Comments on: What Percentage Of Financial Planners Invest In The Funds They Recommend?

By: MVD34

MVD34 — Mon, 24 Nov 2008 06:10:38 +0000

While I think you are on the right track (FP’s would buy what they are selling only if it was good), I would recommend that you slice open the pie and inspect the ingredients carefully in this situation.

Although I rather doubt the number is that high…except maybe on the insurance side, where the majority of the products are simply too awful for a knowledge person to even consider…there are good reasons for the phenomenon as well as bad.

Good — in addition to what others already mentioned — sometimes the adviser and the client have assets that qualify them for different funds. DFA funds are a good example. $10k grand gets you a no fee, low cost index fund at Vanguard, but it can take a million bucks or more to get everything you want at DFA. DFA is better, in my opinion, but Suzy Sixpack doesn’t really have that option. Bob the FP might.

By: Scott K

Scott K — Sun, 23 Nov 2008 07:54:55 +0000

I think this would be a hard figure to keep track of since every client has a different risk tolerance. I would say who cares if they are investing in what they are recommending as long as you like the stocks or mutual funds they are picking. No one will care more about your money than you so at least do a little research on the stocks or mutual funds they like. If you are questioning the pick, then ask them why they like it and tell them why you are questioning it.

By: Kiker

Kiker — Sat, 22 Nov 2008 19:14:25 +0000

The number fluctuates. Use to be a FA. I did not invest in Funds, as my Risk Tolerance Philosophy is highly aggressive. However, we were required to operate within the Risk Philosophy of the client, not ourselves. FP/FAs are NOT hedge fund managers, though that would be a lot of fun.
The people I worked with were no where near as risky as I was, so they all invested in Funds.
So, i think the stat is largely a moot point.
FA/FPs (same thing) are not allowed to dominate your investments. They are strictly monitored about telling you to sell something while they are buying it….as the SEC believes that if it was so important for you to sell, why did they buy? This is pretty heavily monitored, especially if they buy after you sell, or vice versa, as your contribution could have artifically adjusted the market, allowing them to enter at a more desired price. Its not prohibitted, cause your risk tolerance may have led to the sell or buy decision, whereas the FAs risk tolerance may have qued a buy.

I encourage everyone to learn about investing on their own. Why pay someone that only sorta knows you. No one knows your values and your money more than you. So jump into the fray for yourself, cause you will likely do far better than an expensive FA who has 300 other clients to contend with as well.

By: NetAdvisor

NetAdvisor — Sat, 22 Nov 2008 09:02:00 +0000

I don’t know where these stats came from. But you need to know that everyone has different risk tolerance, time horizons, investment objectives, age levels, and of course, various amount of money to invest.

It would not be suitable for a financial planner or broker to tell you to just buy what he or she is buying. It may be risky given your situation.

I don’t think one can verify accurate stats on your question.