Here are some highlighted excerpts from the interview with chartered financial consultant, investment advisor representative and author Mark Roberts:
Steve: Why am I paying a fee if all I'm doing is buying and holding? Is that a legitimate gripe from consumers?
Mark: I think it is, but the average consumer has been programmed so much with buy and hold, buy and hold, as the right way to go, that even the average financial advisor is doing that. At the end of the day, buying and holding is smart for short periods of time. We don't want to be day traders. We don't want to get clients in and out on a daily basis, but we do want to be watching it daily. We do need to make our adjustments when needed. We want to be able go into a platform and say, "XYZ is not performing and we need to replace it with ABC." If we do that, we hit a couple of buttons and take care of it for everybody.
We create our own active money management models from very low risk, to an all-bond portfolio, to a high risk that's all stock model and then five in the middle is a diversified portfolio. It's one thing to sell it, it's another thing to manage it, and when clients are doing our various models, we can watch every investment in everyone's models every day. If something goes good, something goes bad, and we need to buy or sell, we know every client it's going to affect. We can treat all clients equally and quickly.
Steve: If you use the baseline of buying the whole model against your active management, the differences would be stark.
Mark: It is, but for compliance purposes, a lot of time that's how we actually have to illustrate things. We have to show performance-wise and so does everybody else, here's our performance history and performances. Here's what we looked like over the last 1 year, 3 years and 5 years. That assumes the investments you have today were kept 1 year, 3 years and 5 years. Our clients don't have the same investments today they had 1 year, 3 years and 5 years ago. They've been tweaked and adjusted over time.
Steve: Now, let's talk about the differences in fees because there are structures that really accentuate a client's portfolio and you've been able to figure this out. Talk about that.
Mark: I’ll break it down to two primary ways financial advisors get paid. Number one is what's called commissions, so every time I buy or sell, I do something to your account I'm doing a transaction, you're going to pay a commission and we receive the commission. My compensation is based on me doing transactions. If your account goes up it doesn't matter to me. If your account goes down it doesn't matter to me. I get paid based on buying and selling. The second way is what is referred to as advisory fees. It's usually a percentage. I would say a typical financial advisor probably ranges anywhere from 1 to 1.5 percent, and it's based on the account portfolio value. If the account goes up, the fee goes up. If the account goes down, the fee goes down. The financial advisor has incentive to grow the account and has incentive to protect the account. Buying and selling, there is no added costs or commissions when you do the advisory fee method. Plus, advisory fees are also tax deductible where transactional fees are not.
Watch the interview with chartered financial consultant, investment advisor representative and author Mark Roberts.
Creating cash flow every month isn’t an accident; it’s a deliberate act of spending wisely and saving for the future. Many consumers look to engage a professional adviser, because for most, managing your finances is not a do-it-yourself activity. ...
Released On: 1/21/2017
Views: 2949
Money market funds, CDs and savings accounts were the safe money havens of the past. But today, they’re crediting rates are so low, taxable and eroded by inflation. You worked hard for your money, so you need to make your money work hard for you. ...
Released On: 1/20/2017
Views: 3019
After the market meltdown of 2008, investors and savers alike want to have safe alternatives for portions of their money. Many near or in retirement just can’t afford another major downturn in the market, so conservative options need to be sought ...
Released On: 1/19/2017
Views: 2991
It doesn’t matter what game you like to plan, there are strategies and tactics to learn to become successful at any sport. The same is true of tax code. There are three basic moves to make that can positively affect the taxes due on your 1040. Wa ...
Released On: 1/18/2017
Views: 2501
Every investor should have a financial profile that includes a risk-tolerance assessment, timeline goals and a retirement or estate strategy. It becomes the reference point for all your money decisions and any plan alterations that will occur. Wa ...
Released On: 1/17/2017
Views: 2470
It’s really troubling in the information age an investor can’t seem to secure the true cost of their investments or consulting advice. Even when you Google—the front of all knowledge—most financial products disclosures don’t reveal the total cost ...
Released On: 1/16/2017
Views: 2647
Elder care in retirement is the greatest economic threat to seniors. Medical expenses and long-term care costs can exceed $220,000 for a married couple during their golden years, and living longer could increase the costs even further.
Released On: 1/14/2017
Views: 2804
The number-one concern of retirees is they may be outliving their money, but their number-one compliant is paying taxes during retirement. Focusing on taxes needs to be coordinated with the purchase investment products to determine investor suita ...
Released On: 1/13/2017
Views: 2561
Most retirees don’t focus on required minimum distributions. Some don’t even know what RMDs are. Only a few seniors have a handle on them and are aware of the penalties for not complying with the laws that govern RMDs.
Released On: 1/12/2017
Views: 2702
Retirement income just not just triggering a lifetime annuity and just setting it and forgetting it. Portfolio income needs many investment positions to generate retirement income to age 100.
Released On: 1/11/2017
Views: 2541
It is impossible to be in the advisory business, be altruistic and be profitable? Is there such an inherent conflict of interest between advisor and investor that the compensation models that exist today need to be scraped? The Department of Labo ...
Released On: 1/10/2017
Views: 2397
Many modern portfolio proponents use the risk-return theory of the efficient frontier to measure market returns against risk exposure. The goal is to optimize returns with the least amount of risk. If portfolio performance falls below the efficie ...
Released On: 1/9/2017
Views: 2628
More than ever, seniors in or near retirement are struggling to create a reasonable lifestyle in their golden years. Many have mortgages, short debt and family obligations, such as long-term care costs for their aging parents and unpaid college l ...
Released On: 1/7/2017
Views: 2716
Sooner or later most seniors will experience some type of morbidity or illness event during retirement. Some retirees live in single story homes, with limited or no steps at all. Walk-in bathtubs, nonskid tile and support bars can help, but they ...
Released On: 1/6/2017
Views: 3170
You’re probably being pummeled with Medicare literature in the mail, but what’s really covered? The topic is overwhelming, thanks to the complicated coverage policies. Watch the interview with retirement specialist Curt Chojnowski.
Released On: 1/5/2017
Views: 2586
Depending upon your risk tolerance and the state of your health, you may want to consider TAMRA compliant cash value life insurance designed for accumulation and not necessarily as a death benefit.Watch the interview with retirement specialist Cu ...
Released On: 1/4/2017
Views: 2529
Most seniors and retirement advisers focus on qualified plan monies. But there are non-qualified monies that could make the difference between experiencing retirement prosperity or retirement poverty. Watch the interview with retirement specialis ...
Released On: 1/3/2017
Views: 2484
The nations of the world continue to print money, expand their governments and obligate their taxpayers with debt they can’t repay. The world economy is so interconnected, that when the first domino falls it will cause a rippling effect of a worl ...
Released On: 1/2/2017
Views: 3254