Crooked ass financial advisors

[berettafan]

I'm forming the opinion that half the financial advisors in the US pushed clients to do Roth conversions in '17 for no purpose other than to juice their commissions. Congress ends the ability to do the conversions and advisors use the opportunity to scare people into doing them purposely ignoring common sense in order to line their pockets.

Just had a woman sit in front of me and say 'right, we wanted to pay the tax now instead of when we are retired'.

I asked 'oh, will you be making MORE money when you retire than now and as such be in a higher tax bracket?'

'well I guess we will because of social security'

hmmm.....if you both get 20k in SSI and have 24k in RMD's your tax is less than a grand. most of your SSI is untaxed. you are paying an extra $4k NOW to cover this 20k conversion.

'hmmm.....maybe I should call my financial advisor?'

we're worried about Russia attacking us yet wall street continues to rob us blind.

farking crooks.

[legion]

I was a Finance major in college. Four years and dozens of classes to learn:

1) There is no secret way to (honestly) makes lots of money.
2) No one cares about your money as much as you do.

Add to that that if incentives are not set up correctly, people will do all sorts of unethical or outright illegal things. Some will take the incentives as permission. Some will only act after their management brow beats them (because management's incentives are usually based on employee goals).

[Porchdog]

I saw an analysis that suggested that if your taxable income is under a certain figure ($88K?), under the new tax rules the money going into the Roth would be below the taxable limit.

Therefore you would pay no tax now and no tax when you take the money out.

I'm a bit skeptical that there are lots of people in that situation putting significant money into Roth IRA's.

[wdfifteen]

There are two kinds of financial advisors.
Fee only - you pay them to give you advice on your investments. They only have one income stream - you.
The other kind - They get paid by you and get commissions for selling you a product. They have obvious conflicts of interest.

I only trust the first kind.

[Shadetree930]

The Roth conversion concept was pitched to our management high earners by an 'independent' financial adviser as a way to pay less income tax over our investment time horizon. At the time of the pitch Obama was in the WH and the underlying assumption was there would be rampant income tax increases coming to cover government debt.

I discussed with my adviser and he was not a big fan of the concept.

Glad I listened to him.

[Baz]

My financial advisors.....very trustworthy!

[VincentVega]

This goes both ways. I have a relative always looking for investment ideas. I dont know how many brokers he talks to, I know its more than a few. He's so concerned with avoiding taxes he pays fees and get into complicated 'investments'.

Fee or not, no 'finance guy' is concerned about you as much as you are or should be.

[pwd72s]

Nobody cares about your money more than you. You CAN do it yourself if you're willing to study some.

One book I highly suggest.

The Bogleheads' Guid to Investing
by Taylor Larimore, Mel Lindauer, Michael LeBoeuf

Yes, many sharks are swimming in the pool of "financial advisors" and brokers. There are good people too, but it's difficult to tell who is a shark and who isn't.

[Tom '74 911]

I was talking to my financial person at the beginning of the year and she confided that the partners in the firm play a little game at the beginning of every year where everyone writes down how they think the year will go, what will happen in the markets, what stocks and investments will be good and what will be bad... and that they had just had their year-end meeting to discuss 2017. NOT ONE PARTNER was correct in their predictions.

So, either everyone in the firm is a complete bonehead (which is not the case) or really, no one can predict the future - imagine that.

As boring as it sounds, it's really hard to beat a market based index fund.

[legion]

Originally Posted by Tom '74 911

I was talking to my financial person at the beginning of the year and she confided that the partners in the firm play a little game at the beginning of every year where everyone writes down how they think the year will go, what will happen in the markets, what stocks and investments will be good and what will be bad... and that they had just had their year-end meeting to discuss 2017. NOT ONE PARTNER was correct in their predictions.

So, either everyone in the firm is a complete bonehead (which is not the case) or really, no one can predict the future - imagine that.

As boring as it sounds, it's really hard to beat a market based index fund.

Years ago, the Wall Street Journal used to run a contest where a bunch of financial professionals ran pretend portfolios. They were judged against the DJIA and a "dartboard" portfolio--a portfolio that was literally constructed by throwing darts at pages of the Wall Street Journal and pretending to buy whatever stock the darts landed in. Almost every year, the dartboard portfolio beat the professionals and the DJIA beat the dartboard. What I took from this is that you were usually better off buying a random assortment of stocks than listening to the professionals, and almost always better off in an index fund than with a random assortment. The feature was discontinued after a few years because it tended to reflect poorly on financial professionals, who were the bulk of subscribers.

Another thing to consider about financial professionals is that many make a career of being right, once. How many adds have you heard about "so-and-so, who correctly predicted the market crash in 2001" (or 2008, or 1929--you get the point)? I have friends in the industry, and it isn't so much that the person was right, but that they made a whole bunch of outlandish bets with their client's money and one of them happened to pan out. You can peddle the "being right" thing for about ten years and attract all sorts of money as an "expert". This means there is huge incentive to make predictions (once again, with other people's money) that are unique from everyone else's predictions.

[onewhippedpuppy]

One other big issue that I have with the profession is the very low barrier to entry. Like being a realtor or selling insurance, it's a high-turnover business where becoming a "financial advisor" requires training catered to the lowest common denominator that yields a nice little certificate and a small office in the local mutual fund company.

[legion]

Originally Posted by onewhippedpuppy

One other big issue that I have with the profession is the very low barrier to entry. Like being a realtor or selling insurance, it's a high-turnover business where becoming a "financial advisor" requires training catered to the lowest common denominator that yields a nice little certificate and a small office in the local mutual fund company.

This is why I went into software development.

With a finance degree, I could have gone retail finance (financial advisor/broker/etc.) or "financial analyst" (the talking heads on TV, more or less). There are lots of exams and certifications for both, but there is also very high turnover. I know a lot of firms, in good times (stock market wise), have turnover rates that approach 90% of the previous year's hires. They are basically firing everyone who is not an absolute top performer. It's a very competitive, high stress environment. It wasn't for me.

[VincentVega]

My first professional job was on the trading floor doing network/desktop support. Really interesting place to work and it fed my interest in finance. After meeting more groups and learning a bit more I also confirmed my DIY, trust but verify approach. Yep, small sample size and I'm painting with a broad brush but it seems like a common thread whenever this comes up.

[Chocaholic]

Originally Posted by Shadetree930

The Roth conversion concept was pitched to our management high earners by an 'independent' financial adviser as a way to pay less income tax over our investment time horizon. At the time of the pitch Obama was in the WH and the underlying assumption was there would be rampant income tax increases coming to cover government debt.

I discussed with my adviser and he was not a big fan of the concept.

Glad I listened to him.

Hey Shadetree....will send you a pm. Moving to Lake Hartwell and at almost 60, it’s time to talk with an honest investment person. Greenville is where I’ll be flying in and out of and we love the downtown area. If your guy is solid, may ask you for a referral.

[74-911]

Depending on individual circumstances, converting a Traditional/Rollover IRA to a Roth IRA can be a good move. I started converting part of my Rollover IRA to Roth in 2010 or 2011 (whichever year it was they removed the income limits) and converted some every year until I had to start RMD's last year.

My only regret is that I didn't convert more than I did.

As to financial advisors, I agree with most of the above posts. However all my Roth conversions were done via Vanguard accounts and they were no fees in the mix. Just move X$$ from Vanguard IRA fund A to Vanguard IRA fund A in the Roth IRA and have the income tax withheld and it is done and my tax bracket isn't any lower now than it was then.

As I said above, individual circumstances may make it a bad idea or a good idea to convert but you definitely have to look at several angles as it isn't cut and dried..

[GWN7]

Originally Posted by Baz

My financial advisors.....very trustworthy!

That picture says:

...................You have cheeseburger?

and

.................................................. .......Give us cheeseburger!

[BE911SC]

I've mentioned it before but PBS Frontline's "The Retirement Gamble" is sobering.

[john70t]

I'm no expert, but there are different "standards of care" that any licensed professional should be following according to your relationship.
I guess "Fiduciary" means he/she can't suddenly sink all your investments into a construction company his brother-in-law owns one day and then charge you 50% transaction fees:
Fiduciary vs. Suitability Standard of Care Comparison Table
"[Being a fiduciary] means that you have a fundamental obligation to act in the best interests of your clients and to provide . . . advice in your clients’ best interests."

(not to parf but I thought the prez might be trying to get rid of those definitions. I don't know more.)


Also look into no-load funds. Depending.
1% per year paid for your child's https://www.irs.gov/newsroom/529-plans-questions-and-answers eventually equals about 20% loss after a couple decades when they(you) are ready to pay down the school debt.
https://www.thebalance.com/no-load-vs-load-funds-2466715

[wildthing]

Find a "Fee Only" Financial Advisor.

Also it is ok to ask them how they get paid, i.e. what commissions do they get when they tell you to buy certain financial products.

[masraum]

Financial Advisors that get paid commissions aren't crooked, they are salesmen.

If you go to that sort of financial advisor and you get sold something that's more about them making money than it is about you making money, it's your fault for going to the salesmen for advice.

There are financial advisors who have a responsibility to advise you to do what's best for you and your money. Those are the guys that you should go to, and they aren't free.

https://paulmerriman.com/get-smart-get-screwed-how-to-select-the-best-get-the-most-from-financial-advisor/
https://paulmerriman.com/how-choose-great-financial-adviser/