[BMW F22]

Anyone here a financial advisor? I am thinking about possibly pursuing that path and would like to get some comments/advice on the position. It would be with a big company like Morgan Stanley, JP Morgan, Edward Jones.

[MrPrena]

FA side is basically sales side of finance. It is basically rich people's job.
Poor guys like me need to get into risk/fund/analysis side.

If you know a lot of rich people who are not tapped or have little to no idea of investment, it is a great field for you.

I believe you need State Life, 7,66,and some designations like cfp.

If you are CPA or Tax attorney, Finance Adv. is great supplements.

[NemesisX]

Originally Posted by MrPrena

FA side is basically sales side of finance. It is basically rich people's job.
Poor guys like me need to get into risk/fund/analysis side.

If you know a lot of rich people who are not tapped or have little to no idea of investment, it is a great field for you.

I believe you need State Life, 7,66,and some designations like cfp.

If you are CPA or Tax attorney, Finance Adv. is great supplements.

Yeah my dad recently got suckered into handing 8% of his portfolio over to a financial adviser. I keep telling him that FA's rarely add value long term over low or no load mutual funds with low expense ratios but his colleague glowingly recommended this person and it's too late now as she's already collected her 2.5% commission (she's with Edward Jones).

It's funny, any trade between 0 and $5000 nets a 2.5% commission for this financial adviser, and that percentage goes down for $5000-$10000, $10000-$20000, and so forth. She "coincidentally" divided up ~90% of my dad's investment into small, $5000 chunks and the remaining 10% into $10,000 chunks which effectively netted her near max commission. Her effective commission once everything was said and done was something like 2.3x% or 2.4x% which isn't exactly trivial on $500k especially when you consider loss of future, compounding capital gains.

To make matters worse, she's put something like 25% of the portfolio into extremely conservative, inflation-susceptible municipal bonds with awful yields. It's like why did we need to pay her to do that?

Anyone here have any positive experience with Edward Jones?

[NemesisX]

Do you guys prefer an assets under management fee structure or a commission-based fee structure (front or back end load), or do most of you handle your investments entirely by yourselves?

[nnnnnnnnnnnnnnnnnnnnnn]

Originally Posted by NemesisX

Do you guys prefer an assets under management fee structure or a commission-based fee structure (front or back end load), or do most of you handle your investments entirely by yourselves?

I let Mact handle my investments since he is god of the stock market...


Financial advisors are POS. They sell you product and don't know anything about investing or planning. A series 7 doesn't mean squat. Stay away from all of the bulge brackets. They charge higher fees and commissions for crappy returns.

Anyone who doesn't care to take an interest in their investments (i.e. let someone else care about it and just mail me the statements) should be in index funds. If you want above average returns on top of that hire a money manager..

[NemesisX]

Originally Posted by nnnnnnnnnnnnnnnnnnnnnn

I let Mact handle my investments since he is god of the stock market...


Financial advisors are POS. They sell you product and don't know anything about investing or planning. A series 7 doesn't mean squat. Stay away from all of the bulge brackets. They charge higher fees and commissions for crappy returns.

Anyone who doesn't care to take an interest in their investments (i.e. let someone else care about it and just mail me the statements) should be in index funds. If you want above average returns on top of that hire a money manager..

Does one need different qualifications to be a "money manager" as opposed to a "financial adviser?" This person at Edward Jones bills herself as a "financial adviser."

Commission-based fees bug me because it's in her best interest to buy and sell as much as the investor will let her. It seems like the only thing stopping her from doing that is that she agreed to some "fiduciary duty" to only work in the best interest of the investor, but who's to judge something like that?

[nnnnnnnnnnnnnnnnnnnnnn]

Originally Posted by NemesisX

Does one need different qualifications to be a "money manager" as opposed to a "financial adviser?" This person at Edward Jones bills herself as a "financial adviser."

Commission-based fees bug me because it's in her best interest to buy and sell as much as the investor will let her. It seems like the only thing stopping her from doing that is that she agreed to some "fiduciary duty" to only work in the best interest of the investor, but who's to judge something like that?

Money managers typically have an analytical background. They can be a group of people or one person who sets up shop on their own. They typically start out as analysts and work their way up to a portfolio manager role. They will build portfolios for clients based on their clients needs.

Financial advisors get paid to sell you crap you probably don't need. The best way to not let an advisor or anyone screw you over is to educate yourself. If you know what you are talking about and understand what they are saying to you then you can call them out on any BS. Anyone who handles anyone else's money does have a fiduciary duty. Some people are held to a higher standard or at least should be held to a higher standard when they get serious designations (CFP, CFA, CPA) and solid experience. At the end of the day you have to feel comfortable with the person sitting across the table. If not, take your money elsewhere.

[BMW F22]

Dang, you guys are making it seem all bad. Not very motivating. Lol

[blankstar43]

2.5% seems very excessive. I work at a registered investment advisor and am responsible for a lot of research and due diligence on our investments. We have a tiered fee only schedule that starts at 1%/year and works it's way down based on asset level. We get absolutely no commission or transaction based fees and receive no kickbacks from specific funds if we use them which allows us to only invest in what we believe will give our clients the best after fee, after tax results for their given circumstance.

A lot of the broker/dealer shops will charge commission based pricing or higher fee based pricing and also have incentives (such as getting paid extra to use specific funds that often pay to be on their platform) to use certain investment vehicles.

Doing your homework before picking a money manager can make a very significant difference in long term results.

[NemesisX]

Originally Posted by blankstar43

2.5% seems very excessive. I work at a registered investment advisor and am responsible for a lot of research and due diligence on our investments. We have a tiered fee only schedule that starts at 1%/year and works it's way down based on asset level. We get absolutely no commission or transaction based fees and receive no kickbacks from specific funds if we use them which allows us to only invest in what we believe will give our clients the best after fee, after tax results for their given circumstance.

A lot of the broker/dealer shops will charge commission based pricing or higher fee based pricing and also have incentives (such as getting paid extra to use specific funds that often pay to be on their platform) to use certain investment vehicles.

Doing your homework before picking a money manager can make a very significant difference in long term results.

That's exactly what I thought. Most layman articles I've read seem to suggest that a typical front-end commission range is between .5% and 1.25% of total assets. This woman is effectively charging double the higher end of that range.

Her commission fees are based on the value of the individual trade - not total assets. That's why it's in her best interest to buy and sell in chunks of up to $5000 regardless of total assets, which is precisely what she did under the guise of "sufficiently diversifying" the portfolio.

On the other hand my dad's not a fan of paying 1% of assets under management per year either. He has a TD Ameritrade account and in addition giving him $2500 in visa gift cards (which was unexpectedly mailed to him as a "courtesy") they asked to actively manage his TD Ameritrade assets @ 1% per year which he politely declined. Basically, my dad is convinced that the stock market is in for a massive correction within the next year or three and he's just biding his time right now. 30% of his total portfolio is with Fidelity and is in low expense ratio (~.3%-.75%), no load ETFs which have done great. 50% is in his TD Ameritrade account, half of which is in cash earning nothing (several FDIC-insured TD Ameritrade checking accounts up to the FDIC insurance limit, essentially) and the other half in mutual funds. Another 10% is in a money market account from his local credit union earning basically nothing (like .9% per year). And, 8% is with this woman at Edward Jones. And then the balance in regular checking for daily expenses. I should mention: having an abundance of his portfolio in cash is just a recent phenomenon that's motivated by his belief that the stock market is in for an imminent correction. Obviously keeping excessive cash on hand is absolutely idiotic as a long term investment strategy.

But yeah, his idea is to wait for a serious market correction/crash within the next couple of years and buy his tried and true ETFs for cheap, and then he basically wants to see what this woman at Edward Jones does with his money and he'll maybe mirror her investment strategy depending on how successful she is.

Again, my dad's colleague gave her a glowing recommendation, claiming that she "doubled" his money within X years and totally beat the general market during that same time frame. That's the only reason he's putting up with these 2.5% commissions. I guess we'll see what happens. You bring up an interesting point about financial advisers sometimes receiving additional incentives to use certain investment vehicles. I think Edward Jones actually got into trouble a couple of years ago for not being sufficiently transparent on that very issue.

[NemesisX]

Originally Posted by BMW F22

Dang, you guys are making it seem all bad. Not very motivating. Lol

Yeah sorry about that. This thread should be more about giving you career advice, but hopefully these discussions are helpful nonetheless. Building trust with your client is of paramount importance and maybe it's helpful for you to know what investors consider to be "red flags."

At the end of the day you have to demonstrate to your client that you can offer them a real return (after commissions/fees) above and beyond the general market benchmarks.

[MrPrena]

Originally Posted by NemesisX

Yeah my dad recently got suckered into handing 8% of his portfolio over to a financial adviser. I keep telling him that FA's rarely add value long term over low or no load mutual funds with low expense ratios but his colleague glowingly recommended this person and it's too late now as she's already collected her 2.5% commission (she's with Edward Jones).

It's funny, any trade between 0 and $5000 nets a 2.5% commission for this financial adviser, and that percentage goes down for $5000-$10000, $10000-$20000, and so forth. She "coincidentally" divided up ~90% of my dad's investment into small, $5000 chunks and the remaining 10% into $10,000 chunks which effectively netted her near max commission. Her effective commission once everything was said and done was something like 2.3x% or 2.4x% which isn't exactly trivial on $500k especially when you consider loss of future, compounding capital gains.

To make matters worse, she's put something like 25% of the portfolio into extremely conservative, inflation-susceptible municipal bonds with awful yields. It's like why did we need to pay her to do that?

Anyone here have any positive experience with Edward Jones?

I guess time will tell. She might be real smart and sell your dad a awesome investment with over 300% return, but it is highly unlikely.

Edward Jones is one of the company I would work for for extra $$$$$.
I am full time investor (securities, private equities, etc etc), and working at Edward Jones would be a good supplemental $$.

Anyways, there was a study from U of MI at AnnA that too much diversification is not good for the portfolio. As you guessed, too much commission and fees.

I am currently 3 LONG and 1 SHORT, and I consider that very diversified.

Was the EJ FA lady your family friend? Usually, people open new acct with FA, because of their family member or good friend just got a job there.

Originally Posted by BMW F22

Dang, you guys are making it seem all bad. Not very motivating. Lol

If you are real good with sale and know a lot of rich people who doesn't know how to invest by their own, FA is a great place to go in to.
FA has a higher income potential than Money/Fund/HedgeFund Mgrs, but it is very rare.

[BMW F22]

Originally Posted by NemesisX

Yeah sorry about that. This thread should be more about giving you career advice, but hopefully these discussions are helpful nonetheless. Building trust with your client is of paramount importance and maybe it's helpful for you to know what investors consider to be "red flags."

At the end of the day you have to demonstrate to your client that you can offer them a real return (after commissions/fees) above and beyond the general market benchmarks.

For sure. All of those comments gave me a different perspective on things. If I can see things from the client's perspective, it will definitely help me serve them better.

Originally Posted by MrPrena

If you are real good with sale and know a lot of rich people who doesn't know how to invest by their own, FA is a great place to go in to.
FA has a higher income potential than Money/Fund/HedgeFund Mgrs, but it is very rare.

I don't know many rich people but I like to think I'm pretty good with sales. It's just an option that I'm looking to maybe get into. We'll see how my current job spans out.

[BimmerPod]

Edward Jones ?! Please tell me you are kidding

[MrPrena]

Is Edward Jones different than decade or 15 years ago?
They use to be rated top 10 company to work for. However, 3 people i know who worked at Edward Jones all hated working there.

The company i was with, their sales side amd traders were banking $$$$, and it was after the dot com/internet bubble.

[mbanks21]

I don't know how other companies work but FAs that work with Franklin Templeton get paid from the sales charge the shareholder would have paid anway. For example you want to invest $100K into a certain fund that has a 4.25% sales chage, you pay that with or without a financial advisor. If you have a financial advisor they would get 4% of that and Franklin gets the remainder.