Finding a fee-based financial advisor

[Used2btexaslover]

I went to this site but there is not one listed in my area, so I'd like to find one in Austin (unless there is another site I can go to find one closer to me.)

How do I go about finding out if they are reputable or not? What do I need to look for? Any specific recs?

 

[politically correct horn]

To tell you the truth, I think that fee based guys are not all that great. If you don't have a high net worth, their fees can actually be pretty high. There are a lot of good people at firms like Schwab, Merril, SSB that can help you out.

 

[Used2btexaslover]

what do you mean by high net worth?

 

[Used2btexaslover]

Also, I've had an account at ML for years and am tired of them trying to sell me things that may not be in my best interest anyway. I want to try something else. My father worked at ML for a while and he himself told me to go with fee-based.

 

[politically correct horn]

I think that people that invest would do well to put effort into it themselves. I am a big believer in asset allocation models ( some debt, some equity, the equity divided into groups like growth or value or international) and then rebalancing the portfolio a couple of times a year. By doing this it forces you to sell market tops and buy market bottoms. For instance lets say that you have 40% of your assets in debt and 60% of your assets in equity and we have a good stock market and after six months your asset mix is now 30% debt and 70% equity because of the growth of the stock portfolio. You then rebalance and sell 10% of the eequity and by bonds with the proceeds, your now back to 60/40 and you sold the hot market and bought the down market.

A lot of the fee based financial planners I have seen are accounts that get a cfp designation. They will organize you like I described above and help you pick out funds or money managers. They charge you a fee for this service either straight up or as a percentage of assets invested. The money managers or mutual funds that you purchase also charge you so from my perspective it is not much different then a broker/dealer. I will also tell you from personal experience that accountants make bad investment advisors and vice-versa IMHO.

It sounds like you got a guy/gal at ML that is not a good fit. I would suggest talking to them and if they don't do this kind of business, asking them to refer you to another person who does. I am sure that the office branch manager knows who can help you. I also know that all of the major firms provide these kinds of services.

On the net worth question, you can start doing this with a little money but your avenues of opportunity open up more as you accumulate more wealth. As an example, when my wife and I started doing this we really did not have enough cash to have a diversified bond portfolio so we had mutual funds. Kind of the same thing with equities. As our savings grew, we began to move away from mutual funds into individual bonds (lattered bond accout with a lot of munis) and into private money managers. The biggest difference between a private money manager and a mutual fund is that you own the individual stocks as opposed to shares in the mutual fund which can be helpful for tax purposes. Having a higher net worth also opens the door to managers that you just can not invest with through mutual funds (for instance they might have a million dollar minimum account size). Because of the individual bonds and the private money mangagers, I like the large broker dealers. Merril underwrites a lot of muni bond paper and sells it to their customers. Merril also strikes agreements with these high dollar money managers that allows you as a Merril Customer to invest with maybe a $50,000 minimum instead of a $1 million minimum.

I did not mean for this to sound like a ML commercial, and I do not use them. I just like the bigger shops for this reason.

 

[Used2btexaslover]

The private money manager option at the big firm does sound interesting.

We already have a pretty diversified portfolio with mutual funds, bonds, stocks and index funds but we want to rework it all. Basically, we want someone tohelp us with the best way to manage all of our savings, roths, 401k, our kid's 529, etc. I appreciate the concept of investing yourself (research, buying and seling, etc) but my husband does not have the time and I don't have the mind for it.

We need to sit down with someone who knows what he/she is talking about and who we can trust to advise in our interests.

 

[hrn346]

I work for a financial company here in austin called Laidlaw (one of the oldest brokerage firms in the world). To tell you the truth, if you dont have a lot of money then i wouldnt go to a bigger firm b/c you won't get the attention that other high net worth individuals would. Also to go fee based, it depends if you are investing a lot of money or not. If you are then I would go fee based if not i would go the commission route.

If you have any questions PM me.

 

[gecko]

I posted on another thread that I am working with a fee-based advisor with UBS in NY (Long Island to be exact). He is a Texas-Ex and former president of the NYC chapter.

I handed over my whole IRA portfolio and the guy has me up 11% since May 27 '04 (recent weeks have not been good). He collects 1% of the net asset value (.25% per quarter). The whole portfolio is mutual funds, I pay no fees going in and out of funds. The dude is money, I wish I had found him earlier.

PM me if you want contact info.

 

[MulletsGalore]

My girlfriend uses Bernstein and is very happy with those guys.