Commission-based planners watch out - you're next

[rsinj]

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[This message has been edited by rsinj (edited September 17, 2004).]

[bwilk]

at least unitl Spitzer gains enough political clout to be Governor of NY.

There are many ways you could have posted this link, but you had to choose the most inflammatory. At least you're consistent.

And I'm not even a paid financial advisor.

[rsinj]

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[This message has been edited by rsinj (edited September 17, 2004).]

[texascfp]

No one's censuring your comments. Only pointing out that your tone detracts from the discussion. bwilk was not to only one to notice.

[rsinj]

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[This message has been edited by rsinj (edited September 17, 2004).]

[bwilk]

I do not object to every post you make. In fact, I think that several posts you have made recently regarding the pros/cons of prepaids have been right on in addressing both sides of the equation.

There are how many mutual fund families in the world? At least several hundred. No one should believe that any one person has the time to research all of them. Also, if you expect a service provider to recommend a service for which they do not get paid then how do you expect them to be around the next time you have a question. I know how to change my own oil, but Jiffy Lube doesn't give me a discount because of it. If a financial planner puts a client into Vanguard funds and then charges them a fee, sooner or later there will be a lawsuit alleging impropriety in that.

You will never be convinced and only like to argue the point. Why won't you accept that some people want/need to use an advisor and others don't. No planner tells you the funds they recommend are going to be the best. They may tell you that they that the funds meet an acceptable asset allocation for your risk tolerance or a variety of reasons why they wish to recommend those funds. Fiduciary responsibility does not mean lowest fees available.

[rsinj]

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[This message has been edited by rsinj (edited September 17, 2004).]

[user_660]

YES, you did mentions FEES!....rsinj: "At our first meeting, he says "I want to get you into these funds from Franklin" - with fees of 5.75%.

Its evident that you don't know what you are talking about because the Spitzer inquiry is about certain incentives insurance companies have provided to brokers (in addition to the commission they are paid).

Its NOT about getting a commission for providing a service or product!

rsinj: "Also, any commission based advisor I am waiting for any commision-based planner to explain how they are upholding their fiduciary responsibility to their client when they limit the scope of funds they recommend to just those which provide an acceptable commission?"

There is "no limit of scope"! That is simply a false perception that you have on this subject. In your world, people should provide advice and services for FREE! huh???

You just don't have a handle on this subject, but those are the same people who blow their horn the loudest (a bunch of hot air). If you edcucated yourself thoroughly on these subjects, you would have a much better understanding. Being closed minded is never a good thing!

Keep that in mind!

[texascfp]

Just a few comments:

1) the vast majority of financial salespeople are not fiduciaries. They are employees of finacial service firms and market the products offered by their firms.

2) If people want a fiduciary, they need to look at advisors that accept such responsibility. An example are Registered Investment Advisors (RIAs). Certified Financial Planning practitioners (CFP(r))who adhere to the CFP Board of Standards meet a series of practice standards, but these fall short of a full fiduciary role.

3) Why does it surprise you that no commission advisor (except Mark) chooses to wallow in your mud hole of self-rightousness. I'd guess that their client lists are justification enough of the work they do.

4) If one looks at the best selling advisor sold fund family, and notes the long and short term index beating returns of their funds and the corrasponding below index risk they take, you should be comforted that advisors are helping their clients quite nicely.

[dopps]

What rsinj does not know is that commission-based advisors all have to belong to a broker/dealer in order to process their transactions. Each broker/dealer has entered into selling agreements with the investment companies they agree to represent, and a registered representative with said b/d can not sell investment products with any company outside of this group. And guess what? All these vendors have a commission arrangement. Guess why? Because neither the advisor nor the broker/dealer work for free!

The advisor has a moral and ethical obligation to disclose this information upfront upon meeting a prospective client. The customer, armed with these facts, then makes the final decision as to whether to do business with the advisor. Sometimes it is not a match, like it was with rsinj and the bank guy, and the relationship does not materialize. The fact that the bank guy failed to show his face after the first meeting, and perhaps maybe failed to disclose upfront how he gets paid, simply means he was a bad advisor. Or maybe he recognized the obvious--that he and rsinj were not destined to do business together, given rsinj's aversion to paying commissions--yet lacked the tact to get back to rsinj with a simple "no, thank you". But please do not lump all advisors into such an unfavorable light just because you had one unsatisfactory experience.

[rsinj]

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[This message has been edited by rsinj (edited September 17, 2004).]

[rsinj]

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[This message has been edited by rsinj (edited September 17, 2004).]

[pazzyr]

although rsinj did 'tweak' you guys a little too much w/the message title, his point is correct. The compensation arrangement of a commission only broker is often in direct conflict w/the financial objectives of the client.

[rsinj]

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[This message has been edited by rsinj (edited September 17, 2004).]

[user_660]

rsinj: "did I at any time mention fees or lowest fees above?"

Yes, YOU did.

I suggest (as I always have) you do some of your own research. When you are better informed, you may actually see that your way is certainly not the only way!

In the meantime,You TWO are comical with the outrageous comments and views you hold!

[dopps]

Thanks, rsinj, for your latest link to a very informative article from Yahoo. Here's what I took from the article:

1. The 529 landscape is extremely confusing, even for highly educated people, thanks mostly to the quiltwork created by each state being empowered to run its own program and set its own rules. This is probably why...

2. ...80% of 529 money comes via advisors. As Joe says, perhaps most 529's are sold, not bought, to people who would not invest unless approached by an advisor. Or, the consumer desperately needs help to sort out all this confusion, so they turn to an advisor. Is it wrong to earn compensation, then, for providing advice?

3. Look who has one of the highest rated 529's in the chart at the end of the article--good ol' American Funds. I believe this is the very fund company Texas was referring to in his 4th point above, when he so eloquently stated that advisors using this product are taking care of their clients very nicely, thank you.

Yes, there are inferior plans that should be exposed and reformed. Yes, there are unscrupulous advisors who either don't know their stuff, misrepresent the facts, or merely disseminate whatever information their home office tells them to without doing their own due diligence--these are the people Spitzer is after. But, please, do not suggest that honest, competent advisors who want to build long-term relationships with their clients (yes, they do exist) do not earn their commissions.

[rsinj]

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[This message has been edited by rsinj (edited September 17, 2004).]

[user_660]

rsinj: First, How can I repeat something a third time when I didn't repeat it the first time (or the second time)??????

Second, DO YOUR OWN RESEARCH!

Whats that stuff you're smokin' ?

[pazzyr]

Dopps- Thanks for keeping the conversation civil. I don't disagree that advisors are entitled to be compensated. Most provide a valuable service but that is not the point of the debate. The problem I have is the way some are compensated. I don't agree that you can provide totally objective advice if you are a commission only planner.

[rsinj]

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[This message has been edited by rsinj (edited September 17, 2004).]