Financial Planning Stuff You Need to Know » Fee-Only

Money Bus Serves Over 100 People in Chicago

Chris Long — Tue, 27 Apr 2010 22:01:29 +0000

Well the numbers are in and the Money Bus (www.yourmoneybus.com) served over 100 people in two days in the Chicago area. The Money Bus was sponsored by the NAPFA Consumer Education Foundation, Kiplingers, TD Ameritrade, and FiLife/WSJ. The bus travels the country and at each stop local NAPFA advisors provide free advice (no product sales!!) to consumers. We answered questions about retirement planning, 401ks, credit card debt, college savings, emergency funds, layoffs, foreclosures, mortgages, etc.

New 401k Fee Disclosure Coming

Chris Long — Mon, 12 Apr 2010 14:22:28 +0000

The Labor department is proposing new 401k fee disclosure rules which will require written agreement in place to provide services to disclose both direct and indirect compensation for plan advisors. This will affect many advisors who do not work with plans as fiduciaries and who’s compensation arrangements are not transparent. For more watch this video.

Index Funds Make Even More Sense in a Downturn

Chris Long — Mon, 03 Aug 2009 21:21:40 +0000

According to the Wall Street Journal many large institutional investors are turning too index funds after finding that actively managed mutual funds have not performed well during the downturn.

They would rather have the guaranteed lower cost of an index fund vs. the unfulfilled promise of better performance through an actively managed fund.

This is the strategy that I use with my clients. Although some actively managed funds will out perform an index fund the percentage that do is actually less than chance would predict. It is also difficult to predict which managers will outperform and index fund year after year. This is especially true for bond funds. According to Morningstar the Vanguard Total Bond Market Index Fund has outperformed 83% of its peers over the last 10-years.

Index funds charge substantially less than their actively managed peers. A low cost index fund costs about 1% per year less than its actively managed peer. That means that the actively managed fund would have to outperform the index fund by 1% per year just to be equal. That is very difficult to do for almost all managers.

How do you who your Financial Advisor is really working for?

Chris Long — Sat, 28 Mar 2009 18:06:19 +0000

Jason Zweig of the Wall Street Journal wrote a nice piece in today’s paper about the arcane world regulating Financial Advisors.

Most advisors are not required to work in your best interests. That includes any advisor at a bank (e.g. Chase, Bank of America, Citibank) or brokerage company (Merrill Lynch, Smith Barney).

Despite the nice ads stating how they really help you out, their approach is similar to a car salesperson that explains the feature of a car and sells you one that is “suitable” for you needs but not necessarily what he things would be best with you. Most people understand that about a car salesperson but not their financial advisor.

The National Association of Personal Financial Advisors NAPFA) has a great series of videos that you can watch at www.focusonfiduciary.com .

NAPFA Launches Financial Education Bus Tour

Chris Long — Mon, 02 Jun 2008 19:43:02 +0000

As part of its consumer education mission NAPFA through the NAPFA Consumer Education Foundation is launching a nationwide financial education cities through the use of a bus outfitted with all the latest interactive learning tools. NAPFA members in each city will hold consumer education events in each city to coincide with the bus tour.

Check the http://www.napfafoundation.org/ website for updates on when the bus will be coming to you.

NAPFA Conference Report

Chris Long — Thu, 29 May 2008 16:25:13 +0000

Ok, I normally don’t blog about industry stuff, but I just came back from the National Association of Personal Financial Advisors (NAPFA) National Conference in Long Beach, CA.

The conference was the best yet. For those of you not in the industry, the NAPFA national conference is the premier events for Fee-Only advisers. We attend sessions on all aspects of financial planning to keep up to date on the industry and to keep our skills sharp. We also have the opportunity to meet and speak with well over 100 vendors in the industry representing anything from mutual funds to financial planning software. It’s a great opportunity to take some time to learn what’s out there.

Why “Independent” Financial Advice can still be tainted, only a Fiduciary Advisor puts your Interests First

Chris Long — Wed, 09 May 2007 18:53:09 +0000

I recently participated in a focus group of financial advisors. About half of the participants were Fee-Only advisors who have a fiduciary relationship with their clients, and the other half were independent brokers. The “independent” in this case meant that they were not representing a large broker/dealer like Merrill Lynch or Smith Barney.

These brokers were Fee-Based, which means they charged a fee but still received commissions based on the products they sold.

A telling difference between the Fee-Only advisors and the brokers came when the moderator asked what type of “rewards” would you like to receive in exchange for doing business with a mutual fund company. The Fee-Only advisors replied either “nothing” or “more detailed information on the company’s web site” The brokers preferred to receive merchandise: golf shirts, hats, etc.

To me this clearly shows who will work in your best interest and who may not. For more information on fiduciary advisors go to www.focusonfiduciary.com