Did your financial advisor called you up this summer to take some profit?

[funkylist]

Mine didn't.

[asdfvcx]

Did he call you anytime in 2007 and advise you to take some profits? How about 2006? 2005? 2004???

If not, why would you expect him to call in the summer of 2008? If you believe that financial advisors has some magical insight into the movements of the markets and can predict crashes, you're unfortunately quite wrong. They're just as good at market timing as the rest of us (which means they're not.)


Now, if your portfolio was outside the asset allocation bounds that both of you agreed on, then maybe you have something to complain about. But if it was outside the range in 2008, it probably was outside the range for the last couple of years. So, this wouldn't be a new problem with your advisor.

[tng11]

Yes, my CIBC advisor called me up sometime in May to take profit on some investments. It was only $5,000 though.

[Thalo]

If you started investing in 2003 with a 60%/40% ratio of equities to income then in 2007 you would be something like 80/20 because your equities outgrew your fixed income and a good advisor would tell you to rebalance back to 60/40 to reduce your risk exposure back to your proper risk tolerance.

They will not tell you to simply take profits just because. The markets are relatively efficiently priced, so if the market knew that it was overvalued then it would devalue. An advisor who tried to time the markets and told you to get completely out of equities could get in a lot of trouble, say if he did that in 2005 or 1998.

[tbtaoufiq]

the Job of a financial advisor is to respect and rebalance the client's portfolio every year. there is no financial advisor who will call to sell all equity and buy fixed income.and i think in the summer of 2007, no customer will follow the FA advise to sell equity : why are you asking me to sell if i made 12% in the last 5 years??? this is the answer for Mr client.but after what happened, the same Mr client : why you didn't push me to sell my stocks and buy GIC???.

There is no real theory about Market timig, just stay invested in the market and respect the asset alocation and your risk tolerance.

[Thalo]

the Job of a financial advisor is to respect and rebalance the client's portfolio every year. there is no financial advisor who will call to sell all equity and buy fixed income.and i think in the summer of 2007, no customer will follow the FA advise to sell equity : why are you asking me to sell if i made 12% in the last 5 years??? this is the answer for Mr client.but after what happened, the same Mr client : why you didn't push me to sell my stocks and buy GIC???.

There is no real theory about Market timig, just stay invested in the market and respect the asset alocation and your risk tolerance.

Really, the financial advisor's job is to talk sense into emotional investors, basically to be their psychiatrist. If successful, the investor puts aside fear and greed and invests strategically and makes money in the long term. What I expect to happen next year though, as advisors get their clients to rebalance from overweight fixed income portfolios is a push back "why should I buy these lousy stocks/mutual funds that lost me so much money last year?"

[dealzuser]

the Job of a financial advisor is to respect and rebalance the client's portfolio every year.

There is no real theory about Market timig, just stay invested in the market and respect the asset alocation and your risk tolerance.

Really, the financial advisor's job is to talk sense into emotional investors, basically to be their psychiatrist.

You are both wrong. The job of a financial advisor is to sell you more financial vehicles and instruments. It's great if they go up because then you wouldn't sell the stuff he sold you and you may buy more. But if they go down, he's there to talk you into staying invested so that he continues to get paid. They'll only tell you to rebalance when you've owned your backend fund for 5-6 years and he stops getting paid. That's when he'll "rebalance" you to another mutual fund so that he'll get paid again.

People say "buy low, sell high". You should be advised to sell when it's high, not always buying. But a financial advisor is more similar to a real estate agent than anything else - it's always a good time to buy. It will always appreciate in the long term.

That's why if you stayed invested in TSX for the past ~5 years, you've made nothing. If you bought last summer, you're down ~40%. You're suppose to take profit when things are good, and buy more when things are bad (like now.)

Peoples!!! YOU have to take responsibility for YOUR MONEY! Get educated about products and read the business news. No one is responsible for YOUR MONEY except yourself!!!

[tbtaoufiq]

[QUOTE=dealzuser;7781427]You are both wrong. The job of a financial advisor is to sell you more financial vehicles and instruments. It's great if they go up because then you wouldn't sell the stuff he sold you and you may buy more. But if they go down, he's there to talk you into staying invested so that he continues to get paid. They'll only tell you to rebalance when you've owned your backend fund for 5-6 years and he stops getting paid. That's when he'll "rebalance" you to another mutual fund so that he'll get paid again.

You re actually saying that all the FA in the the world are not honest, common. there is somme FA who do what you re saying but not every body. and for your information : not all FAs are paid on commission, and not all FAs advise MF with DSC Fees.it depend if the f
FA want s to get a max now and don t care about you after, or if he wants to build a relationship with you.
by the way, all the FA and Financial planner who works for banks are paid in commission, yes, but doen t depend on what the sell and are not even allowed to sell Mutal fund with DSC fees. it depend on how much they bring to the bank!!!

[dealzuser]

You re actually saying that all the FA in the the world are not honest, common. there is somme FA who do what you re saying but not every body. and for your information : not all FAs are paid on commission, and not all FAs advise MF with DSC Fees.it depend if the f
FA want s to get a max now and don t care about you after, or if he wants to build a relationship with you.
by the way, all the FA and Financial planner who works for banks are paid in commission, yes, but doen t depend on what the sell and are not even allowed to sell Mutal fund with DSC fees. it depend on how much they bring to the bank!!!

I am NOT trying to judge whether this Financial Advisor or that Financial Advisor is honest or not. What I AM trying to say is that the Financial Advisor's goals (make more money for THEMSELVES) and your goals (grow your investment) are NOT the same.

Financial Advisors are SALES people. Treat them as such. Don't expect objective advice. If you think you have a different relationship, then all power to you.

You seem to contradict yourself whether they get commission or not (underline in your post quoted above). Regardless, let's agree that financial advisors get paid more when they sell more products to you. They get paid more when they have more accounts. Therefore, their effort is spent meeting and getting new clients or getting existing clients to buy more (as sales people do) and not watching your investment or not advising you when to buy and sell (as advisors should do.)

I am NOT saying they are evil (just like sales people are not evil). But they are SALES PEOPLE. Make your own plans and your own financial decisions. I cannot emphasize that enough.

[smartcdn]

Mine didn't.

OP: certainly a good topic but also check this out from a while back...
http://www.redflagdeals.com/forums/s...d.php?t=647122

btw was public voting (making everyone see how you voted) really necessary?

[dash riprock]

I am NOT trying to judge whether this Financial Advisor or that Financial Advisor is honest or not. What I AM trying to say is that the Financial Advisor's goals (make more money for THEMSELVES) and your goals (grow your investment) are NOT the same.

Financial Advisors are SALES people. Treat them as such. Don't expect objective advice. If you think you have a different relationship, then all power to you.

You seem to contradict yourself whether they get commission or not (underline in your post quoted above). Regardless, let's agree that financial advisors get paid more when they sell more products to you. They get paid more when they have more accounts. Therefore, their effort is spent meeting and getting new clients or getting existing clients to buy more (as sales people do) and not watching your investment or not advising you when to buy and sell (as advisors should do.)

I am NOT saying they are evil (just like sales people are not evil). But they are SALES PEOPLE. Make your own plans and your own financial decisions. I cannot emphasize that enough.

the economic model for most FA's(not fee based) is to get you into mutual funds where they get a trailer fee. This model means that no matter the market conditions, they get a base salary contingent upon the assests under their control. So, they are better off if the market goes up, but still earn an commission if the market goes down. This trailer fee model is what Manulife one probaly considered when they schemed how they would compensate FA's and insurance agents for referring their clients. Base commision then a trailer on monthly balance.

[Thalo]

It's true that advisors get payed trailing comissions as long as you own a fund and they stop getting pid those comissions when you sell it, however usually the reason they advise you to stay invested is because when they recommended the fund to you, the objective was long term growth and you were made well aware of the potential volatility of the fund along the way. Now, you've experienced the worst side of that volatility and your emotions tell you to sell. The advisor is there to remind you of your original objectives and to stay invested and not destroy wealth by selling at a low.

[i6s1]

If FAs acted in the best interests of their clients, they wouldn't be telling them to buy mutual funds. Ever. QED.

Pay hourly for your advice.

[sjweyman]

My father is a FA with CIBC Wood Gundy and gets paid comission on all sales. I know he doesn't encourage people to buy mutual funds or anything else because of the comission he will receive.. He is genuinely interested in helping people with their financial objectives and long term growth. He tells people to buy when it makes sense and sell when it makes sense for their financial objectives. He knows that his clients will have to buy some times and sell other times so he is going to be making money. New IPOs and investment opportunities come around all the time.

Of course, he has been in the game a long time (he's 58) when being an investment advisor meant more than it does today and has well established clients with large accounts so he's not worried about drumming up new business or anything like that. He hasn't taken on small accounts for many many years (except mine) because he has no need to do that. We don't talk in depth about how he does his job all the time or anything ... but I do know my dad and I know he is 100% trustworthy. I've heard him talk of good periods of income and bad periods of income but I've never once heard him hint of increasing or decreasing sales just to make extra cash.

My only point is that good FAs do exist out there that are 100% aligned with your interests even though they can get paid more for going against your interests ... but good luck finding them! However, when you think about it ... by producing bad returns for clients or causing them to buy/sell too much you will make people suspicious and lose clients anyway and then have to spend a ton of time getting new ones. So acting in the best interest of your client just makes sense anyway most of the time.

All that being said, knowing how to manage your own money is definitely a good thing as well because no FA can spend an insane amount of time looking after just your portfolio ... only you can do that.

[setell]

My father is a FA with CIBC Wood Gundy and gets paid comission on all sales. I know he doesn't encourage people to buy mutual funds or anything else because of the comission he will receive.. He is genuinely interested in helping people with their financial objectives and long term growth. He tells people to buy when it makes sense and sell when it makes sense for their financial objectives. He knows that his clients will have to buy some times and sell other times so he is going to be making money. New IPOs and investment opportunities come around all the time.

Of course, he has been in the game a long time (he's 58) when being an investment advisor meant more than it does today and has well established clients with large accounts so he's not worried about drumming up new business or anything like that. He hasn't taken on small accounts for many many years (except mine) because he has no need to do that. We don't talk in depth about how he does his job all the time or anything ... but I do know my dad and I know he is 100% trustworthy. I've heard him talk of good periods of income and bad periods of income but I've never once heard him hint of increasing or decreasing sales just to make extra cash.

My only point is that good FAs do exist out there that are 100% aligned with your interests even though they can get paid more for going against your interests ... but good luck finding them! However, when you think about it ... by producing bad returns for clients or causing them to buy/sell too much you will make people suspicious and lose clients anyway and then have to spend a ton of time getting new ones. So acting in the best interest of your client just makes sense anyway most of the time.

All that being said, knowing how to manage your own money is definitely a good thing as well because no FA can spend an insane amount of time looking after just your portfolio ... only you can do that.

Got a question, how are you so sure your dad is a 100% trustworthy FA if you guys don't talk about what he does? To you he may be a 100% great person and you trust him but to his clients he might not be that 100% wonderful guy!