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Guy?! What! what! If you’ve read even a few of my blog posts, you already know the answer. I’ll even ignore the word “guy” for a while, that part of the answer being just too obvious. What’s sparking my ire is 45 pages in the November Chicago magazine (I read it at the doctor’s office) of sycophantic advertorial crap about the top wealth managers in the Chicago area. I hope people aren’t stupid enough to identify this as actual reportage, although that’s certainly what the magazine and the “winners” are hoping for, and shame on Chicago magazine. Oh shucks, I guess they’ll never feature me now.
Okay, for 35 pages I’ve looked at smiling white-guy suits (with some chicks thrown in, mostly blondes and under 40) declaring how they give “unbiased advice”, are dedicated to the “best interests of the client” and talk about how hard they work and how they’ll work to build your wealth. Yeah, right, but they’re gonna work to build THEIR wealth a lot harder, I guarantee. Because surprise, surprise, every one of them as far as I can see is a stock broker(okay, maybe a CPA or attorney thrown in). They have no legal duty to work for your best interests, only to recommend “appropriate” investments. So let’s see what these nice guys will cost you.
I’m going to give them the benefit of a doubt and assume they’re going to recommend fairly reasonable investments to you, say, a large cap mutual fund and not some insane hedge fund scheme or Ponzi-scheme non-traded REIT. Okay, so this lovely fund carries a 5.75% load (par for the course if the fund is called Lord Abbett or Putnam or Oppenheimer–bet you’ve heard those names if you’ve ever talked to a broker). Plus, the Lord Putheimer fund has yearly management fees of, let’s be nice, 1.5%. Invest a million bucks and you’re going to lose 7.25% right off the bat–$72,500. No wonder those guys are smiling. Are you? Do you think the Lord Putheimer fund is going to make you that much this year?
In contrast, I’ll meet with you on an hourly basis. If you have the most complicated investments around (you were working with a broker, right?), you can still take a zero off that number and cut it in half–it’s highly unlikely that advice alone would cost more than $3,500, and plenty of clients pay far less. Want investment management? My fee, which includes a financial plan and an actual person who will talk to you without canned junk to sell you and do most of the worrying for you, would cost you $8,000 for that million, billed over a year. Not cheap, but not $72K, either. The funds I recommend generally have management fees in the range of 0.17% to 0.50%, so you’ll get professional management and investments at less than their funds alone nick you for. I don’t collect any commissions, or referral fees. I do get some free brochures from Vanguard, pens from Scottrade, and a refrigerator magnet now and then, which I can assure you are compelling my recommendations. Not. I’ll even wear a lavender tie if it’ll make you feel better. I draw the line at blonde.
But back to the original question. I don’t think nice is the important quality here. There’s no nice way to tell you your dog is dead. You are paying for and should be getting honest advice–the truth–not some suck up that will pat you on the back as he picks your pocket. The advisor who really has your best interests at heart will tell you the truth about any stinkers in your investments, help you face what you need to, and move forward with investments that have a reasonable chance at success without skinning you alive. THAT will be a lot nicer when you look to your dough for retirement, or sending your kid to college. A lot nicer than visiting that nice guy in his very nice office.
