Why are financial advisers so clueless and bad frankly and what do they get by contacting you
- Thread starter invortex
- Start date
No. Once you've established yourself as a Potential High Net Worth Mark the financial advisor vultures will start circling.
There is a purpose for them though. If you have a very high net worth (think multiple millions) a financial advisor makes sense because your primary goal is capital protection, and they can run zero cost collars on your assets for you to basically lock in a base level of capital appreciation. As a person with this level of net worth, you probably have better things to do than manage a series of zero cost collars on your (probably substantial) holdings. Best to pay someone professional to do that.
Other than that all they will do is take a percentage of profits from you for occasionally looking over your 401k/IRA/etc. They are virtually worthless until you have enough money to need to worry about capital protection over appreciation.
There is a purpose for them though. If you have a very high net worth (think multiple millions) a financial advisor makes sense because your primary goal is capital protection, and they can run zero cost collars on your assets for you to basically lock in a base level of capital appreciation. As a person with this level of net worth, you probably have better things to do than manage a series of zero cost collars on your (probably substantial) holdings. Best to pay someone professional to do that.
Other than that all they will do is take a percentage of profits from you for occasionally looking over your 401k/IRA/etc. They are virtually worthless until you have enough money to need to worry about capital protection over appreciation.
in today's environment how much can be locked in... 2% like a bank CD?
I'd rather get the 12% from QQQ and ride the roller coaster for free lol.
They also do provide value if you're someone with no interest or time to manage money and made a lot of it suddenly through something like company stock options. Just diversifying someones portfolio and advising on tax implications of option exercise is of huge value to a 30 year old software developer who's spending 80 hours a week coding and zero interest in finances who would otherwise have their entire $X M net worth in the stock of the same company they worked for since that's their default option. Certainly agree that if you're interest in finance (everyone here!) and/or have less than low 7 figures there's not a lot of value there.
Agree with the need for a financial advisor when sitting on piles of cash. However, the bar for most financial advisors in the US is waaaayyyyy too low. Any creep can take the regulatory exam and license which means nothing. Heck, there are financial advisors out there in the US who are knee deep in own personal debt and hardly can pay off their credit cards. Are you expecting to get sound financial advice from such people?
This is a very special case but I agree. However, generally these folks come in as advisors during a liquidation event from what I understand and provide significant services (I am in a tech company now and if we exited I would certainly use one). Among these are coordinating any loans required to clear the cost of the options (you still have to buy them on exit and I, for example, am not sitting on enough liquid cash to just dump it in), suggestions on when to exercise, and management post-exercise.
No and you are absolutely correct. Financial advisors are really no different than realtors. You really have to marry the guy (or girl) to trust them. There are just too many fly by night guys out there looking for easy commission. I bank with Schwab and the amount of times they offer me "financial services" with any random clerk is frankly nuts.
Financial advisors who are reps of large financial services firms and who recommend only proprietary products are by definition 'brokers' who get paid to sell you products. Those guys, I agree, can be less than qualified to manage your retirement money. But not all can be painted with the same broad brush. Independent investment advisors who charge only management fee can add more value and alpha, sometimes more than the average long/short hedge fund - which for some reason tend to be held in such high esteem.