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Reply to DOL Unintended Consequences?     
Old 06-19-2017, 12:20 PM   #41
DHK
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DOL Unintended Consequences? Re: DOL Unintended Consequences?
You have to be able to justify the fees charged as well as have a schedule of client services that you are willing to do at least annually.

Earning and Validating Financial Planning And/or AUM Fees
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Old 06-19-2017, 12:31 PM   #42
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DOL Unintended Consequences? Re: DOL Unintended Consequences?
Originally Posted by DHK View Post
The value for the $8k will be (rationalized as):
- Fiduciary duty
- Ongoing financial advice per the ADV Part 2
- Active management of account (versus mutual funds) which *may* help to reduce market volatility
- Ongoing beneficiary update & review
- Whatever else the advisor and their team can do to serve this client.
The bolded parts are the key as to whether or not an adviser is worth their comp.

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Im very leery of all the various TAM funds out there. Its the new "cure all" for investors. Retail Mutual Funds were pitched the same way back in the 90s...

Its just a Mutual Fund in a fancy wrapper. And often computers do most of the analytical work and even the trades themselves. So perhaps a better question is what are the TPAMs doing to earn their 1.3% premium over a VC ETF????
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Old 06-19-2017, 01:39 PM   #43
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DOL Unintended Consequences? Re: DOL Unintended Consequences?
Many people that don't utilize a "managed money acct" (so no MM fee) pay as much or more total in fees...and they might not even know it.

Back to the unintended consequences... my RIA said they feel there is a good chance that if nothing changes with the law, you will end up having to be associated with a legal fiduciary to be able to do anything with qualified funds. Meaning BD, RIA, or Bank... and potentially a handful of IMO types that have applied for fiduciary status, assuming any get it granted. I guess we'll see how it shakes out. Fun times.

Tahoe Ray, what are your thoughts?
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Old 06-19-2017, 03:05 PM   #44
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DOL Unintended Consequences? Re: DOL Unintended Consequences?
Originally Posted by VolAgent View Post
How is that different than timing the market? How does the advisor, or really the fund manager, have a crystal ball to know when the market will drop and when it will recover? This could easily turn a 20% loss into a 50% by getting out late and getting back in late.
Check out w.e Donahue stock dividend index it's a tactical SMA that crushed the S&P 500. Especially look at 2008 and 2009.
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Old 06-19-2017, 03:22 PM   #45
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DOL Unintended Consequences? Re: DOL Unintended Consequences?
Originally Posted by Golfnut2112 View Post
Check out w.e Donahue stock dividend index it's a tactical SMA that crushed the S&P 500. Especially look at 2008 and 2009.
Is that the Power Dividend Index? Closest name I could find. Unfortunately the PDF they have on their website does not go back that far. It is lagged the S&P for every period they show.

Also, just looking at the chart on the PDF, the only time it has ever missed a downturn since 2013 is when it never bothered to get back in after a prior one.

Hopefully 2008 and 2009 look different, but they definitely haven't been crushing it since 2013.

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Old 06-19-2017, 04:03 PM   #46
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DOL Unintended Consequences? Re: DOL Unintended Consequences?
I get pitched these a lot as a RIA. While the logic on how they allocate and spread the risk initially sounds pretty reasonable at most, when you start listening on when they get out of the market and under what conditions they go back into the market, it is all a nice story. There are so many of these being pitched now, and they all did marvelously at 2008. They make it sound like buy us now and when 2008 happens again, you will look/feel smart.

One way I call of these BS funds is that they really have a hard time explaining in English under what circumstances and when they will go back into market.
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Old 06-19-2017, 04:09 PM   #47
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DOL Unintended Consequences? Re: DOL Unintended Consequences?
Originally Posted by walthamny View Post
I get pitched these a lot as a RIA. While the logic on how they allocate and spread the risk initially sounds pretty reasonable at most, when you start listening on when they get out of the market and under what conditions they go back into the market, it is all a nice story. There are so many of these being pitched now, and they all did marvelously at 2008. They make it sound like buy us now and when 2008 happens again, you will look/feel smart.

One way I call of these BS funds is that they really have a hard time explaining in English under what circumstances and when they will go back into market.
So I will ask you the question I have posed in general, what do you do to earn your 1%?

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Old 06-19-2017, 08:28 PM   #48
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DOL Unintended Consequences? Re: DOL Unintended Consequences?
Originally Posted by VolAgent View Post
Is that the Power Dividend Index? Closest name I could find. Unfortunately the PDF they have on their website does not go back that far. It is lagged the S&P for every period they show.

Also, just looking at the chart on the PDF, the only time it has ever missed a downturn since 2013 is when it never bothered to get back in after a prior one.

Hopefully 2008 and 2009 look different, but they definitely haven't been crushing it since 2013.
Go to w.e Donahue's web site and go to resources and then index power dividend.
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Old 06-19-2017, 08:29 PM   #49
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You have to offer more than just simple asset allocation to earn 1%. I actually charge less than 1% for asset management and have discounts for seniors and disabled but my fee is higher than the average Robo advisor. I model my business like wealth management services. There is a lot of financial planning, reviewing whether to put more into 401k pay down mortgage college savings strategies, I will occasionally review their 3 months of bank statements for budgeting. If their case is really complicated I charge an hourly fee in addition to what I charge for AUM. Typically this happens if t hey also have real estate holdings or complex estate planning. If they have a Non Qualified portfolio and I am managing that, I prefer they also file their taxes through my firm. I avoid day traders, stock pickers, people who think I can beat the market.

I just found a client $100 in unclaimed funds from running his SSN number through a database. MY AUm fee includes an annual check of unclaimed funds databases. It is so easy and it earns you referals left and right.

To justify your fee compared you have to offer more than what a robo offers.
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Old 06-19-2017, 08:58 PM   #50
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DOL Unintended Consequences? Re: DOL Unintended Consequences?
Originally Posted by VolAgent View Post
So I will ask you the question I have posed in general, what do you do to earn your 1%?
Me personally I send out monthly newsletters and on the phone constantly. You have to remember it's FINRA forcing us to go to fee based. Look at the B shares they are gone and C shares are the scrutinized so bad it's not worth the effort. I work in the over 70 market and and very few people what to pay a front end load, you can thank FINRA FOR THE CURRENT CONDITIONS!!!!
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