Brokers add no value

Jul 18, 2006 3:04 pm

Good thing I sell annuities and not MF's.

This study is a farce. It says the FUNDS do better. It's completely silent on how advisors do managing the funds over how the cheapskates do managing them.

Personally...I think all MF's suck.

Jul 18, 2006 3:26 pm

Interesting comments.

From the article:

"It is important to note that the authors are not anti-advisor. Remarkably, they had the cooperation and support of some of the largest and most respected industry groups and research organizations in America in working on this study. Further, the authors go out of their way to point out that financial advisors may offer significant "intangible benefits."

and

"The methodology of the study is rigorous and sound. The massive amounts of data involved have been analyzed for years from many different angles. Researchers from major universities around the country have contributed guidance and expertise to the authors. Morningstar and Financial Research Corporation contributed data (although the findings of the study and the conclusions drawn can only be attributed to the authors.) In addition, staff members of the Investment Company Institute and representatives of various mutual fund companies assisted the authors. This is not a biased study."

Jul 18, 2006 3:29 pm

The BCT study also found that the clients of advisors are less educated and have lower net worth than do-it-yourselfers. 

Granted, I didn't conduct a study and I'm not here to profit by helping you counter said study, but I've found the above to be 180 degrees out of reality......

Jul 18, 2006 3:37 pm

[quote=cranky sob]

Good thing I sell annuities and not MF's.

This study is a farce. It says the FUNDS do better. It's completely silent on how advisors do managing the funds over how the cheapskates do managing them.

[/quote]

Correct. The authors themselves say they get their data from FUND level info, not client account level info.

Jul 18, 2006 7:00 pm

So this study doesn't matter to you and it's business as usual?

You are happy to ignore what the (pro-advisor) Morningstar author of the article and the media had to say?

Is anyone here planning to write a rebuttal?

M

Jul 18, 2006 7:29 pm

[quote=William]

Is anyone here planning to write a rebuttal?



[/quote]



Go away troll.
Jul 18, 2006 7:32 pm

[quote=William]

So this study doesn’t matter to you and it’s business as usual?

You are happy to ignore what the (pro-advisor) Morningstar author of the article and the media had to say?

Is anyone here planning to write a rebuttal?

M

[/quote]

Morningstar is PRO-adviser?

You're a fool!!
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Jul 18, 2006 7:55 pm

[quote=William]

So this study doesn't matter to you and it's business as usual?

You are happy to ignore what the (pro-advisor) Morningstar author of the article and the media had to say?

Is anyone here planning to write a rebuttal?

M

[/quote]

As joe pointed out, MorningStar isn't "pro-broker". Additionally, the author doesn't work for MorningStar. Finally, the "media" has been making money for years selling magazines that feature nothing more than “no-load” fund advertisements and a rotation of the “your broker is a thief”, “You don’t need an advisor, buy our TEN STOCKS YOU HAVE TO OWN NOW edition instead” and “Your broker is a thief, Second Edition” for as long as I can recall.<?:namespace prefix = o ns = "urn:schemas-microsoft-com:office:office" />

Should a client walk in my office and present me with a copy of that study, rather than explain to them that it’s based not on client accounts, but on fund money flows, I’ll simply ask him; “OK, how many funds are in the portfolio I run for you?”

His answer will be; “Oh, that’s right, none”….

Anything else on your mind?

Jul 18, 2006 8:04 pm

He's writing for Morningstar and he's an advisor. He's taking a pro-advisor stance in the article.

No, nothing else on my mind. You pretty much lived up to what I thought the response from advisors would be. I have some good quotes now. Thanks.

M

Jul 18, 2006 8:21 pm

And of course, now the article link is blown up by the board moderators so we can’t read it or rebut if we even wanted to.

Jul 18, 2006 8:26 pm

[quote=William]

He’s writing for Morningstar and he’s an advisor. He’s taking a pro-advisor stance in the article.

No, nothing else on my mind. You pretty much lived up to what I thought the response from advisors would be. I have some good quotes now. Thanks.

M

[/quote]

You're going to use anonymous quotes from an internet bulletin board?  Wow, you're editors will be very proud of you!!!
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Jul 18, 2006 11:03 pm

He doesn't work for MorningStar, MorningStar isn't "pro-broker" by any stretch of the imagination and he "advises" reps. Furthermore, his “advice” about using a couple of closed-end bond funds could only be considered useful to the most junior of advisors. In fact there’s a pretty good likelihood that you’re here drumming up business for said “advisor”.

No, nothing else on my mind. You pretty much lived up to what I thought the response from advisors would be.

I doubt you thought;

a) advisors were smart enough to understand how little a study based on mutual fund cash flows instead of client account balances really matters.

b) advisors were NOT selling mutual funds to every client they work with I doubt

c) that advisors care little about what groups (the financial press and academics) that have been hostile towards us for years are now saying. The article itself quotes Clements, the WSJ columnist who’s been writing his “you don’t need an advisor, you just need my column” piece for years.

As someone who doesn’t use mutual funds, just what would you suggest I do about this “study” aside from adding it to the "dumb s*%t I've read recently" pile?

I have some good quotes now. Thanks.

No doubt you think anonymous quotes on the internet are worth as much as the "study" you brought us.

[/quote]

Jul 19, 2006 1:55 am

Nicely done  Mike.<!–
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Jul 19, 2006 2:39 am

If you want to read the study, it is:

"Assessing the Costs and Benefits of Brokers in the Mutual Fund Industry" by Daniel Bergstresser, Peter Tufano and John MR Chalmers.

I don't have editors. I show your quotes to investors. 

 "In fact there’s a pretty good likelihood that you’re here drumming up business for said “advisor”.

This kind of comment is usually made by the most junior of advisors.

It really is fascinating to see your reactions. I actually thought I would get some thoughtful responses. My bad.

Jul 19, 2006 3:30 am
William:

I show your quotes to investors.]



And?
   
[quote=William]

It really is fascinating to see your reactions. I actually thought I would get some thoughtful responses. My bad.[/quote]

Tell us, William, how long have you been in production?

Do you realize what a complete fool you have made of yourself?

Jul 19, 2006 12:14 pm

[quote=William]

If you want to read the study, it is:

"Assessing the Costs and Benefits of Brokers in the Mutual Fund Industry" by Daniel Bergstresser, Peter Tufano and John MR Chalmers.

You should read it so you can counter it. Its weaknesses are obvious.

I don't have editors. I show your quotes to investors.

Anyone care to make a bet "William" doesn't show all the quotes, just the ones that fit his agenda?

"In fact there’s a pretty good likelihood that you’re here drumming up business for said “advisor”.

This kind of comment is usually made by the most junior of advisors.

That kind of claim is usually made by trolling hacks....

It really is fascinating to see your reactions. I actually thought I would get some thoughtful responses. My bad.

So, it's not "thoughtful" to point out that;

1) MorningStar isn't "broker friendly" (unless by "friendly" you mean "sells a do-it-yourself-service")

2) The writer of the article was attempting to drum up business for his "follow me and I'll show you (via my newsletter and bogus "accreditations") how to counter this "news"

3) That academics have been hostile to brokers (and active management, for that matter)for ages

4) the "study" didn't look at CLIENT ACCOUNTS it looked at MUTUAL FUND FLOWS

5) That many, many brokers know better than to use funds to begin with

6) That the "study" made the hysterical claim that "do it yourself types" are smarter and of high net-worth than people using brokers?

7) That the writer’s “advice” to use closed net bond funds instead of mutual funds wouldn’t be news to anyone that’s been licensed more than 6 months?

[/quote]

Here’s my guess; either “William” is a troll for the hack that wrote the “buy my newsletter and avoid this mess” article OR “William” is a part of that hard-core “all brokers are thieves, I’ve come to understand the market and the business of financial advice in the past 6 months and now know everything and anyone not buying Vanguard index funds is a fool” type would wouldn’t have been satisfied by any response short of a complete confession of unethical behavior, massive fraud and an offer to cut his grass for free for the rest of our natural lives.

Jul 19, 2006 12:16 pm

net = end

would = who

Jul 19, 2006 12:45 pm

Having slapped "William" a few times, I would recommend you read the study. In my searches I found a draft of it from the 90's, so I wonder how it's "news" today.

I also found a fairly reasoned response to it from a columnist who gets paid to give "free" advice to tens of thousands of people he has no clue about (I've always found "broker slurs" from people like that to be a perfect example of irony). He suggested that people "test" their FA by asking questions like "Emerging markets are hot, why shouldn't we sell everything about buy that"?

If that's the kind of question you'll get wrong and thereby lose the respect of the client, you deserve the fall out.

Jul 19, 2006 3:04 pm

"In my searches I found a draft of it from the 90's, so I wonder how it's "news" today. "

Yes, that does seem strange. Especially since the data went through 2002. Perhaps you should look further, or ask for help.

How sad that I present a study that deserves consideration and what you are interested in doing is 'slapping me'.

As far as the 'reasoned response', the article 'Is Your Broker Just Making You Broker?' (MONEY Magazine), is not much of a response at all, let alone 'reasoned'. It mentions the study but does not draw conclusions or challenge or even discuss the study.

But hey, maybe your definition of 'reasoned response' is much different than mine.

Jul 19, 2006 3:17 pm

[quote=William]

"In my searches I found a draft of it from the 90’s, so I wonder how it’s “news” today. "

Yes, that does seem strange. Especially since the data went through 2002. Perhaps you should look further, or ask for help.

How sad that I present a study that deserves consideration and what you are interested in doing is 'slapping me'.

As far as the 'reasoned response', the article 'Is Your Broker Just Making You Broker?' (MONEY Magazine), is not much of a response at all, let alone 'reasoned'. It mentions the study but does not draw conclusions or challenge or even discuss the study.

But hey, maybe your definition of 'reasoned response' is much different than mine.

[/quote]

Maybe this is a different study and an article written by a different journalist.  But, it follows a script that has been used over and over for at least a decade....nothing new.

Then again you most likely have been in the business for about 2 months, so how could I expect you to have any sense of perspective?
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Jul 19, 2006 3:40 pm

[quote=William] <?:namespace prefix = o ns = "urn:schemas-microsoft-com:office:office" />

"In my searches I found a draft of it from the 90's, so I wonder how it's "news" today. "

Yes, that does seem strange. Especially since the data went through 2002. Perhaps you should look further, or ask for help.

I sit corrected. The draft's date was 2004. How that makes it "news" today is still a mystery...

How sad that I present a study that deserves consideration and what you are interested in doing is 'slapping me'.

Slapping you had to do with your obvious trolling efforts. Just what is it about a "study" that looks at mutual fund cash flows and not client accounts and then attempts to draw conclusions about the value brought to clients of everyone working in the industry that you feel deserves “consideration”?  Just what of the many bullet point rebuttals I produced didn’t make sense to you? I notice you didn’t bother to address a single one of them….

As far as the 'reasoned response', the article 'Is Your Broker Just Making You Broker?' (MONEY Magazine), is not much of a response at all, let alone 'reasoned'. It mentions the study but does not draw conclusions or challenge or even discuss the study.

I suppose this just isn’t going to sink in, but the methodology of the study wasn’t the point of the article, the application of the study’s conclusion was. IOW, just what is someone using an advisor to do with the information the “study” (chuckle) produced as it attempted to judge the value brought to clients by everyone the authors labeled as “brokers” based on nothing more than mutual fund cash flows?

 

 

But hey, maybe your definition of 'reasoned response' is much different than mine.

Given that you think MorningStar is “pro-broker” I think it’s pretty obvious we differ on a number of definitions.

You’ve now heard from a few people laboring in the fields on the subject of your “study”, how about offering your own opinion on it?

 

[/quote]

 

Jul 19, 2006 3:45 pm

[quote=mikebutler222]

The BCT study also found that the clients of advisors are less educated and have lower net worth than do-it-yourselfers. 

Granted, I didn't conduct a study and I'm not here to profit by helping you counter said study, but I've found the above to be 180 degrees out of reality......

[/quote]

Say, "William", while you're working up your next post, how about addressing the fact that the study's claim would be contradicted by the real world experience of every FA I've ever met?

Jul 19, 2006 7:37 pm

This is such a silly argument I can't even understand why everyone gets so up in arms about it.  The question always posed is: "Can your advisor invest your money better than you can?", which isn't actually the point.  Some people definitely would have made themselves a few bucks more than their advisor made them.  I have no doubt of this.  Some of my own clients have brought things to my attention that made a lot of sense for their portfolio's that I'd never considered.  Again, not the point.

The point is that although your money is valuable, your time is the most valuable thing you have, and in order to make the most of it you outsource everything that's not your specialty.

If my clients did all their own investing, which I know many are intelligent enough to do, they'd have to give up something else that they spend time on.  Less time at their job would give them less money to invest.  Should they spend less time with their family?  Less time travelling?  Less time reading a good book?

My clients utilize my services because they trust that I'll do well for them, they know that their interests and mine are aligned, and they like me.  If any of those things aren't true they're free to find another advisor and I've never given them a hard time about leaving me (and I've gotten a few back who simply though the grass would be greener on the other side and found out that grass is just grass, wherever you are).

Some people will want to take their time and do their own investing.  Some will call me to do it for them and spend more time with the things that are important to them.  I'll outperform some and some will outperform me.

When a new client comes to my office, I NEVER tell them that I can invest better than they can; how the heck do I know how the investments they haven't made yet will do?  I can simply take this one task, which is a VERY time consuming task, off their hands if they'd like me to.

There's really nothing more to it than that.

Jul 19, 2006 7:40 pm

Thanks Freedom…you just hit the nail on the head.

Jul 19, 2006 8:07 pm

[quote=dude]Thanks Freedom.........you just hit the nail on the head.[/quote]

Agreed.  One other point is that some people simply do not have any interest in learning enough about investing to do it themselves.

Jul 19, 2006 8:09 pm

I agree the time issue is part of it, inclination is another. I also wouldn't tell a client I'll do better investing than he will, although I'm certain that that's the case because there's no need to insult the client.<?:namespace prefix = o ns = "urn:schemas-microsoft-com:office:office" />

 

 OTOH, there's not much that can be gained from a "study" that claims that "brokers" (whatever they are) add nothing to a relationship because mutual fund cash flows, and not client account balances suggest something. It assumes that every FA uses funds, every FA is of equal ability and uses the same amount of due diligence and every client has the same needs in terms of financial goals.

 

If you really need to see the weaknesses behind the “one over the world” approach the academics used to reach their dubious conclusions about you and your industry, take a look at page two, second paragraph and page eleven where they insert several “we can’t measure” caveats that you can drive a bus through.

Jul 19, 2006 8:14 pm

Freedom, outstanding post. I always think about the yard guy or oil change guy. What they do isn’t difficult or hard. It’s just that I would rather have someone else do that and I can have that time to do what I want.

Jul 19, 2006 8:24 pm

You folks are pretty quick to surrender to the idea that your years of study, effort and attention bring nothing to the table that can’t be gained by reading Money Magazine and catching a couple of episodes of Cramer’s TV show. That doesn’t sound like a profession as I’d define one.

Jul 19, 2006 11:54 pm

Actually Mike, you're right.  Perhaps I was overgeneralizing a bit.  But much of those years of study is to prepare us to invest for a wide variety of clients, as opposed to one (ourself).  How much could we have shortened the learning curve if we only had to study enough to invest our own money and not anyone else's?

Of course, when I first started out and WAS only investing for myself I did much of my learning through trial and error.  Now THAT was a heck of a lot more expensive than letting an established FA invest for me!  Anyone else put money into Putnam's OTC & Emerging Growth fund at the end of '99 beginning '00?   I never sold a share of it.  In fact I keep that fund ticker (POEGX) scrolling across my computer screen to remind me that nobody's perfect...

Jul 20, 2006 12:18 am

[quote=FreedomLvr]

Actually Mike, you're right.  Perhaps I was overgeneralizing a bit.  But much of those years of study is to prepare us to invest for a wide variety of clients, as opposed to one (ourself).  How much could we have shortened the learning curve if we only had to study enough to invest our own money and not anyone else's?

Of course, when I first started out and WAS only investing for myself I did much of my learning through trial and error.  Now THAT was a heck of a lot more expensive than letting an established FA invest for me!  Anyone else put money into Putnam's OTC & Emerging Growth fund at the end of '99 beginning '00?   I never sold a share of it.  In fact I keep that fund ticker (POEGX) scrolling across my computer screen to remind me that nobody's perfect...

[/quote]

Double That! POEGX. I 'inherited' some accounts (less than $2MIL) and every account had that -along with Voyager I & II.

The day I found my 'value' as an 'advisor' was 09/11/01. My BOA and I were on the phone for three days calling every single client. We told them that when the market re-opened it was likely to be an ugly downturn, but not to panic.

We made many more phone calls during the next week. We didn't lose one client. And not even one asked to be out of the market.

Jul 20, 2006 1:32 am

"You folks are pretty quick to surrender to the idea that your years of study, effort and attention bring nothing to the table that can't be gained by reading Money Magazine and catching a couple of episodes of Cramer's TV show."

The thing is, there are many other choices besides reading Money Magazine and Cramer's TV show. Today, there are excellent resources for people that want to do their own investing. Have you ever honestly looked at them?

And those fees! I meet people on a regular basis that are paying 2%, 3%, 4% in fees! What in the world kind of value to do have to provide for that kind of cost.

Look at the results of this study.......do-it-yourselfers outperform financial advisors....financial advisors add no value......advisor-selected funds underperform funds that investors select on their own....the scientific evidence shows that many of the other advisors in America not only underperform indexes--they underperform what most people do on their own if they don't have an advisor.........advisors do not provide superior asset allocation.....investors pay billions of dollars a year for this underperformance......

Are there really any surprises?

Jul 20, 2006 1:59 am

I will just listen to Jim Kramer for now on then…

Jul 20, 2006 3:40 pm

"You folks are pretty quick to surrender to the idea that your years of study, effort and attention bring nothing to the table that can't be gained by reading Money Magazine and catching a couple of episodes of Cramer's TV show."<?:namespace prefix = o ns = "urn:schemas-microsoft-com:office:office" />

The thing is, there are many other choices besides reading Money Magazine and Cramer's TV show. Today, there are excellent resources for people that want to do their own investing. Have you ever honestly looked at them?

Sure, I read them because I often have to point out to clients the errors in what they’re read, or how it doesn’t apply to their situation or the dismal record of the person doing the writing. And don't even get us started on the hacks that write newsletters for a living...

I’ve also noticed that any well stocked library carries a law library and a medical library. I can access information on law and medicine on any number of websites, I can watch legal and medical themed TV. There’s just no shortage of information. OTOH I’m not convinced that most people shouldn't use those “excellent resources” to practice law or medicine. Perhaps you disagree.

Gee, look at all the money I can save (I’d say, if I were someone like you that knows the cost of everything and the value of nothing) if I wrote my own estate plan. Then again, what are the costs if I get it wrong?

If you want some real fun, ask most any FA in the biz over five years about some of the horror stories former “do it to yourselfers” brought to them after they realized that managing their finances on their coffee break with a copy of Money Magazine and an Etrade account isn’t necessarily a wise idea. You'll have to block out a few hours for that.

 

And those fees! I meet people on a regular basis that are paying 2%, 3%, 4% in fees! What in the world kind of value to do have to provide for that kind of cost.

Seems to me you’re grossly exaggerating costs here. But, as to value, all it takes to overcome even the exaggerated costs you’re talking about at 3 or 4% is to keep a client from committing financial suicide, like going 100% to the hot dot tech funds in 1999 (All my friends are making 69% a quarter in them") or 100% to cash when they get rattled in mid-2000. Showing them how to reach their financial goals (which can’t be done via a website or newspaper column where individual situations can’t be discussed in detail), via wise, consistent investments, savings and planning.

Here’s a quick example that overcomes the exaggerated fees you’re talking about, getting clients out of mutual funds with embedded cap-gains before they got a massive and unexpected tax beating in 2000. Then again, that’s the sort of “intangible” your study admitted they couldn’t measure, but had massive financial implications for my clients.

 

Look at the results of this study.......do-it-yourselfers outperform financial advisors....financial advisors add no value.....

That’s the problem with putting “studies” in front of people like you. The study you provided didn’t say what you’re now claiming. It came to some very, very narrow conclusions using (imho) dubious statistics (looking only at mutual fund cash flows, not client accounts) and ignored the vast majority of the tasks that advisors provide for their clients (those "intangables" they admitted they couldn't measure). But, in the hands of people like you, it “proved” a great many things that even the authors would tell you they didn’t come close to proving.

 

Are there really any surprises?

There sure weren’t any about you, pal. You were spotted as a troll, you protested that your “study” deserved some “consideration” and when pressed on it, you exposed yourself for what we all knew you were from <?:namespace prefix = st1 ns = "urn:schemas-microsoft-com:office:smarttags" />Jump Street.

Here’s some news for you; “studies” “proved” long ago that "brokers" don’t “help” and that even active asset management doesn’t “help”, yet every real pool of money you can name has some active management and some advisors involved. Now, why is that so?

[/quote]

Jul 20, 2006 4:24 pm

[quote=William]

Look at the results of this study.......do-it-yourselfers outperform financial advisors....financial advisors add no value......advisor-selected funds underperform funds that investors select on their own....the scientific evidence shows that many of the other advisors in America not only underperform indexes--they underperform what most people do on their own if they don't have an advisor.........advisors do not provide superior asset allocation.....investors pay billions of dollars a year for this underperformance......

Are there really any surprises?

[/quote]

You talk a great deal about what "do-it-yourselfer's" can do positively for themselves "superior asset allocation", for no fees. Does your study (which I have not read) mention what can happen when DIY goes wrong for investors? Have you personally looked into the eyes of any of those people?

I cannot recall how many investors we have met in past years who were determined to DIY -- because they "had it dialed in". Whether it was a magazine, book, computer program, internet subscription, a seminar they'd attended, television guru they watch religiously they were planning to manage their own retirement accounts.

E-Trade and the tech bubble literally made paupers of a retired couple we met in 2000, who DIY'ed their entired retirement account right away! Taking advice from Money magazine on "the 10 Stocks you MUST buy NOW!" is like taking advice from the kid in Home Depot on tiling your floor who was flipping burgers a week ago.

You talk about financial advisors adding value. I cannot speak for others, however with all of our clients we follow a disciplined strategy of managing client expectations through establishing financial goals, and selecting investments to match those goals. Every portfolio review consists of re-evaluating those goals, and the investments.

Something we discuss with all clients, is the fact that they are emotionally tied to their money. Which will cause them to make irrational decisions in times of crisis, emotional instability, and economic upset. We, are not emotionally tied to their money and  can offer objective advice, while still allowing them to do as they wish.

It sounds as if the study was comprised of people who had very negative relationships at one time and were burned very badly.

Jul 20, 2006 5:02 pm

Oftentimes it’s the people who respond to the studies that skew it.  It’s going to be the people that do the best on their personal investing that are the quickest to brag about it.

Jul 20, 2006 5:20 pm

[quote=William]

And those fees! I meet people on a regular basis that are paying 2%, 3%, 4% in fees! What in the world kind of value to do have to provide for that kind of cost.



Look at the results of this study…<SPAN =highlight>…do-it-yourselfers outperform financial advisors…financial advisors add no value…

[/quote]



In what capacity do you meet these people on a “regular” basis? You clearly are not registered and experienced. You claim not to have editors. Prehaps you are a savior. Prehpaps the law office you work in is preparing for battle in an upcoming case?



What in the world kind of value? Well, “William”, you stated from the study you quoted that the value is significant…





[quote=William] Further, the authors go out of their way to point out that financial advisors may offer significant “intangible benefits.”[/quote]



significant



Do you see how foolish you look “William”?



That is just one of your many follies. I don’t have time to answer everyone. Others have pointed out your other follies. You see, “William”, I have other interests that occupy my time other than trolling message boards stirring up conflict. It must be sad to be you, “William”. Your desperation is showing.



Do you see how trollish you look “William”?



After your thread “William” we are left wondering, are you more trollish than foolish or more foolish than trollish?



Jul 20, 2006 6:56 pm
William:

And those fees! I meet people on a regular basis that are paying 2%, 3%, 4% in fees! What in the world kind of value to do have to provide for that kind of cost.



Here is a quote from that article you mentioned...

[quote=William]

As far as the 'reasoned response', the article 'Is Your Broker Just Making You Broker?' (MONEY Magazine),

[/quote]

"Left to their own devices, investors are prone to engage in all kinds of bad behavior,..."

"William" I question if you even graduated high school. I would like to meet the person that keeps you employed.

Do you see how foolish you look, "William"?
Jul 21, 2006 4:00 pm

Ad hominem: The last resort of those who know they’ve lost the debate.

Jul 21, 2006 4:04 pm

[quote=William]Ad hominem: The last resort of those who know they've lost the debate.[/quote]

Actually, no.  That is Godwin's law.  No one has brought up Hitler.....yet.

If it were possible to obtain a link to the original article, I would be interested to see what everyone is blathering about.

Jul 21, 2006 4:39 pm

[quote=William]Ad hominem: The last resort of those who know they've lost the debate.[/quote]

This from the guy that can't respond in any fashion other than to distort the study he provided.... call me when you can respond a single bullet point rebuttal addressed to you.

Jul 21, 2006 4:41 pm

[quote=babbling looney]

[quote=William]Ad hominem: The last resort of those who know they've lost the debate.[/quote]

Actually, no.  That is Godwin's law.  No one has brought up Hitler.....yet.

If it were possible to obtain a link to the original article, I would be interested to see what everyone is blathering about.

[/quote]

BL, google the name of the study "William" provided and look for the MorningStar article that references it.

Jul 21, 2006 4:56 pm

[quote=William]Ad hominem: The last resort of those who know they’ve lost the debate.[/quote]

Hey sure buddy…if it makes you feel better just go ahead and keep thinking that, ok?
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Jul 21, 2006 5:36 pm

The “Article” reads more like an advertisement than any credible piece of literature.  Evidently “William” is one of those brilliant people who believes everything he hears on TV. And wasn’t it Money Magazine in the late 90’s that listed World Com and Enron as Top Stocks to own for the next decade.    

Jul 22, 2006 12:06 am

Some great posts here...

I'll throw in my two cents with a true story that I've shared with prospects who ask me what I bring to the table.  To make a long story short, I had a fellow come to me in 1999 ready to retire.  His buddy was also retiring at the same time and was trying to convince my prospect to go it alone with a hot group of no-load funds.  I spent some time with the prospect, showing him all the similar high P/E large cap growth holdings in this family's funds and discussing a more reasoned investment approach for his age and risk profile.  The story has a very predictable end.  Although my balanced model portfolio didn't have the impressive track record that Janus had in the 90's, my client's rollover account averaged about 7% from 2000-2002 using a portfolio of bonds and value stocks, while his buddy eventually cashed his Janus funds in 2002 with about 30% of his original investment intact (as told to me by my client).

I'm sure there are a lot of similar stories out there.  If your advisor isn't beating your performance, maybe you don't need an advisor...

...but it's more likely you just need a better advisor.

Jul 22, 2006 3:08 pm

No such thing "William"



You see, we are actually licensed in the securities business. You, clearly, are not.



So to level the playing field, once again, Where do you meet these investors on a “regular” basis as you claim?



As others have pointed out, there are many flaws in your study. In fact, in college, I had a course where the title of one of the books was something like, Lying with Statistics.



To come here and start a thread titled Brokers add no value and then referrence an article that says advisers offer significant value tells us that you lack basic understanding of the english language or are a troll.

Jul 22, 2006 11:12 pm

My study?

The study was done over several years by Daniel Bergstresser, Harvard Business School, John Chalmers, University of Oregon and Peter Tufano,  Harvard Business School; National Bureau of Economic Research (NBER)

Further, according to the Morningstar article....

"The methodology of the study is rigorous and sound. The massive amounts of data involved have been analyzed for years from many different angles. Researchers from major universities around the country have contributed guidance and expertise to the authors. Morningstar and Financial Research Corporation contributed data (although the findings of the study and the conclusions drawn can only be attributed to the authors.) In addition, staff members of the Investment Company Institute and representatives of various mutual fund companies assisted the authors. This is not a biased study. "

I'm sure the authors would appreciate your rebuttal. Really. It looks like they are trying to do a very through job of it.

Jul 23, 2006 12:12 am

What's the point?  So the average E-trade account lost something like 80% during 2000-2002.  Mutual fund investors got scorched following magazine reco's.  Investors got slaughtered following various brokerage firm/advisor recommendations.  etc etc etc

As a "good" advisor, I think one of your main duties is to protect the clients from the firms we work for.  Yeah, that sounds facetious, almost ridiculous.  Yet it's true in my experience.  Wall Street will almost always offer products/ideas when it is most convenient (i.e. easiest to sell) for the firm.

Advisors that have properly allocated their clients' holdings, prevented them from getting too emotional (usually at the worst times) and constantly monitered/reviewed/made tactical moves at the appropriate times has served their clients well. 

Jul 23, 2006 2:32 pm

Having finally read the article. The article is not the study and only briefly references the actual study.  It seems to me that the purpose of the writer was to try to get people to contact him and buy into some sort of program/book/seminar that will help us combat the terrible news that people can lose money in the market even if they have a broker.  Until I see the actual figures from the study I remain sceptical.

And by the way my clients did not lose any siginificant money in the most recent downturn in the market (2000) because of the way we had positioned them by keeping them from chasing the pie in the sky returns of tech funds and tech stocks. In fact many made money in most cases by moving some into bonds when the average yield on a AAA bond was 8% or better and then selling those appreciated bonds approximately a year ago.

The value of having a broker, in addition to trying to make money in down markets, consists of many more things.  One of which is clearly illustrated in the thread about EIAs and how we has brokers can advise our clients on the pitfalls of this and other strategies (scams) that are flogged by the insurance companies and the broker world.

As The Judge says our job is to manage not only our client's money but their emotions. 

By the way when a client passes away, I wonder how much help the beneficiaries get from Etrade in transfering assets and locating stock certificates that need to be renamed? Not to mention the emotional  comfort and hand holding that is part of the grieving process that we as brokers help our clients go through.

Jul 23, 2006 4:42 pm

[quote=babbling looney]

By the way when a client passes away, I wonder how much help the beneficiaries get from Etrade in transfering assets and locating stock certificates that need to be renamed? Not to mention the emotional  comfort and hand holding that is part of the grieving process that we as brokers help our clients go through.

[/quote]

How difficult can it be for somebody at e-Trade to say, "What is your address, we will send you the forms that are necessary to change the name on the account?"

Jul 23, 2006 9:28 pm

Well that is nice if all the assets are in the brokerage account. Often that is not the case.

Right now I am working with heirs of one of my clients who had a brokerage account with me in a Trust account. In addition there were several holdings of various stocks at the transfer agent in her individual name and a very few stock certificates that were squirreled away in the safe deposit box in her deceased husband's name and her and his name as joint tenants. They never got around to changing them into the trust when he died just last year and like many clients they don't always tell us everything.  The heirs aren't sure what to do with the I bonds and she even still had a few bearer bonds (you know the old clip the coupon bonds).  They were pleasantly surprised when we discussed the step up in value rules of the investments and the real estate holdings. 

Then there is the question of the real estate holdings and the rental properties.  True those aren't in a brokerage account, but they are asking for my input on the advisability of renting, selling out right or how they should hold those properties in the future.  Since the attorney who drew up the parents trust also is long gone, I made a few referrals to some lawyers in the area who I have dealt with in the past and trust as well as a recommendation on a CPA firm to help them with these issues.

We also discussed the life insurance policy. The issuing agent had retired and the original company had been bought by a larger insurance company and renamed.  I was able to put them directly in contact with the new firm's claims desk to expedite them being able to make a claim.

This should all be a snap for Etrade to handle.  Nothing quite as warm and fuzzy as an unknown person on the other end of an 800 number and some forms in the mail.  Of course since I have had a relationship with the parents for years, I was able to bring some personal stories to the table and discuss the wonderful people that their parents were and how they will be missed by their friends and the community as a whole.  I 'm sure they would certainly get this treatment from Etrade. 

You may not be able to put a monetary value on these services, but you cannot deny that they have value.  Maybe not for everyone and especially for those people who are only about the money.  For my clients and their families.......they do.  This is why I will be retaining those assets and getting new accounts from the heirs.

Feb 12, 2014 3:48 pm

You should make sure your advisor is adding value. We use a selection of low cost index tracking ETFs and Mutual Funds. For the smaller investors (of say $5k) we have a service called “Seedlings” see my blog: http://www.ivlions.com/a-new-financia…ller-investors/