Re: advisory service for 500$

From: Duke o W <DukeoW@aol.com>
Subject: Re: advisory service for 500$
Date: Wed, 13 May 1998 22:51:02 EDT

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From: jdennis@po3.nsknet.or.jp (John D. Dennis)
Subject: Vanguard Pers-fin Advisory Service

Vanguard has recently introduced a personal financial advisory service. For
a one time fee of $500 they'll review your investment portfolio, your
retirement plan, etc. I realize this is new, but has anyone had any
experience with this service? I called them, and now a 20 page
questionnaire is apparently on its way to me. I'm thinking there may be
different ways to fill out this form, and that some answers may "place" me
in a category which may not be appropriate--does anybody have any
suggestions for what the "key" questions might be? Or, how to best avoid
being pigeon-holed by a few of your answers and having the rest ignored?
Also, regarding this or other such "services," what are the do's or don't's
or other pros or cons to keep in mind?

Thanks, jd
>>>>>>>>>>>>>>>>

$500 may be a lot for evaluating a 20 page listing. 
On the other hand this amount should buy a at least a couple of hours of first
rate advisory time face to face. Many of these finincaial planners give
seminars for a nominal or no costs to explain what they can do and not do.
Locating the good ones is more difficult. There is too much "top 10
performance" in the advice business. There is good reason to look for "average
results" for the really long haul.  It has worked for me.

There is one good advisor I met in the Washington DC area who sells services
as well as advice (a usual combination). Another that impressed me operates
out of Palm Beach area of Florida.  He gets his from finders fees and
comissions on products he supplies, and also does by the hour work. Percentage
fee for service types typically want 1% of assets with a minimum of 50K
invested.  Since there is no significant difference between the choice of what
to own for 50K or 500K or a million, I am not willing to pay this cost yet!
Active management of assets can add overhead of another 1% a year!.  Not for
this guy. That is one thing in favor of the fixed fee rather than percentage. 

Right now we are nearing end of moving money around to avoid estate taxes.
It's surprising just what is included in the "estate".  It is especially hard
on IRA/40X accounts.  First the estate pays income tax to get it out the "tax
free" hole, then it is easy to be hit second time with 37-55% estate taxes.
Our lawyer can protect us from this with a will that sets up a bypass trust,
but that only works for the first 1.2 million.   We plan to spend a lot over
the remaining years to avoid this problem.  

My gut feeling is that the 20 pages should set U up to understand what is
important, spending the $500 is another matter.  Latest Vanguard newsletter
had a section on estate protection that addresses the tax problems of joint
ownership! Save 4-5% in probate costs and get hit with 37% taxes on a half
million or so. 

I guess I should get a copy to see what I might have missed.  

The usual disclaimers apply.    

duke

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