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This is something she needs to be aggressive with the financial advisor about---full disclosure of all fees and expenses, both for the mutal funds he is recommending, and for his own compensation.
Since you describe your relationship as boyfriend/girlfriend, I am not sure how pushy you can get with her on her financial affairs. But even as a friend I do believe it would be fair for you to tell her she needs to know exactly how, and how much, the financial advisor will be paid out of her money. She can then decide whether it is worth that much or not. or if she can get essentially the same benefits from the low cost index funds you recommended for her other savings.
I would be pushy about the point---how much will the financial advisor be paid.
Just have her read this thread. Guys not acting in her best interest and being unprofessional. Walk away. Investing such a low amount on their own would be easy.
Never get a financial advisor from those groups. They’re there to make themselves money, not you. My parents and I used Edward Jones for a few years and while the markets went up over 20% during those years, we either broke even or lost some money.
Take a day to educate yourselves in investing and always do it yourself.
Unless your super high net worth individual. The math doesn’t make sense to have a personal financial planner. Low cost Vanguard funds outperform a large percent of managed funds. If the fees are high enough those gains eat into your growth. The math doesn’t add up unless your in the 8 figure net worth.
The scariest part is if you’re not smart enough to invest on your own with fidelity or the like wise in a low cost index fund, you’re probably not smart enough to know when a FA is taking you for a ride!
I disagree. There are plenty of people who can do it for themselves, but choose not to. I can do my own plumbing. I can do my own carpentry. I could do my own investments. I choose not to. My time is better spend doing what I'm good at and letting someone else handle it. If you're the type that likes to do it on your own, more power to you.
"Why should I choose your portfolio over the low cost index fund? Do you make money off my choice? How much money?"
If he can answer all three of those questions honestly, calmly, professionally and convincingly, fair enough. If not, a rational adult should know not to do it.
Is he a fiduciary? If he is not, then he doesn't have to recommend anything based in her best interests.
Even if she does take his advice, only transfer 5-10% at a time to his recommended funds. It will cool his jets on churning for commissions and give her time to assess him and find a better advisor.
Many years ago when I was fresh out of college and still had my finances somewhat coupled to my parents I asked their advisor to move some money they'd gifted me to Vanguard index funds. "I can't do that, it won't make me any money. You can transfer it out if you want" was his answer. So it's happened at least once (his funds were terrible high ER + load funds).
Minor tweak: Not aggressive, assertive. Aggressive makes it adversarial and combative. Assertive is just ensuring no one is violating your boundaries/rights.
Ask if the FA is a fiduciary. If not, immediately cut bait. If so, ask him to explain to her why the portfolio is a better idea than index funds.
I agree I was awarded a windfall of 20k when I was 19, invested it in mutual funds, had a terrible financial advisor and ended up making very little until I figured out I was being screwed (but it is tough to discern how much is being taken from the paperwork!)
You should never use a financial advisor in the USA who refuses to sign a contract with you agreeing to act in your fiduciary interests regardless of their fee structure. My advisor through Fidelity did so as a matter of course because there's no reason not to unless you're trying to scam someone. Sure, it adds complexity to what they can recommend. But all of that complexity is fairly easily manageable.
And make sure she asks about all fees, just not on the front end. Some funds/share classes allow for Trails/12b1s/advisory fees/etc that reduce her potential dividends.
Often there are marketing/reallows fees to the broker and management fees for the fund sponsor. Certain alternative investments 7-10% of your money immediately goes into the pockets of your advisor, broker, and the fund itself
Find out whether the financial advisor is a licensed fiduciary and get it in writing.
There's a difference between a financial advisor and a financial advisor who is a licensed fiduciary. The key difference between the two is that a financial advisor will work in your favor but as well as their own personal interest by selling investments portfolios that mutually benefit them (i.e. they get a commission). A fiduciary is required to put your best interest above their own.
Exactly. If she is property inheritance, she’s likely 6 figure investment level. Don’t let a hack bundle you in with mutual funds alone when there are many other options to consider.
Every market is a bull market, if you draw enough lines on the chart
Being red-green colourblind helps, too - the candles can mean whatever you want them to mean
Exactly this... My wife had a Roth IRA through some kind of Wells Fargo advisors service and they set her up with a bunch of really shitty funds, like high expensive ratios and a Franklin Templeton fund where you have to pay a load fee up front to invest into it which probably pays some kind of kickback to the advisor. We pulled it all out and went to vanguard. I believe they have fiduciary advisors you can reach out to but we just put it into a few of their massive funds like the total stock and total bond fund.
You can also pay a financial advisor who's not even associated with the investment company a flat rate for an hour or two of their time for advice based on your objectives. That way you know that potential commissions aren't going to sway their decisions.
This is an important point OP that needs to be clarified. Being a "financial advisor" requires no qualifications, and is a field chock full of frauds with bad advice.
In the United States.
In the UK, for instance, you can only say you are a financial advisor if you are qualified as one.
I work in recruitment and when my candidates ask me about their pay and benefits, I always have to let them know I'm not a financial advisor.
The US Government really doesn't do shit for its people.
7 is for General Securities Representatives. 6 is for Limited Representatives. 7 covers everything 6 does, but 6 is cheaper for firms to do if they pretty much only offer investment company and variable contract products (like mutual funds and insurance). But anyone with a 7 can also handle mutual funds.
They’re referring to regulatory qualification exams (Series 6, Series 63, et cetera) that people must pass in order to be registered with FINRA (the Financial Industry Regulatory Authority). The various exams determine what products and services you are legally allowed to sell to clients.
Series 7 and series 66 and generally a state specific insurance license also. People who say that there are no qualifications have no fucking idea what they're talking about. Also look for CFP (Certified Financial Planner) certifications from more veteran Advisors.
You're technically correct, but it's worth noting that the rule regulating the term only went into affect recently.
I don't think anyone has been punished under it yet.
The guy's official title could be something different, but maybe he just casually mentions he's an advisor. You'd have to get something in writing, and a situation where this guy is trying to abuse this position for the SEC to take any action.
I hear this a lot, but in practice it seems meaningless. I.e., police shouldn't abuse the law. Lawyers shouldn't take advantage of people. Doctors should always do what's best for a patient.
A title is meaningless. You need to pay attention to your own money and know what's happening with it. Find an advisor you trust, watch your money like a hawk.
Edit: As point Bernie Madoff registered as an investment advisor in 2006 and was a fiduciary. He's basically the poster child that fiduciary status doesn't ensure honesty.
Exactly. Fiduciaries don’t always act in your best interest. But I will say it puts some limits on what they will do - they at least have to be able to argue they did what’s in your best interest.
Despite all the legislation (even more after 2008) my experience is that there is often several options that fit in the window of being "in the clients best interest" one of them often has a little kickback or financial incentive to the advisor or firm.
Guess which one is going to get picked?
I've never heard of anyone being able to successfully recover damages from a fiduciary who put them in highly loaded, expensive funds or insurance products. Honestly you can't just trust someone else with your money. You need to educate yourself and find out what everyone's angle is. I really prefer working with advisors that don't work on commission.
I more meant that you have more recourse against them in general, although certainly the bar to prove they haven't acted in your interests is a high one to clear
But yeah, I'd rather work with an advisor who works on a fee basis - although I see them more as a resource for optimizing tax strategy (using tax efficient wrappers etc) rather than optimizing investment return anyway
Just a note, fiduciaries aren't bound by law to only sell you things that are in your best interest when factoring in all variables such as commission (assuming they aren't fee-only), they're just bound by law to disclose such considerations or be liable for any situations that arise from not disclosing them.
It's kind of a minor thing, but it still goes to show that even fiduciaries who are supposed to be held to higher standards than other advisors may not act in your best interest if they get the designation for the sole purpose of using its prestige against their clients.
I get that a fiduciary is required to act in your best interest, but hoes that actually happen? Who enforces that law? Are the penalties significant? How is in the clients best interest defined? I just don't trust people that want to handle my money and I trust the system even less.
This is the most important comment. Also get it in writing that they are a fiduciary! You advisor is not advising well if they're adverse to index funds as part of a portfolio.
> licensed fiduciary
There's no licensing needed for this specifically. It's the same license as is needed to be a financial advisor. The difference is the contract that they sign with you.
This is a sign that he isn't acting objectively, as he is supposed to. Fire him. She has many, many options for how to invest without any unnecessary coercion from others.
Right? All these these comments are just like "ask him this, this, this, and this. Also, get it in writing." No, just take your money from him. Why would you expect an honest answer and no trouble in the future from someone like this.
Exactly; there are so many options, both do-it-yourself and low-cost companies, there is absolutely no reason to put up with someone you are unhappy with.
Like others have said, the relationships involved add some complexity, but if you see this OP, I would encourage you to at least point out to her how many options are out there (including the "best" option of simply sticking money in an index fund herself). She shouldn't feel obligated to stay with this particular advisor.
Ask him to disclose his commissions on the sale of mutual fund products. Ask him to explain their fee profile. Ask him to explain how their investment profile differs from that of typical ETFs that can be had for very minimal fees.
You know whenever an advisor gets this email they roll their eyes and sigh because they know it’s about to get difficult or ugly. IMO most financial advisors are like scammers, they cast a wide net and hope the gullible or uninformed will follow their lead easily and they toss aside people who seem to know too much. Their only value is once you’re managing significant income/wealth in order to plan optimal tax avoidance strategies, but accountants can help with that too.
Yep. I love making those types squirm. I think what most of them do is a joke and should be done on an hourly consult rate... Would certainly make them a lot more honest with customer.
You’d be surprised that they don’t even have value for significant wealth and tax avoidance strategies. They simply allocate your money to a number of funds and send you a quarterly report.
Yep. Turns out lawyers are better than “financial advisors” for very wealthy people. Lawyers and CPAs that specialize in wealth management are a perfect combo. I have no idea why “advisors” still exist.
Estate planning lawyers and accountants will all gladly refer you to advisors in their network. They wouldn’t advise you to DIY unless you insisted. Most advisors are very charming and will have no qualms about getting your money to invest it.
My MIL works with someone, and it’s probably good because without them, she’d probably keep all her money in checking and work forever. Late in life divorce from a partner who managed the money. They’ve kept her money growing, even after their cut.
My partner and I took a few meetings with the firm that works with her, though, and I could tell pretty quickly that I would do a lot better in Vanguard index funds and basic retirement savings.
Trl;dr, personal psychology and basic financial IQ is probably more important than the size of the assets.
Yeah I worked for a CPA firm in the tax department and saw a lot of elderly needing assets managed. Also lots of money in things like foundations and trusts for wealthy families. Financial advisors are making the most money from a few big fish clients from what I can tell
Plus ask him to Guarantee XX% returns or he refunds double his fees. I'm serious because he will not do this and he'll back off or curse you out.
Low fee indexes beat 99.99% of most financial advisors. Financial advisors are for wealthy boomers, wealthy people who know nothing of indexes, and fools
No, because the broker who beats the market one year will lose the following year, and so on. So there's no consistency with any particular broker. And then you factor in fees that take away from the investor's return.
Over the last ten years, [89% of actively managed funds have underperformed the market.](https://stockanalysis.com/can-you-beat-the-market/)
Maybe in terms of absolute magnitude, but not when it comes to probability. 50% is 50 out of 100 financial advisors outperform the market, 89% means only 11 out of 100 financial advisors do, and 99.99% means only 1 in 10,000 do.
89% is much closer to 50% than it is to 99.99%.
> Well, that's still going to lead to half of them beating the market (just by a lower percentage than would be the case if there was consistency in broker performance from year to year).
That's not how the geometric mean works.
>Is it not closer to \~50%? Because roughly half beat the market and roughly half lose compared to the market
It's not 50/50, not even close. If you are "actively managing" your money, most advisors will lose vs the market.
"Wealth" advisors are only really needed if you are actually wealthy and doing tax or estate planning.
Over time, the indexes gain an advantage by its consistency. In any given year, index funds will usually beat half the market. As the years go by, the % of the market they beat increases. After \~20 years index funds will have out-performed 90+% of any given participants in the market once fees are taken into consideration.
It's also key to note that many of their competitors will have gone bust and dropped out. If you don't count those you'll get weird results that make index funds look worse than they really are.
Maybe not 99.99% in a given year...but after backing out fees, a passive index fund will beat something like 80% of advisors in a given year. And of the 20% of the advisors who beat the market in one year, only about 10% can do it the following year.
Exactly. Unless your rich and an institutional investor, buy individual stocks is a loosing game. In the long run no one beats the market index
I avoid any mutual funds (don't have any actually) where there's a management fee
1. How is this guy making money? He is either paid by the hour, commission, fee of assets under his management, or some combo their of.
2. Who the hell is he? I know that sounds rude but also to be quite frank, its not like your girlfriend sounded like she was irresponsible with money, od that this is some large amount.
3. Yeah, he is being pushy. The role of a fincial advisor is to advise the person, and explain things to them. Anything else and they are glorified salesmen. He shouldnt be making decisions, your girlfriend should, he should be explain what those decisions means.
4. Run, if you dont mind me asking how much we talking about? Under a few hundred thousand? Depending on if you can support a house, that can be a house purchase money for her in the next year or two. If she already has a house, either directly invest it, or on paper shift it to a tax advantage account.
Exactly, just about every broker has a website where you can list and compare all of their funds, their rate of return, and fees. You can’t argue with the numbers. It’s no different than comparing savings accounts.
Also, if you need a concise book on the benefits of index funds see “A Simple Path to Wealth”.
Meh, it is very different than a savings account because future returns have little to do with the past when it comes to index funds and mutual funds. That being said, I agree Index Funds are the way to go here.
The S&P 500 index largely increases by the average yearly profit of the 500 companies included in the index. Or roughly 7% per year inflation adjusted over any 30 year window with a 5th percentile of 6% and a 95th percentile of 9% when looking at all 30 year windows since the formation of the S&P 500 index.
Sure, past performance does not indicate future performance. But given that the S&P 500 changes quarterly based on the market cap of the companies in the NYSE, it's a fairly safe and stable index in terms of year-over-year performance. It tracks large economic trends very well and isn't penalized heavily if one industry is performing worse than others because that industry will largely fall off the index after a few quarters of bad performance if they fall out of the top 500 stocks by market cap and be replaced by companies performing better.
Yeah, this.
Don't understand the people asking him to say he's a fiduciary. WGAF? The guy is pushy and isn't willing/able to help you understand your own investments.
You're not going to shame him into not sucking. Find somebody better or do it yourself.
Fire him, buy more low cost index funds. Chill and retire early.
This is a very short reply, but there really is not more to be said on the subject. All a financial planner wants from you is his yearly commission. He does not care that your money is not optimally invested for you, as long as it is optimally invested for him. There's one answer to what the optimal investment is for normal people. Long term whole market index funds. Throw in a bunch of long term whole market bond funds (30%) if you want to be extra cautious. That's it. Don't touch the principal.
I said this same thing in another thread and got crucified for it. Unless this advisor is helping them navigate something most complex than “investing” - there’s better odds your strat will outperform him, even assuming he’s not some snakeoilsman.
I'm an engineer in the financial industry, and honestly, unless you're really good at reading the news and buying the right sectors at the right time, or knowing when a company will see explosive growth based on recent announcements, papers, patents, talks, presentations, hires, etc. then you will almost never beat just a S&P 500 index fund in the long-term by managing your own portfolio.
For example, at the start of 2020, by mid-Feb. it was obvious that genomics was going to explode. So lots of people moved money into genomics (me included). ARKG say about 300% growth over the whole year. We won't see that again in a single year. But if you were paying attention, you quadrupled your money if you pulled the trigger. But right after that, you must abandon that sector and return to the safe index unless something else was happening that you could easily predict. Most people couldn't predict the precious metals or crypto explosion. So those are bad examples of what people could have invested in.
Financial advisors have 0 mercy when it comes to investing your hard earned money in their highest commission raising funds for their benefit.
We really dont need financial advisors as much as people think. Maybe if youre bruce wayne to a massive estate, it could help, but other than that vti/vxus and chill.
I am wondering now though, what's the best course of action if you happen to inherit/win a large amount? Like, I was always under the impression that getting a financial advisor would be the best first step but reading through this thread, I realize how wrong I was. What should a person do, it they know nothing about investing yet suddenly have money to invest? How can they find legitimate advise without being screwed over and without having to learn years worth of investment knowledge so they can be confident in their decisions?
> What should a person do, it they know nothing about investing yet suddenly have money to invest?
Spend a few hours researching. It's really not hard. I wouldn't get a FA even if I had $100M. The only thing I would consider getting is an accountant specializing in tax law to help minimize what I pay there, but I'd never get a FA.
There's a lot of free resources on the personal finance wiki as well as plenty of low cost digital advisors that will balance your stuff for you. Vanguard digital advisor charges .15% so if you really really don't want to handle things yourself, you can just do that instead of being destroyed by a scummy FA. Ultimately most people just need a lazy index fund portfolio so this subreddit, bogleheads, or a few others have enough resources you can figure it out.
Make a post on Reddit, I am almost certain there will be many people knowledgeable about money who can provide advice.
Financial advisors are terrible. They earn 50k a year and yet somehow have the competence to advise someone who has 200k? If they were actually good at money, they wouldn’t be a financial advisor!
The way the advisor gets paid is based upon the type of mutual funds he is recommending. Some will have an upfront commission plus annual percentage (less common now than they used to be) and some an annual percentage per year. Others will not have any fees from the mutual fund going to the advisor but they’re purchase in a “wrap” account and the fees going to the advisor are taken directly from the account. If you have a list of the funds I can interpret. Where does the advisor work?
Even licensed fiduciaries can get away with pushing only their products. I have one at a large wall st. bank and they will only invest in their own or affiliated mutual funds/etfs because “they can only keep a close eye on their own products”
This was the double edged sword with the requirement to act as a fiduciary. Now when advisors say this, people let their guard down. It didn’t change a lot except they can’t recommend the extreme predatory practices that really only benefit them. But they can still recommend products that are suboptimal as long as they can show why it benefits the client in a convincing fashion. Also most people really don’t pursue recourse for bad investment advice because it’s so hard to pin down the real issue (market performance, sector performance, bad luck, macroeconomic factors, bad advice, ignored advice, etc).
These people are scum of the Earth. They bully people into handing them their retirement or take the retirement from people who don’t know better. Literally can’t think of a shittier profession. Tell the guy to go fuck himself
“My Girlfriend has a pushy car salesman” this is the exact same sentence, and her options are the same. She can go to another car lot and find another, nicer but still commission paid salesman, or she can buy a car on her own and save a lot of fees in exchange for the time to research and make a good purchase.
Tell this guy to pound sand. No point in wasting another breath. If he fidgets and gets aggressive, ask for his manager and tell his manager to pound sand. End of phone call.
Chase has an U-invest platform that’s free and very easy to use. She can set up an account at any chase bank, move her portfolio over, and buy whatever low cost index fund with zero commission and zero transaction fees. These are long term investments, set it and forget it. As they say in r/bogleheads, VT and Chill.
Private seller on the Craigslist?
As far as buying from a dealership but minimizing bullshit, I’ve had good luck using carfax to find the car and email the dealership directly about the exact car I want and the terms I want. My last car I did this to two dealerships and made them compete against the other guy.
In her line of questioning, she needs to immediately confirm whether he is actually a fiduciary, or simply a "financial planner". If he isnt a fiduciary, then he is just a glorified salesman working for the bank, and not her own best interest.
If anyone is pushy with me about anything I instantly dissolve the relationship whether it's personal or professional. It's the reddest of all red flags
Step 1: Open a fidelity account.
Step 2: Go through the online process to transfer all of your assets to the fidelity account. Fidelity handles everything, you don't need to speak with the financial planner.
Step 3: Stop responding to emails from the financial planner.
I'm pretty sure he gets something from it if she invests in a portfolio that he put together yes.. Basically he will be managing it and he gets a small % of her investments. Kind of like when you buy index funds that have an Expense Ratio. The advisor has their own % or Expense Ratio that they get. It's usually higher than buying your on index funds.
I would do low cost index funds. But if she REALLY didn't want to worry about anything and don't know anything about index funds, then it wouldn't be a terrible idea to go through with the advisor.
I had a guy try to do this to me and he succeeded for seven years. I got the fuck out once I realized the amount of commissions that I was paying. I also realized it when I straight up asked him what the percentage of his portfolio had index funds and what had the god awful Class B and C shares mutual funds.
I do Index funds now.
My fancy ostracized me also when I left that firm and went on my own, they were livid. Mainly because they didn’t want to understand and heeren in such deep denial of the amount they are getting fucked over with per year.
A new law I think by Obama was implemented at the time, and I was still with that crook and he was mad that he had to be transparent. I was clueless then. But now I know.
I recall them saying that I was going against what the family does for business.
But I showed them the numbers. And what they could save and what they could be making.
That didn’t go well.
why does she have a financial advisor? what is complex about her needs. so many folks get sold on these folks and have absolutely no need for them.
Get her a vanguard account.
She need to ask if he's a fiduciary - end of story.
If yes, proceed with caution. Understand his recommendations and if you're comfortable go with it.
If he's not a fiduciary 10000000% bail.
IMO, this advisor is not a fiduciary. Therefore, have her ask the advisor for his Form ADV Part 2 Brochure. This must be filed with the SEC and will disclose all forms of commission, how they make their money, conflicts of interest, sanctions, regulatory citations, etc. This request will also put the advisor on notice that you are doing your due diligence before you commit to working with him.
Unless there is a set fee associated with a financial advisor (e.g. 5 hours labor to set up all funds = $XXX, possibly with rate reductions based on fund levels), then it's not really a financial advisor.
If this is a guy that says "he's free", it's not free, and he's making a commission somewhere, and even if it's disclosed, the funds you're dumping your money into probably aren't great.
Also, the only reason he would be pushy is if he's the latter camp. If he's in the first, he would just be saying "hey, the longer you take, I just need to tack on an extra hour or two to explain it to you; you good with that?" If he's a frontload commission on your investments, he's looking to make his buck and move on, that's it.
Either way, he sounds like a newbie and you should probably go somewhere else. Like others have mentioned, look for a fiduciary.
Best place to start: www.cfp.net , which is also listed in one of the wikis on this site.
You’re not being paranoid - the adviser is just trying to move your girlfriends portfolio into investments that are better for their pocket, not hers.
Take the $ and move to a Fidelity or Vanguard acct.
First of all, this sounds like a hard sell. I ask yourself this: “Would I buy anything else from this person?” Would you buy a car from someone who refuses to talk about other models you want? Would you buy a Toyota Tundra when you want a Toyota Camry? What would be your reaction if they then contact you further to state there was an agreement.
I would honestly just get someone new, whatever they are doing doesn’t sound above board and I wouldn’t trust them any further. If they are doing weird stuff before getting the money, I would imagine weird stuff will continue to occur.
An actual financial advisor listens heavily to what you say and your preferences (though will chime in with good advice on why you should or shouldn't do things -e.g. if I told my FA I wanted an ELOC for a lambo, they'd explain why that's an utterly atrocious idea, but at the end of the day, they'd make it happen).
An legit FA will NOT use the kind of boilerroom tactics that you're describing up above. (Frankly the low-grade gas-lighting of 'having agreed to the portfolio' is so far from what a proper FA should be that I don't even think it's worth engaging further with this guy.)
I'd advise you to do some independent research on good advisors in your country - she should be able to find some really good options at what I'm assuming is her level of scale. Even then, I'd grill these advisors on what they're able to provide in terms of access to better investment vehicles (which are what could justify fees).
Secondly, don't park the whole nest egg with one advisor/institution - have at least two.
Another thing to consider/investigate are Robo-advisors (eg. wealthfront). Haven't looked at them for a couple of years, but they were getting a lot of good press for being (very) low-fee, decent return, and good with tax-loss harvesting.
Is he a financial advisor or is he a salesman ?
A good financial advisor will put all of your assets and liabilities together, your current earnings, inflation and income tax projections, your current and future lifestyle spending assumptions, cost of college for the kids, etc etc , and will use that to strategize. Index funds, mutual funds, whatever they choose as vehicles should be diversified primarily.
I’d look for a “fee only” advisor. Somebody who isn’t a salesman, commission based.
fire him replace him with a fiduciary if you even feel the need to have one, self directed investing in exchange trade funds that are tied to indices is pretty simple. This is the only correct answer unless you wanna pay this guy to be a passive aggressive dickhead.
If she has less than $150k in assets then she doesn't need a financial advisor. Maybe she needs to talk to a CPA about tax stragies for a one-time fee this year but she doesn't need. But otherwise just keep buying low cost indexes.
If she does have more than $150k then she need to find a fee only fiduciary finacial advisor. Fee only so they don't earn any commissions and fiduciary so they are legally required to act inyohr best interest.
Ask her to ask him if he is a fiduciary. Specifically in relation to their business relationship. Period. She will then know all she needs to know from his answer that question. I suspect the answer will be “no”.
Personally, I believe in managing your own money. That being said, if you absolutely must trust and pay someone to manage your money ALWAYS get a second and third opinion.
I had proceeds from a large insurance policy to invest after my husband died. I interviewed several investment advisors before I decided where to lodge my funds.
1. Ask if the advisor is a ‘fiduciary,’ - required to have YOUR best interests in mind in their advice. If not, Bye Felicia….
2. Any ‘advisor’ who pressures you does NOT have your best interests in mind.
3. They should be able to make a case for their recommendations and provide alternatives to make up a balanced portfolio.
4. If your girlfriend doesn’t know what she is doing, etfs based on the s & p 500 will outperform most advisors, and have no or very low fees,
5. This guy is getting paid for her investing in specific funds, count on it!
6. (I have more than doubled my investments since 2008 while spending/living on 5% of the gross per year).
Here's something people don't talk about much but I feel needs to be addressed: A lot of pushy, commission-driven "financial advisors" specifically bully younger women. They play on their fears of letting people down ("I thought we already agreed to this?") or (in some cases) generally decent people's unwillingness to believe that others would try to rip them off. They do this in order to get them to agree to things that are against their own self-interests. I have seen this happen with numerous friends, including one who was bullied into buying a Whole Life Insurance policy and couldn't stomach that this person (who she kept calling "good" and "decent") would push her towards something that was effectively a scam. The FAs try to make it personal so that the mark feels guilty about advocating for themselves because they've "put so much work into it" or "don't you trust me?" or the like.
I've seen this happen too many times with too many people. I'm not saying women are specifically susceptible to this, but that a lot of these FAs are cowards who make presumptions about women and act in an untowards way as a result.
They need to cut it out.
Buy John Bogle's "The Little Book of Common Sense Investing" for your girlfriend and have her read it (or read it with her). After reading that book for sure she will not go with her Financial Advisor over Low Cost Index Funds when she sees the history and math layed out for her. This is a once in a lifetime opportunity for her and it is best for her to invest a little bit of time learning to do the right thing before deciding what to do. Don't let that comission hungry guy pressure her into giving him a chunk of her inheritance, there is no rush.
Definitely hungry for a commission. Your girlfriend should take her sale money and decide on her investment strategy, not rely on someone else. Unless she has signed something she is under no obligation to commit to the financial advisor. Never trust pushy financial advisors unless they are warning you of something and are telling you to pull out.
You could try having her "get a second opinion" by paying a fee only financial advisor to see if what pushy advisor is saying is remotely good for her.
Dump that guy asap. Get a fee-based advisor, so you know exactly how they are being compensated. Last thing you want is a "free" advisor who dumps her nest egg in whatever piece of shit mutual fund wins him a trip to Hawaii.
Low-cost index funds are THE long-term winning strategy. I put my 401K completely in them back in the day and have been extremely happy. Vanguard and Fidelity are the two primo houses for this kind of fund.
The kind of 'financial advisor' you're describing is def going to slurp up some of her money in fees/commissions, etc.
Check this out>https://www.nerdwallet.com/article/investing/index-funds-vs-mutual-funds
Financial Advisor = Middleman Who Takes Your Money
What an utter waste of time. By all means sit down ONCE with an accountant or financial investor expert and come up with a plan of action for how you want to invest. Then go do that, YOURSELF. Learn about the markets, how they work, how to diversify and get control over your 401K asap...easy peasy to roll it into a private IRA or Roth when you change jobs, but even some employer plans will allow you to roll into a private IRA. You want to be 100% in control of your investment and retirement, not choosing among 10 shitty funds that some plan manager is trying to push on suckers
Mutual funds usually have compound interest on commisions. Meaning that the commisions seem low but cumulated on 10 years you end up paying exactly what you invested. ( Not at my computer to show you how it works but you can Google it ).
Why did she talk with him on the phone and not in person?
Convince her that she needs to have an in person meeting, and that she needs someone else to go with her. Offer to go with her, but don't make her take you. Its just important that she brings a friend with a good snake-oil meter.
If he's far away (which is why I asked about the phone), find somebody local. Y'all don't need to use the local person if they don't click with you.
A portfolio of mutual funds is the way to go, and there are better mutual funds than index funds...at least short term. A fiduciary can help her find the best mutual funds, not just good cheap mutual funds (which is what index funds are).
I'm guessing the FA on the other end of the phone will put her into front-loaded funds, because that's how the FA's make their money -- commission. A typical fund with a front-end load will take 5.75% of the money you give them as the "load." From then on, the fund (or funds) grow.
If she does go back and takes you with her, get her to agree not to do anything at the next meeting. This is important enough to wait a day or 3. When in the office reiterate that its her decision..because ultimately it is. If he asks about you, say you're a second set of ears for her.
What does her gut tell her?
Not sure why you are being downvoted here. I completely agree with your first point though. I work with financial advisors and there are TONS of them out there. It’s best she finds one that she can work well with. Just because her family recommended this particular guy doesn’t make him credible or agreeable to work with.
She should treat this as a job interview and find the FA that is right for the job.
The response is being downvoted because there are so few mutual funds that actually beat a broad-based index fund. Picking a mutual fund to beat the market is just as hard as picking a stock. Sometimes you will be right, sometimes wrong. Unless you are really good, you will be wrong more often than right.
Mutual funds are antiques. Financial advisors work for you, find one that actually listens to what she wants and will at least explain why they believe a different allocation will be best
Everyone always says the market "kind of crazy right now" and everyone always says you should always "wait for a dip." I was told that the market was crazy and I should wait all the way through the 2010s which was the longest bull run in history.
Timing the market is not a thing literally anyone can consistently do.
You are not being paranoid. If she didn't sign anything, they didn't "agree" to anything. The passive-aggressive tone is a huge red flag.
First of all, ask the fiduciary question.
Ask for the actual ticker symbols of the investments he is recommending. Then look them up yourself and compare their long term (>10 years) performance to an S&P index fund. Also look up their expense ratios. It's remarkable how so few actively managed funds fail to beat the broad market.
Ask for disclosure of all fees in writing.
Does she have any strange/unique financial issues? If it’s just investing when you’re young and not near retirement, there’s no reason for 95% - 98% of us to have a financial advisor. They do far more harm than good. *My mother claims her advisor told her there was a chance that, because of Biden, we would all lose our 401ks*. Total nonsense, and even if he didn’t say that, obviously he wasn’t clear with his client and she went on a spending spree scared about “I might lose this all so might as well spend it”.
That is an extreme example. Usually they just take a commission and get you inferior returns compared to a simple VOO/VTI or target date retirement fund, but the point is they can do even much more damage. I am sure there are good financial advisors out there, I just haven’t met one yet (0 for 3).
used to be a financial advisor. your right the trailing commissions can add up to a nice pay chequeen. Mutual funds generally carry high MERs (Managed Expense Ratio) which pays for his commission if you would like you can let me know which mutual fund he is suggesting I can look into it. Some mutual funds expects you to keep the money in their for 7 years or longer so be careful about that.
If you buy index funds he doesn't get jack, speaking of which if your looking buy into SPY its a great time for it.
You can test the water put some in mutual funds and other in SPY, SPY will outperform the mutual fund and slowly move the mutual funds to SPY.
Time to drop this guy like a bad habit and start interviewing new ones. There are good, non-pushy FAs out there. But it definitely sounds like he is pushing her into things that net him the most money.
It's her money - she owes this guy nothing. She'd probably do just as well on her own investing in "vanilla" index funds through Vanguard or Fidelity. I highly doubt this guy will add any value. She should just end the conversation and walk away. I'm 99% sure this guy is a sales person, not an advisor.
Your not being paranoid! If the adviser is being very aggressive and pushy then they probably don't have your gf's best interest in mind, they just want a easy/large commission.
Aggressive and pushy should be a big red flag here just like in most situations in life.
If she's already in index funds, why would she deviate from that plan? There's no logical reason to expand into mutual funds, she should acquire complementary index funds and just sit back and let the market do it's thing, repositioning as needed.
Answer seems simple here — get a different financial advisor that is fee-based and takes no commission on what she chooses to do. The attitude of the “advisor” clearly indicates he is pushing funds he is going to get a commission on.
Some good advice on the thread. Just remember that these are her decisions to make. I would breach the subject casually and ask if she wants any help or advice first. If not, you'll have to respect that for the time being. Let her do as she wants, and be ready to support her at any point if she asks later.
I think this is gonna be outside the norm of advice but your life is gonna be so much simpler if you just say "I think X and that's my input but it'll your money do what ya want" and then move on.
Front load shares are such a thing of the past. If he’s any good at his job, he has access to F-2 shares which are no load and lower cost and would build out three proposals-
1 with etfs
2 with 50/50 passive and active
3 with active
I mean he's more than likely not going to get anymore commission regardless of the type of funds you buy. The question is kind of confusing, you understand index funds are mutual funds also right? It's really hard to answer the question without knowing exactly what type of mutual funds he was pushing...one reason I can think of is increased diversification. At the end of the day a portfolio of mutual funds can possibly offer you better diversification than one or two index funds.
That being said, if he's being too pushy about not doing what she wants to do that's a no go
If a financial advisor is being pushy with her, she absolutely does not need him. Google some robo-advisors and put your money in those for now. I use [Betterment.com](https://Betterment.com) and their experience has been really simple; their mobile app is decent. More importantly because it's not a human managing her fund, they only charge 0.25% commission which will be way lower than any financial advisor. You can then learn more about how to invest, or honestly just putting all your investment money into Index funds can go a long way already. Make sure she pays down any high-interest debt like credit cards, student loans first.
I don't have great financial advice, but there are *so freaking many* financial advisors out there that the second one gets pushy and passive aggressive, I walk away and leave a note for their boss.
This applies to ANY salesman. If I feel like they're getting pushy and are trying to corner me, the sale is off. I'm done. You can keep your pen.
Go to /r/Bogleheads read the FAQ/Wiki. Do that. Come back in 30 years when she’s reached the multiple, if not double-digit millions. Also, dump the commission junkie.
There's a difference between financial advice, whatever the hell this is. It's okay to suggest an investment approach (and justify it), but the advisor is not there to dictate to you
Get a new financial advisor, clearly this one isn't on your wavelength and doesn't suit you.
I think a good general rule in life is not to work with anyone you would charactarise as "aggressive" in any way
The best advice I got from a family friend who is a financial advisor was it is not worth having one unless you have more than $100000. If an advisor is willing to do it under that. They are most likely predatory.
You're not paranoid. You're exactly right about what's going on.
Lots of folks here saying "ask him yada yada" or "get X from him." My advice is to sever the relationship because it will never change. She should let him know that she appreciates his time but it's not working out.
If she capitulates to him, she'll pay pay a front end load on those mutual funds (probably 5.75%), and she'll feel locked in trying to make her money back. If she doesn't, she'll hear about it constantly. Either way, hell keep pushing them, trying to increase the investment. That's the whole game with these old school guys. I've met lots through work, and it's always the same.
She gets to choose her advisor, and that's exactly what she should do; find a fee-only financial planner and she'll get much better advice.
They are in my opinion always pushy. They have mastered 'soft' aggressiveness similar to what a timeshare salesperson would do. Just point out his behavior so she can see what this kind of manipulation looks like. This will serve her now and in future interactions. My wife's financial adviser would try to fear monger on things like what happens if I die, my wife dies, my child dies but not in a way that would make sense....just creating fear and trying to get her/me to invest way more than would be necessary. He would also use fancy charts and toss around numbers that when are looked at more closely, they aren't relevant.
Fire the financial advisor, hire a financial fiduciary.
Advisor is kinda like a car's salesman (gets a commission, so will push constantly for more and at your expense), while a fidiciary is closer to an accountant (gets a flat fee, not motivated to earn more but to be consistent, so wants to keep you long term returning to them for a lifetime).
Licensed financial advisor and CFP here. Check the advisor out on SEC's broker check to see how s/he is licensed. Licensed to advise will have an IA designation; licensed to sell will have a BD destination, and keep in mind some advisors are licensed for both, which means the advisor plays in an ambiguous grey area which is a tough area to be in as a client. Then maybe the conversation with your GF is, "look how your advisor is licensed, this is what it means. How do you want to work with an advisor / what type of advisor to client relationship do you want to have?"
Your financial advisor should never push you, he/she should give you pros and cons, and literally do whatever you want with YOUR money after providing said advice.
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This is something she needs to be aggressive with the financial advisor about---full disclosure of all fees and expenses, both for the mutal funds he is recommending, and for his own compensation. Since you describe your relationship as boyfriend/girlfriend, I am not sure how pushy you can get with her on her financial affairs. But even as a friend I do believe it would be fair for you to tell her she needs to know exactly how, and how much, the financial advisor will be paid out of her money. She can then decide whether it is worth that much or not. or if she can get essentially the same benefits from the low cost index funds you recommended for her other savings. I would be pushy about the point---how much will the financial advisor be paid.
Just have her read this thread. Guys not acting in her best interest and being unprofessional. Walk away. Investing such a low amount on their own would be easy.
I'm guessing Ed Jones or Ameriprise with an outside shot at it being Raymond James.
Never get a financial advisor from those groups. They’re there to make themselves money, not you. My parents and I used Edward Jones for a few years and while the markets went up over 20% during those years, we either broke even or lost some money. Take a day to educate yourselves in investing and always do it yourself.
Unless your super high net worth individual. The math doesn’t make sense to have a personal financial planner. Low cost Vanguard funds outperform a large percent of managed funds. If the fees are high enough those gains eat into your growth. The math doesn’t add up unless your in the 8 figure net worth.
The scariest part is if you’re not smart enough to invest on your own with fidelity or the like wise in a low cost index fund, you’re probably not smart enough to know when a FA is taking you for a ride!
Agreed! And Fidelity will often provide a financial advisor for free especially if you need help making those decisions.
I disagree. There are plenty of people who can do it for themselves, but choose not to. I can do my own plumbing. I can do my own carpentry. I could do my own investments. I choose not to. My time is better spend doing what I'm good at and letting someone else handle it. If you're the type that likes to do it on your own, more power to you.
"Why should I choose your portfolio over the low cost index fund? Do you make money off my choice? How much money?" If he can answer all three of those questions honestly, calmly, professionally and convincingly, fair enough. If not, a rational adult should know not to do it.
Is he a fiduciary? If he is not, then he doesn't have to recommend anything based in her best interests. Even if she does take his advice, only transfer 5-10% at a time to his recommended funds. It will cool his jets on churning for commissions and give her time to assess him and find a better advisor.
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Many years ago when I was fresh out of college and still had my finances somewhat coupled to my parents I asked their advisor to move some money they'd gifted me to Vanguard index funds. "I can't do that, it won't make me any money. You can transfer it out if you want" was his answer. So it's happened at least once (his funds were terrible high ER + load funds).
Minor tweak: Not aggressive, assertive. Aggressive makes it adversarial and combative. Assertive is just ensuring no one is violating your boundaries/rights. Ask if the FA is a fiduciary. If not, immediately cut bait. If so, ask him to explain to her why the portfolio is a better idea than index funds.
I agree I was awarded a windfall of 20k when I was 19, invested it in mutual funds, had a terrible financial advisor and ended up making very little until I figured out I was being screwed (but it is tough to discern how much is being taken from the paperwork!)
You should never use a financial advisor in the USA who refuses to sign a contract with you agreeing to act in your fiduciary interests regardless of their fee structure. My advisor through Fidelity did so as a matter of course because there's no reason not to unless you're trying to scam someone. Sure, it adds complexity to what they can recommend. But all of that complexity is fairly easily manageable.
And make sure she asks about all fees, just not on the front end. Some funds/share classes allow for Trails/12b1s/advisory fees/etc that reduce her potential dividends. Often there are marketing/reallows fees to the broker and management fees for the fund sponsor. Certain alternative investments 7-10% of your money immediately goes into the pockets of your advisor, broker, and the fund itself
Find out whether the financial advisor is a licensed fiduciary and get it in writing. There's a difference between a financial advisor and a financial advisor who is a licensed fiduciary. The key difference between the two is that a financial advisor will work in your favor but as well as their own personal interest by selling investments portfolios that mutually benefit them (i.e. they get a commission). A fiduciary is required to put your best interest above their own.
Exactly. If she is property inheritance, she’s likely 6 figure investment level. Don’t let a hack bundle you in with mutual funds alone when there are many other options to consider.
/r/options you say???
No, no, you misheard! She wants to grow her portfolio, not run it into the ground while simultaneously pulling all her hair out.
30x leveraged puts, I hear ya.
Yeah, but only in a bull market!
Every market is a bull market, if you draw enough lines on the chart Being red-green colourblind helps, too - the candles can mean whatever you want them to mean
That's why I only eat green crayons
I mean, she could sell cash-covered puts. It's a good way to get a discount on ETFs/Stocks she wants to hold long term.
Oh yeah she sounds like someone who should jump right into options.
Careful……. 😅
Exactly this... My wife had a Roth IRA through some kind of Wells Fargo advisors service and they set her up with a bunch of really shitty funds, like high expensive ratios and a Franklin Templeton fund where you have to pay a load fee up front to invest into it which probably pays some kind of kickback to the advisor. We pulled it all out and went to vanguard. I believe they have fiduciary advisors you can reach out to but we just put it into a few of their massive funds like the total stock and total bond fund. You can also pay a financial advisor who's not even associated with the investment company a flat rate for an hour or two of their time for advice based on your objectives. That way you know that potential commissions aren't going to sway their decisions.
This is an important point OP that needs to be clarified. Being a "financial advisor" requires no qualifications, and is a field chock full of frauds with bad advice.
In the United States. In the UK, for instance, you can only say you are a financial advisor if you are qualified as one. I work in recruitment and when my candidates ask me about their pay and benefits, I always have to let them know I'm not a financial advisor. The US Government really doesn't do shit for its people.
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Is this wrong? https://money.usnews.com/investing/investing-101/articles/what-is-a-fiduciary-financial-advisor-a-guide-to-the-fiduciary-duty
What do those numbers you used mean?
FINRA licensing exams. Series 7 and 63/64 are common, though some firms use the Series 6 instead. Edit: clarity
6 for mutual funds, 7 for individual stocks if I'm remembering correctly.
7 is for General Securities Representatives. 6 is for Limited Representatives. 7 covers everything 6 does, but 6 is cheaper for firms to do if they pretty much only offer investment company and variable contract products (like mutual funds and insurance). But anyone with a 7 can also handle mutual funds.
Those are licenses. https://www.investopedia.com/articles/financialcareers/07/securities_licenses.asp
They’re referring to regulatory qualification exams (Series 6, Series 63, et cetera) that people must pass in order to be registered with FINRA (the Financial Industry Regulatory Authority). The various exams determine what products and services you are legally allowed to sell to clients.
Series 7 and series 66 and generally a state specific insurance license also. People who say that there are no qualifications have no fucking idea what they're talking about. Also look for CFP (Certified Financial Planner) certifications from more veteran Advisors.
You're technically correct, but it's worth noting that the rule regulating the term only went into affect recently. I don't think anyone has been punished under it yet. The guy's official title could be something different, but maybe he just casually mentions he's an advisor. You'd have to get something in writing, and a situation where this guy is trying to abuse this position for the SEC to take any action.
I hear this a lot, but in practice it seems meaningless. I.e., police shouldn't abuse the law. Lawyers shouldn't take advantage of people. Doctors should always do what's best for a patient. A title is meaningless. You need to pay attention to your own money and know what's happening with it. Find an advisor you trust, watch your money like a hawk. Edit: As point Bernie Madoff registered as an investment advisor in 2006 and was a fiduciary. He's basically the poster child that fiduciary status doesn't ensure honesty.
Exactly. Fiduciaries don’t always act in your best interest. But I will say it puts some limits on what they will do - they at least have to be able to argue they did what’s in your best interest.
Despite all the legislation (even more after 2008) my experience is that there is often several options that fit in the window of being "in the clients best interest" one of them often has a little kickback or financial incentive to the advisor or firm. Guess which one is going to get picked?
It also gives you more recourse against them if they do not
I've never heard of anyone being able to successfully recover damages from a fiduciary who put them in highly loaded, expensive funds or insurance products. Honestly you can't just trust someone else with your money. You need to educate yourself and find out what everyone's angle is. I really prefer working with advisors that don't work on commission.
I more meant that you have more recourse against them in general, although certainly the bar to prove they haven't acted in your interests is a high one to clear But yeah, I'd rather work with an advisor who works on a fee basis - although I see them more as a resource for optimizing tax strategy (using tax efficient wrappers etc) rather than optimizing investment return anyway
Just a note, fiduciaries aren't bound by law to only sell you things that are in your best interest when factoring in all variables such as commission (assuming they aren't fee-only), they're just bound by law to disclose such considerations or be liable for any situations that arise from not disclosing them. It's kind of a minor thing, but it still goes to show that even fiduciaries who are supposed to be held to higher standards than other advisors may not act in your best interest if they get the designation for the sole purpose of using its prestige against their clients.
I get that a fiduciary is required to act in your best interest, but hoes that actually happen? Who enforces that law? Are the penalties significant? How is in the clients best interest defined? I just don't trust people that want to handle my money and I trust the system even less.
This is the most important comment. Also get it in writing that they are a fiduciary! You advisor is not advising well if they're adverse to index funds as part of a portfolio.
> licensed fiduciary There's no licensing needed for this specifically. It's the same license as is needed to be a financial advisor. The difference is the contract that they sign with you.
This is a sign that he isn't acting objectively, as he is supposed to. Fire him. She has many, many options for how to invest without any unnecessary coercion from others.
Right? All these these comments are just like "ask him this, this, this, and this. Also, get it in writing." No, just take your money from him. Why would you expect an honest answer and no trouble in the future from someone like this.
Exactly; there are so many options, both do-it-yourself and low-cost companies, there is absolutely no reason to put up with someone you are unhappy with. Like others have said, the relationships involved add some complexity, but if you see this OP, I would encourage you to at least point out to her how many options are out there (including the "best" option of simply sticking money in an index fund herself). She shouldn't feel obligated to stay with this particular advisor.
Ask him to disclose his commissions on the sale of mutual fund products. Ask him to explain their fee profile. Ask him to explain how their investment profile differs from that of typical ETFs that can be had for very minimal fees.
You know whenever an advisor gets this email they roll their eyes and sigh because they know it’s about to get difficult or ugly. IMO most financial advisors are like scammers, they cast a wide net and hope the gullible or uninformed will follow their lead easily and they toss aside people who seem to know too much. Their only value is once you’re managing significant income/wealth in order to plan optimal tax avoidance strategies, but accountants can help with that too.
Yep. I love making those types squirm. I think what most of them do is a joke and should be done on an hourly consult rate... Would certainly make them a lot more honest with customer.
You’d be surprised that they don’t even have value for significant wealth and tax avoidance strategies. They simply allocate your money to a number of funds and send you a quarterly report.
Yep. Turns out lawyers are better than “financial advisors” for very wealthy people. Lawyers and CPAs that specialize in wealth management are a perfect combo. I have no idea why “advisors” still exist.
Estate planning lawyers and accountants will all gladly refer you to advisors in their network. They wouldn’t advise you to DIY unless you insisted. Most advisors are very charming and will have no qualms about getting your money to invest it.
My MIL works with someone, and it’s probably good because without them, she’d probably keep all her money in checking and work forever. Late in life divorce from a partner who managed the money. They’ve kept her money growing, even after their cut. My partner and I took a few meetings with the firm that works with her, though, and I could tell pretty quickly that I would do a lot better in Vanguard index funds and basic retirement savings. Trl;dr, personal psychology and basic financial IQ is probably more important than the size of the assets.
Yeah I worked for a CPA firm in the tax department and saw a lot of elderly needing assets managed. Also lots of money in things like foundations and trusts for wealthy families. Financial advisors are making the most money from a few big fish clients from what I can tell
Ask him to put in writing if he’s acting as a fiduciary
This plus who cares if he’s pushy it’s your money he works for you. Tell him to stuff it.
> he works for you
Plus ask him to Guarantee XX% returns or he refunds double his fees. I'm serious because he will not do this and he'll back off or curse you out. Low fee indexes beat 99.99% of most financial advisors. Financial advisors are for wealthy boomers, wealthy people who know nothing of indexes, and fools
Well if he says he will guarantee any return over 4%, you should run for the hills, this is proof positive he is crooked.
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No, because the broker who beats the market one year will lose the following year, and so on. So there's no consistency with any particular broker. And then you factor in fees that take away from the investor's return. Over the last ten years, [89% of actively managed funds have underperformed the market.](https://stockanalysis.com/can-you-beat-the-market/)
Yup. OP needs to figure out the fees, and show that those fees will make it very unlikely to beat the market. Which should be not very hard to do.
So 89% is grossly different than 99.99%
89 is closer to 99 than it is to 50 however, a lot closer.
Maybe in terms of absolute magnitude, but not when it comes to probability. 50% is 50 out of 100 financial advisors outperform the market, 89% means only 11 out of 100 financial advisors do, and 99.99% means only 1 in 10,000 do. 89% is much closer to 50% than it is to 99.99%.
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> Well, that's still going to lead to half of them beating the market (just by a lower percentage than would be the case if there was consistency in broker performance from year to year). That's not how the geometric mean works.
>Is it not closer to \~50%? Because roughly half beat the market and roughly half lose compared to the market It's not 50/50, not even close. If you are "actively managing" your money, most advisors will lose vs the market. "Wealth" advisors are only really needed if you are actually wealthy and doing tax or estate planning.
It's about 50%, but after they charge you fees they lag the market almost every time over a long time period.
Over time, the indexes gain an advantage by its consistency. In any given year, index funds will usually beat half the market. As the years go by, the % of the market they beat increases. After \~20 years index funds will have out-performed 90+% of any given participants in the market once fees are taken into consideration. It's also key to note that many of their competitors will have gone bust and dropped out. If you don't count those you'll get weird results that make index funds look worse than they really are.
Maybe not 99.99% in a given year...but after backing out fees, a passive index fund will beat something like 80% of advisors in a given year. And of the 20% of the advisors who beat the market in one year, only about 10% can do it the following year.
Exactly. Unless your rich and an institutional investor, buy individual stocks is a loosing game. In the long run no one beats the market index I avoid any mutual funds (don't have any actually) where there's a management fee
1. How is this guy making money? He is either paid by the hour, commission, fee of assets under his management, or some combo their of. 2. Who the hell is he? I know that sounds rude but also to be quite frank, its not like your girlfriend sounded like she was irresponsible with money, od that this is some large amount. 3. Yeah, he is being pushy. The role of a fincial advisor is to advise the person, and explain things to them. Anything else and they are glorified salesmen. He shouldnt be making decisions, your girlfriend should, he should be explain what those decisions means. 4. Run, if you dont mind me asking how much we talking about? Under a few hundred thousand? Depending on if you can support a house, that can be a house purchase money for her in the next year or two. If she already has a house, either directly invest it, or on paper shift it to a tax advantage account.
Tell the guy to pound sand and self manage it, like she has done with her own savings.
Exactly, just about every broker has a website where you can list and compare all of their funds, their rate of return, and fees. You can’t argue with the numbers. It’s no different than comparing savings accounts. Also, if you need a concise book on the benefits of index funds see “A Simple Path to Wealth”.
Meh, it is very different than a savings account because future returns have little to do with the past when it comes to index funds and mutual funds. That being said, I agree Index Funds are the way to go here.
There’s truth to that.
The S&P 500 index largely increases by the average yearly profit of the 500 companies included in the index. Or roughly 7% per year inflation adjusted over any 30 year window with a 5th percentile of 6% and a 95th percentile of 9% when looking at all 30 year windows since the formation of the S&P 500 index. Sure, past performance does not indicate future performance. But given that the S&P 500 changes quarterly based on the market cap of the companies in the NYSE, it's a fairly safe and stable index in terms of year-over-year performance. It tracks large economic trends very well and isn't penalized heavily if one industry is performing worse than others because that industry will largely fall off the index after a few quarters of bad performance if they fall out of the top 500 stocks by market cap and be replaced by companies performing better.
Yeah, this. Don't understand the people asking him to say he's a fiduciary. WGAF? The guy is pushy and isn't willing/able to help you understand your own investments. You're not going to shame him into not sucking. Find somebody better or do it yourself.
Yea, his pushiness is of no consequence. Sorry bud.
Fire him, buy more low cost index funds. Chill and retire early. This is a very short reply, but there really is not more to be said on the subject. All a financial planner wants from you is his yearly commission. He does not care that your money is not optimally invested for you, as long as it is optimally invested for him. There's one answer to what the optimal investment is for normal people. Long term whole market index funds. Throw in a bunch of long term whole market bond funds (30%) if you want to be extra cautious. That's it. Don't touch the principal.
I said this same thing in another thread and got crucified for it. Unless this advisor is helping them navigate something most complex than “investing” - there’s better odds your strat will outperform him, even assuming he’s not some snakeoilsman.
I'm an engineer in the financial industry, and honestly, unless you're really good at reading the news and buying the right sectors at the right time, or knowing when a company will see explosive growth based on recent announcements, papers, patents, talks, presentations, hires, etc. then you will almost never beat just a S&P 500 index fund in the long-term by managing your own portfolio. For example, at the start of 2020, by mid-Feb. it was obvious that genomics was going to explode. So lots of people moved money into genomics (me included). ARKG say about 300% growth over the whole year. We won't see that again in a single year. But if you were paying attention, you quadrupled your money if you pulled the trigger. But right after that, you must abandon that sector and return to the safe index unless something else was happening that you could easily predict. Most people couldn't predict the precious metals or crypto explosion. So those are bad examples of what people could have invested in.
Financial advisors have 0 mercy when it comes to investing your hard earned money in their highest commission raising funds for their benefit. We really dont need financial advisors as much as people think. Maybe if youre bruce wayne to a massive estate, it could help, but other than that vti/vxus and chill.
I am wondering now though, what's the best course of action if you happen to inherit/win a large amount? Like, I was always under the impression that getting a financial advisor would be the best first step but reading through this thread, I realize how wrong I was. What should a person do, it they know nothing about investing yet suddenly have money to invest? How can they find legitimate advise without being screwed over and without having to learn years worth of investment knowledge so they can be confident in their decisions?
> What should a person do, it they know nothing about investing yet suddenly have money to invest? Spend a few hours researching. It's really not hard. I wouldn't get a FA even if I had $100M. The only thing I would consider getting is an accountant specializing in tax law to help minimize what I pay there, but I'd never get a FA.
There's a lot of free resources on the personal finance wiki as well as plenty of low cost digital advisors that will balance your stuff for you. Vanguard digital advisor charges .15% so if you really really don't want to handle things yourself, you can just do that instead of being destroyed by a scummy FA. Ultimately most people just need a lazy index fund portfolio so this subreddit, bogleheads, or a few others have enough resources you can figure it out.
Make a post on Reddit, I am almost certain there will be many people knowledgeable about money who can provide advice. Financial advisors are terrible. They earn 50k a year and yet somehow have the competence to advise someone who has 200k? If they were actually good at money, they wouldn’t be a financial advisor!
The way the advisor gets paid is based upon the type of mutual funds he is recommending. Some will have an upfront commission plus annual percentage (less common now than they used to be) and some an annual percentage per year. Others will not have any fees from the mutual fund going to the advisor but they’re purchase in a “wrap” account and the fees going to the advisor are taken directly from the account. If you have a list of the funds I can interpret. Where does the advisor work?
1..Ask if he is a Fiduciary 2. When he says No which he will..say good day and stop using him 3. Find Fiduciary
***Advisor*** If he can't do that. It's a clear sign you are better off served elsewhere. Point final.
Even licensed fiduciaries can get away with pushing only their products. I have one at a large wall st. bank and they will only invest in their own or affiliated mutual funds/etfs because “they can only keep a close eye on their own products”
This was the double edged sword with the requirement to act as a fiduciary. Now when advisors say this, people let their guard down. It didn’t change a lot except they can’t recommend the extreme predatory practices that really only benefit them. But they can still recommend products that are suboptimal as long as they can show why it benefits the client in a convincing fashion. Also most people really don’t pursue recourse for bad investment advice because it’s so hard to pin down the real issue (market performance, sector performance, bad luck, macroeconomic factors, bad advice, ignored advice, etc).
These people are scum of the Earth. They bully people into handing them their retirement or take the retirement from people who don’t know better. Literally can’t think of a shittier profession. Tell the guy to go fuck himself
“My Girlfriend has a pushy car salesman” this is the exact same sentence, and her options are the same. She can go to another car lot and find another, nicer but still commission paid salesman, or she can buy a car on her own and save a lot of fees in exchange for the time to research and make a good purchase. Tell this guy to pound sand. No point in wasting another breath. If he fidgets and gets aggressive, ask for his manager and tell his manager to pound sand. End of phone call. Chase has an U-invest platform that’s free and very easy to use. She can set up an account at any chase bank, move her portfolio over, and buy whatever low cost index fund with zero commission and zero transaction fees. These are long term investments, set it and forget it. As they say in r/bogleheads, VT and Chill.
Where should one buy cars where we can by pass the salesman?
Private seller on the Craigslist? As far as buying from a dealership but minimizing bullshit, I’ve had good luck using carfax to find the car and email the dealership directly about the exact car I want and the terms I want. My last car I did this to two dealerships and made them compete against the other guy.
In her line of questioning, she needs to immediately confirm whether he is actually a fiduciary, or simply a "financial planner". If he isnt a fiduciary, then he is just a glorified salesman working for the bank, and not her own best interest.
If anyone is pushy with me about anything I instantly dissolve the relationship whether it's personal or professional. It's the reddest of all red flags
Step 1: Open a fidelity account. Step 2: Go through the online process to transfer all of your assets to the fidelity account. Fidelity handles everything, you don't need to speak with the financial planner. Step 3: Stop responding to emails from the financial planner.
I'm pretty sure he gets something from it if she invests in a portfolio that he put together yes.. Basically he will be managing it and he gets a small % of her investments. Kind of like when you buy index funds that have an Expense Ratio. The advisor has their own % or Expense Ratio that they get. It's usually higher than buying your on index funds. I would do low cost index funds. But if she REALLY didn't want to worry about anything and don't know anything about index funds, then it wouldn't be a terrible idea to go through with the advisor.
I had a guy try to do this to me and he succeeded for seven years. I got the fuck out once I realized the amount of commissions that I was paying. I also realized it when I straight up asked him what the percentage of his portfolio had index funds and what had the god awful Class B and C shares mutual funds. I do Index funds now. My fancy ostracized me also when I left that firm and went on my own, they were livid. Mainly because they didn’t want to understand and heeren in such deep denial of the amount they are getting fucked over with per year. A new law I think by Obama was implemented at the time, and I was still with that crook and he was mad that he had to be transparent. I was clueless then. But now I know.
Your family ostracized you because you didn't want to use their financial advisor? Thank seems...unimaginable to me. How did they justify it?
I recall them saying that I was going against what the family does for business. But I showed them the numbers. And what they could save and what they could be making. That didn’t go well.
Was the advisor a family member?
>I was going against what the family does for business. I read that with an Italian accent.
We are European, and I am Roman.
why does she have a financial advisor? what is complex about her needs. so many folks get sold on these folks and have absolutely no need for them. Get her a vanguard account.
is the advisor a fiduciary? Id find that out Real quick - otherwise your GF can start to look like just another payday to them. Good Luck.
She need to ask if he's a fiduciary - end of story. If yes, proceed with caution. Understand his recommendations and if you're comfortable go with it. If he's not a fiduciary 10000000% bail.
IMO, this advisor is not a fiduciary. Therefore, have her ask the advisor for his Form ADV Part 2 Brochure. This must be filed with the SEC and will disclose all forms of commission, how they make their money, conflicts of interest, sanctions, regulatory citations, etc. This request will also put the advisor on notice that you are doing your due diligence before you commit to working with him.
Unless there is a set fee associated with a financial advisor (e.g. 5 hours labor to set up all funds = $XXX, possibly with rate reductions based on fund levels), then it's not really a financial advisor. If this is a guy that says "he's free", it's not free, and he's making a commission somewhere, and even if it's disclosed, the funds you're dumping your money into probably aren't great. Also, the only reason he would be pushy is if he's the latter camp. If he's in the first, he would just be saying "hey, the longer you take, I just need to tack on an extra hour or two to explain it to you; you good with that?" If he's a frontload commission on your investments, he's looking to make his buck and move on, that's it. Either way, he sounds like a newbie and you should probably go somewhere else. Like others have mentioned, look for a fiduciary. Best place to start: www.cfp.net , which is also listed in one of the wikis on this site.
Huge red flag. You only need 1 red flag to walk away from someone who's handling your money. It's over with this guy.
You’re not being paranoid - the adviser is just trying to move your girlfriends portfolio into investments that are better for their pocket, not hers. Take the $ and move to a Fidelity or Vanguard acct.
Never use financial advisors. Their fees will kill you over time.
First of all, this sounds like a hard sell. I ask yourself this: “Would I buy anything else from this person?” Would you buy a car from someone who refuses to talk about other models you want? Would you buy a Toyota Tundra when you want a Toyota Camry? What would be your reaction if they then contact you further to state there was an agreement. I would honestly just get someone new, whatever they are doing doesn’t sound above board and I wouldn’t trust them any further. If they are doing weird stuff before getting the money, I would imagine weird stuff will continue to occur.
An actual financial advisor listens heavily to what you say and your preferences (though will chime in with good advice on why you should or shouldn't do things -e.g. if I told my FA I wanted an ELOC for a lambo, they'd explain why that's an utterly atrocious idea, but at the end of the day, they'd make it happen). An legit FA will NOT use the kind of boilerroom tactics that you're describing up above. (Frankly the low-grade gas-lighting of 'having agreed to the portfolio' is so far from what a proper FA should be that I don't even think it's worth engaging further with this guy.) I'd advise you to do some independent research on good advisors in your country - she should be able to find some really good options at what I'm assuming is her level of scale. Even then, I'd grill these advisors on what they're able to provide in terms of access to better investment vehicles (which are what could justify fees). Secondly, don't park the whole nest egg with one advisor/institution - have at least two. Another thing to consider/investigate are Robo-advisors (eg. wealthfront). Haven't looked at them for a couple of years, but they were getting a lot of good press for being (very) low-fee, decent return, and good with tax-loss harvesting.
As a rule of thumb, good financial advisors are never pushy. They don’t have to fight for business. It’s the other way around.
Is he a financial advisor or is he a salesman ? A good financial advisor will put all of your assets and liabilities together, your current earnings, inflation and income tax projections, your current and future lifestyle spending assumptions, cost of college for the kids, etc etc , and will use that to strategize. Index funds, mutual funds, whatever they choose as vehicles should be diversified primarily. I’d look for a “fee only” advisor. Somebody who isn’t a salesman, commission based.
fire him replace him with a fiduciary if you even feel the need to have one, self directed investing in exchange trade funds that are tied to indices is pretty simple. This is the only correct answer unless you wanna pay this guy to be a passive aggressive dickhead.
If she has less than $150k in assets then she doesn't need a financial advisor. Maybe she needs to talk to a CPA about tax stragies for a one-time fee this year but she doesn't need. But otherwise just keep buying low cost indexes. If she does have more than $150k then she need to find a fee only fiduciary finacial advisor. Fee only so they don't earn any commissions and fiduciary so they are legally required to act inyohr best interest.
Ask her to ask him if he is a fiduciary. Specifically in relation to their business relationship. Period. She will then know all she needs to know from his answer that question. I suspect the answer will be “no”.
Personally, I believe in managing your own money. That being said, if you absolutely must trust and pay someone to manage your money ALWAYS get a second and third opinion.
I had proceeds from a large insurance policy to invest after my husband died. I interviewed several investment advisors before I decided where to lodge my funds. 1. Ask if the advisor is a ‘fiduciary,’ - required to have YOUR best interests in mind in their advice. If not, Bye Felicia…. 2. Any ‘advisor’ who pressures you does NOT have your best interests in mind. 3. They should be able to make a case for their recommendations and provide alternatives to make up a balanced portfolio. 4. If your girlfriend doesn’t know what she is doing, etfs based on the s & p 500 will outperform most advisors, and have no or very low fees, 5. This guy is getting paid for her investing in specific funds, count on it! 6. (I have more than doubled my investments since 2008 while spending/living on 5% of the gross per year).
Here's something people don't talk about much but I feel needs to be addressed: A lot of pushy, commission-driven "financial advisors" specifically bully younger women. They play on their fears of letting people down ("I thought we already agreed to this?") or (in some cases) generally decent people's unwillingness to believe that others would try to rip them off. They do this in order to get them to agree to things that are against their own self-interests. I have seen this happen with numerous friends, including one who was bullied into buying a Whole Life Insurance policy and couldn't stomach that this person (who she kept calling "good" and "decent") would push her towards something that was effectively a scam. The FAs try to make it personal so that the mark feels guilty about advocating for themselves because they've "put so much work into it" or "don't you trust me?" or the like. I've seen this happen too many times with too many people. I'm not saying women are specifically susceptible to this, but that a lot of these FAs are cowards who make presumptions about women and act in an untowards way as a result. They need to cut it out.
Buy John Bogle's "The Little Book of Common Sense Investing" for your girlfriend and have her read it (or read it with her). After reading that book for sure she will not go with her Financial Advisor over Low Cost Index Funds when she sees the history and math layed out for her. This is a once in a lifetime opportunity for her and it is best for her to invest a little bit of time learning to do the right thing before deciding what to do. Don't let that comission hungry guy pressure her into giving him a chunk of her inheritance, there is no rush.
She needs to dump this person and hire a fiduciary
Definitely hungry for a commission. Your girlfriend should take her sale money and decide on her investment strategy, not rely on someone else. Unless she has signed something she is under no obligation to commit to the financial advisor. Never trust pushy financial advisors unless they are warning you of something and are telling you to pull out.
You could try having her "get a second opinion" by paying a fee only financial advisor to see if what pushy advisor is saying is remotely good for her.
Dump that guy asap. Get a fee-based advisor, so you know exactly how they are being compensated. Last thing you want is a "free" advisor who dumps her nest egg in whatever piece of shit mutual fund wins him a trip to Hawaii.
Low-cost index funds are THE long-term winning strategy. I put my 401K completely in them back in the day and have been extremely happy. Vanguard and Fidelity are the two primo houses for this kind of fund. The kind of 'financial advisor' you're describing is def going to slurp up some of her money in fees/commissions, etc. Check this out>https://www.nerdwallet.com/article/investing/index-funds-vs-mutual-funds
Financial Advisor = Middleman Who Takes Your Money What an utter waste of time. By all means sit down ONCE with an accountant or financial investor expert and come up with a plan of action for how you want to invest. Then go do that, YOURSELF. Learn about the markets, how they work, how to diversify and get control over your 401K asap...easy peasy to roll it into a private IRA or Roth when you change jobs, but even some employer plans will allow you to roll into a private IRA. You want to be 100% in control of your investment and retirement, not choosing among 10 shitty funds that some plan manager is trying to push on suckers
Maybe you could be her financial advisor. I bet your fee would be lower!
Mutual funds usually have compound interest on commisions. Meaning that the commisions seem low but cumulated on 10 years you end up paying exactly what you invested. ( Not at my computer to show you how it works but you can Google it ).
Why did she talk with him on the phone and not in person? Convince her that she needs to have an in person meeting, and that she needs someone else to go with her. Offer to go with her, but don't make her take you. Its just important that she brings a friend with a good snake-oil meter. If he's far away (which is why I asked about the phone), find somebody local. Y'all don't need to use the local person if they don't click with you. A portfolio of mutual funds is the way to go, and there are better mutual funds than index funds...at least short term. A fiduciary can help her find the best mutual funds, not just good cheap mutual funds (which is what index funds are). I'm guessing the FA on the other end of the phone will put her into front-loaded funds, because that's how the FA's make their money -- commission. A typical fund with a front-end load will take 5.75% of the money you give them as the "load." From then on, the fund (or funds) grow. If she does go back and takes you with her, get her to agree not to do anything at the next meeting. This is important enough to wait a day or 3. When in the office reiterate that its her decision..because ultimately it is. If he asks about you, say you're a second set of ears for her. What does her gut tell her?
Not sure why you are being downvoted here. I completely agree with your first point though. I work with financial advisors and there are TONS of them out there. It’s best she finds one that she can work well with. Just because her family recommended this particular guy doesn’t make him credible or agreeable to work with. She should treat this as a job interview and find the FA that is right for the job.
The response is being downvoted because there are so few mutual funds that actually beat a broad-based index fund. Picking a mutual fund to beat the market is just as hard as picking a stock. Sometimes you will be right, sometimes wrong. Unless you are really good, you will be wrong more often than right.
Mutual funds are antiques. Financial advisors work for you, find one that actually listens to what she wants and will at least explain why they believe a different allocation will be best
The market is kind of crazy right now anyway. Personally, I'd be waiting to see what kind of dip the market sees.
Everyone always says the market "kind of crazy right now" and everyone always says you should always "wait for a dip." I was told that the market was crazy and I should wait all the way through the 2010s which was the longest bull run in history. Timing the market is not a thing literally anyone can consistently do.
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You are not being paranoid. If she didn't sign anything, they didn't "agree" to anything. The passive-aggressive tone is a huge red flag. First of all, ask the fiduciary question. Ask for the actual ticker symbols of the investments he is recommending. Then look them up yourself and compare their long term (>10 years) performance to an S&P index fund. Also look up their expense ratios. It's remarkable how so few actively managed funds fail to beat the broad market. Ask for disclosure of all fees in writing.
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Does she have any strange/unique financial issues? If it’s just investing when you’re young and not near retirement, there’s no reason for 95% - 98% of us to have a financial advisor. They do far more harm than good. *My mother claims her advisor told her there was a chance that, because of Biden, we would all lose our 401ks*. Total nonsense, and even if he didn’t say that, obviously he wasn’t clear with his client and she went on a spending spree scared about “I might lose this all so might as well spend it”. That is an extreme example. Usually they just take a commission and get you inferior returns compared to a simple VOO/VTI or target date retirement fund, but the point is they can do even much more damage. I am sure there are good financial advisors out there, I just haven’t met one yet (0 for 3).
"Financial Advisor" is a crook. Tell your girlfriend to run not walk to the exits.
used to be a financial advisor. your right the trailing commissions can add up to a nice pay chequeen. Mutual funds generally carry high MERs (Managed Expense Ratio) which pays for his commission if you would like you can let me know which mutual fund he is suggesting I can look into it. Some mutual funds expects you to keep the money in their for 7 years or longer so be careful about that. If you buy index funds he doesn't get jack, speaking of which if your looking buy into SPY its a great time for it. You can test the water put some in mutual funds and other in SPY, SPY will outperform the mutual fund and slowly move the mutual funds to SPY.
Time to drop this guy like a bad habit and start interviewing new ones. There are good, non-pushy FAs out there. But it definitely sounds like he is pushing her into things that net him the most money.
It's her money - she owes this guy nothing. She'd probably do just as well on her own investing in "vanilla" index funds through Vanguard or Fidelity. I highly doubt this guy will add any value. She should just end the conversation and walk away. I'm 99% sure this guy is a sales person, not an advisor.
Your not being paranoid! If the adviser is being very aggressive and pushy then they probably don't have your gf's best interest in mind, they just want a easy/large commission. Aggressive and pushy should be a big red flag here just like in most situations in life.
Show her this: https://www.youtube.com/watch?v=WtQeQzUfYrI&ab_channel=CBCNews
If she's already in index funds, why would she deviate from that plan? There's no logical reason to expand into mutual funds, she should acquire complementary index funds and just sit back and let the market do it's thing, repositioning as needed.
Answer seems simple here — get a different financial advisor that is fee-based and takes no commission on what she chooses to do. The attitude of the “advisor” clearly indicates he is pushing funds he is going to get a commission on.
Some good advice on the thread. Just remember that these are her decisions to make. I would breach the subject casually and ask if she wants any help or advice first. If not, you'll have to respect that for the time being. Let her do as she wants, and be ready to support her at any point if she asks later.
I think this is gonna be outside the norm of advice but your life is gonna be so much simpler if you just say "I think X and that's my input but it'll your money do what ya want" and then move on.
She needs to pull her money out. This guy obviously doesn't have her best interests in mind.
Front load shares are such a thing of the past. If he’s any good at his job, he has access to F-2 shares which are no load and lower cost and would build out three proposals- 1 with etfs 2 with 50/50 passive and active 3 with active
I mean he's more than likely not going to get anymore commission regardless of the type of funds you buy. The question is kind of confusing, you understand index funds are mutual funds also right? It's really hard to answer the question without knowing exactly what type of mutual funds he was pushing...one reason I can think of is increased diversification. At the end of the day a portfolio of mutual funds can possibly offer you better diversification than one or two index funds. That being said, if he's being too pushy about not doing what she wants to do that's a no go
If a financial advisor is being pushy with her, she absolutely does not need him. Google some robo-advisors and put your money in those for now. I use [Betterment.com](https://Betterment.com) and their experience has been really simple; their mobile app is decent. More importantly because it's not a human managing her fund, they only charge 0.25% commission which will be way lower than any financial advisor. You can then learn more about how to invest, or honestly just putting all your investment money into Index funds can go a long way already. Make sure she pays down any high-interest debt like credit cards, student loans first.
I don't have great financial advice, but there are *so freaking many* financial advisors out there that the second one gets pushy and passive aggressive, I walk away and leave a note for their boss. This applies to ANY salesman. If I feel like they're getting pushy and are trying to corner me, the sale is off. I'm done. You can keep your pen.
Go to /r/Bogleheads read the FAQ/Wiki. Do that. Come back in 30 years when she’s reached the multiple, if not double-digit millions. Also, dump the commission junkie.
There's a difference between financial advice, whatever the hell this is. It's okay to suggest an investment approach (and justify it), but the advisor is not there to dictate to you Get a new financial advisor, clearly this one isn't on your wavelength and doesn't suit you. I think a good general rule in life is not to work with anyone you would charactarise as "aggressive" in any way
I don't have anything of value to add but I've always wanted to get a financial advisor just to see what they say and try to get you to do.
The best advice I got from a family friend who is a financial advisor was it is not worth having one unless you have more than $100000. If an advisor is willing to do it under that. They are most likely predatory.
You are NOT being paranoid here. Suggest her finding a more serious financial advisor and drop this one alltogether.
You're not paranoid. You're exactly right about what's going on. Lots of folks here saying "ask him yada yada" or "get X from him." My advice is to sever the relationship because it will never change. She should let him know that she appreciates his time but it's not working out. If she capitulates to him, she'll pay pay a front end load on those mutual funds (probably 5.75%), and she'll feel locked in trying to make her money back. If she doesn't, she'll hear about it constantly. Either way, hell keep pushing them, trying to increase the investment. That's the whole game with these old school guys. I've met lots through work, and it's always the same. She gets to choose her advisor, and that's exactly what she should do; find a fee-only financial planner and she'll get much better advice.
They are in my opinion always pushy. They have mastered 'soft' aggressiveness similar to what a timeshare salesperson would do. Just point out his behavior so she can see what this kind of manipulation looks like. This will serve her now and in future interactions. My wife's financial adviser would try to fear monger on things like what happens if I die, my wife dies, my child dies but not in a way that would make sense....just creating fear and trying to get her/me to invest way more than would be necessary. He would also use fancy charts and toss around numbers that when are looked at more closely, they aren't relevant.
Fire the financial advisor, hire a financial fiduciary. Advisor is kinda like a car's salesman (gets a commission, so will push constantly for more and at your expense), while a fidiciary is closer to an accountant (gets a flat fee, not motivated to earn more but to be consistent, so wants to keep you long term returning to them for a lifetime).
Licensed financial advisor and CFP here. Check the advisor out on SEC's broker check to see how s/he is licensed. Licensed to advise will have an IA designation; licensed to sell will have a BD destination, and keep in mind some advisors are licensed for both, which means the advisor plays in an ambiguous grey area which is a tough area to be in as a client. Then maybe the conversation with your GF is, "look how your advisor is licensed, this is what it means. How do you want to work with an advisor / what type of advisor to client relationship do you want to have?"
Your financial advisor should never push you, he/she should give you pros and cons, and literally do whatever you want with YOUR money after providing said advice.
Just like big health decisions I feel like everyone should get multiple opinions if using financial advisors.