are there for.

If someone is getting a fee to manage a portfolio, what else are they doing other than picking stocks?

OP, can you address this question? I know some financial advisors sell insurance, but that is not something you need to buy every year.

[OTAlexFA]

Anonymous wrote:

Anonymous wrote:

OTAlexFA wrote:

Anonymous wrote:OK, so here is your opportunity to help someone i. Your line of work keep a client. If my net of fees return on my investments so far this year is 5.2% and the S&P 500 Price Index return for the same period is 6.1%, why am I not better off just putting all my money into an S&P 500 Price Index fund?

Especially given your earlier comment that advisors can't beat the market.

Because I would hope that you hired an advisor for something more than picking stocks. That's only a portion of what they are there for.

If someone is getting a fee to manage a portfolio, what else are they doing other than picking stocks?

OP, can you address this question? I know some financial advisors sell insurance, but that is not something you need to buy every year.

I hope I can but first - A "Portfolio Manager" is different than a "Financial Advisor." A portfolio manager should be evaluated on results. For instance, I am an FA and, for particular clients, I will use a PM platform for my client. FAs are the quarterbacks. Outside of that, I will start with something similar to a question that someone posted earlier about what mistakes retail investors make...

*Creating and evolving your financial plan. This is the big one. Having a definitive and reviewable plan and direction instead of just throwing money at their portfolio. This should be reviewed at least annually with evolving the plan as needed. Do you know what your goals are? Do you know how to get there? How do you know when your plan is successful? Many people just try and amass a dollar amount they conceive in their head by the time they retire and assume it will work. Will it? For this, I light-heartedly introduce myself as a "Future Lifestyle Consultant." What lifestyle do you want in retirement/the future? Let's get you there.

*Rebalancing your portfolio. Monitoring the parameters that you establish and ensuring that your portfolio stays within those bounds. See, financial plan.

*Research and advice. Bigger firms pride themselves on their research and accessibility. FAs are typically a conduit to the client for that purpose. If you trust your FA, you can trust the advice they're providing. With the internet, there is SO MUCH INFORMATION available to the consumer, often times reflecting opposite sides of positions. If you find a firm you trust, they can filter that for you.

*Estate Planning

*Dependent care (parents' long-term care, children's trusts, etc.)

*COMMUNICATION. Our business is a relationship business; that's no secret. Unlike this board, performance is rarely ever the main reason a client fires a financial advisor. It's communication, or, specifically, lack thereof. Evaluating and validating the decision making process. Without communication, the person that originally posed this question is absolutely correct - "What am I paying you for?"