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You NEVER said that. You said simply "FEE Based", and 99 our of 100 "fee based CFP's" charge based on % of money invested. Of the approx. close to 1000 FP's I know of, NONE are strictly "fee by the hour" based. Good luck finding one of those. As you already mentioned, they will not work for you or me, we are small fries. And again, most products pay commissions, PERIOD. It's a RULE and LAW built into the products to keep them "honest". I think that might be the part you don't understand. You can pay a CFP by the hour, but if you invest in many products, he or she (and his/her firm) will often get the magic word: commission! Like it or not, that is the facts.

And I know CFP's that are in jail. Not one, a few! That is meaningless. In all businesses there are good ones, and bad ones. Fee vs commission you will just never get. But I assure you, you have it all reversed. Fee for VERY wealthy folks, non-fee for the rest of us. The hard thing for me to understand is, you actually posted that yourself. Hard to understand why you don't see that?

You can lead them to water, but....

I'm not even sure (and I'm sure nobody else is either!) what your even trying to say there? commission vs fee based has nothing to do with certification. In any case, my wife happens to be a few steps above a "CFP". She left CFP's back in the dust many moons ago. Nobody is dropping the C. LOL!

 

We still have my wifes student loans they were like 35-40k.

My only debt and hers other than student loan is our morgauge.

 

Your exactly right. And that is exactly why I use a CFP for all my investments decisions, and suggest most people do as well. Use a dentist to fix your teeth, use a mechanic to fix your car, use a plumber to fix you pipes and use a CFP to fix your finances.

 

Make sure you check what is available to you on the student loans. They have dropped interest to 0, even cut some of the loans in half, dropped fee's from no payment.... with lots of new laws that were put into place during the recession...

 

I've never hired a mechanic or plumber...some people are capable of managing their own finances.

 

FIXED IT!

Hey, go for it and best of luck to you. I hope it works out.. Sometimes it does, sometimes it doesn't. It's your call.

 

Yup. Not condescending at all. Have a day.

 

I think he was joking...note the smiley face.

Maybe this has been covered but CFP or not I would NEVER solely rely on someone else to invest my funds for retirement, etc. Healthy skepticism and oversight is wise.

That said I split my retirement investments down the middle. Half are administered by a CFP in a SEP. The other by myself. So far I'm doing better than he is by a small margin.

 

ABSOLUTELY! And if your adviser doesn't encourage that find another one. They are always your decisions, they are just "advising" you.

 

I see there's been a lot of lively discussion, especially with regard to whether or not a financial planner adviser broker etc etc should be used.

My take on it is that the vast majority of people in the financial industry, regardless of what they call themselves, are out to make money for themselves at the expense of those that they call their clients. While there may be some that are decent and honest I've never felt the need to use use one.

I agree with most of what jharkin has said. For the average middle class person or family low cost index funds are the best way to go. Set it early and keep adding to it with minor re-balances over time. no need for daily micromanaging. We're talking about real life here, not some movie like Wall Street. All that garbage being thrown in our faces about beating the market is just that..garbage. Pretty much every reputable study that's ever been done has shown that no fund manager, financial planner etc etc has been able to consistently beat the market over a long period of time. It's funny though. Every low information idiot and his mother is chomping at the bit to get rich quickly every time there's some buzz around the IPO of the next great tech company. OOOHHHH GOTTA BUY IT! Either that or they have a hot stock tip from so and so that's going to produce a big pay day. good luck with that.

Money is the name of the game in America. That's understood. But we'd all do a little better by trying a little harder to resist the temptations that would turn us into the materialistic, superficial a-holes that far too many of our fellow Americans have already become. If you can find it within yourself to look that advertising agency in the eye while they're dangling their shiny trinkets in your face and tell them to stick their overpriced garbage where the sun don't shine then you're well on your way to winning the war.

 

The personal savings rate in the US is currently at 5.5%. That's insane. If you make 30k a year you save $135/month. Most people spend more than that on cell phones and/or cable TV.

 

I heard last weak the average home's credit card debt is 7k$. Seems high to me since ours is always 0$.

 

This is exactly where most people are mistaken. The average middle class American's have not clue (and I was one of those!) how to invest money for the long haul. The average middle class America would not even know what a "low cost index fund" is. And to make it worse, as I already point out those so called low index funds, are not always "low index funds" and are also not always the right way to go. There are many other options depending on ones situation. For example, many times Whole life insurance for a young person or family is a much better "investment" than actually investing in the market. Not only will it make you money down the road, you get the added benefit of the insurance. That's just one simple example, there are lots of things to consider.

Beating the market? Nobody is saying they can do that, or advocating trying that. To the contrary, financial advisers do the exact opposite and generally advise you to look at LONG TERM safe investments. Not get rich quick money making schemes. That is where and how they help most people, in the long term including tax consequences... Most people look at their investments very short term and want them micromanaged, which is the exactly opposite of what a proper planner will do.

If your planner is doing any of the things your mentioning (get rich quick, micro managing....), find a new financial planner.

 

I respectively disagree with anyone suggesting whole life insurance as a long term investment vehicle. I have plenty of experience with it.

 

They are sometimes a great investment, especially if your young. Wish I had done it! But like anything else, there are good ones, bad ones, good times and reasons to do it, and bad times and bad reasons to do it. The trick is knowing all those....

Whole Life insurance has a bad name for good reason, there are lots of un-qualified people "selling" them. And I say sell because it's almost like a sale and they often pay high commissions (hence a lot of folks trying teo sell them). But that is why you need a good, honest CFP. Whole Life is not half as bad as it's made out to be, it can actually outperform many investments if done correctly. But again, not for everyone....

 

Whole life insurance is not a good idea for 99.9% of people.

 

Everything I've ever read or learned about life insurance leads me to concur with you lukem.

Machria, you claim that index funds are bad investments for most people yet you haven't offered much specifics with regard to alternatives other than to mention whole life insurance. So if you could please indulge us; I'd like to hear what kind of overall investing strategy you would recommend to the average middle class person. If you could mentions specific products/investments/details that would be great.

Thanks

 

I've seen articles where they claim it's 15k. I've also read that there are a lot of outliers that have like 60k or so that drive up the average. My wife was telling me abotu a nurse she works with who went through a nasty divorce and as a way of making herself feel better went out and bought all sorts of items, running up a 20K credit card bill.

It's one thing if you are forced to run up a cc bill due to hard times such as loss of a job or an illness but I think it would be fairly accurate to say that the majority of people with high/unmanageable credit card debt basically bought a bunch of **** that they didn't need on credit.

 

If we all agree the vast, vast majority of people can't beat the market (index fund)...and you can trade the institutions' index funds for free....and they charge < .15% to buy the ever changing market for you....how can this be BAD advice? It may not be the best but I fail to see how it is bad. Somebody clue me in?

 

I'd go further and claim that NOBODY can beat the market over a sustained period of time, unless you have insider information in which case you're a scumbag or a member of Congress.

Oh how I do hate it when I'm being redundant.