Looking around for a financial adviser / wealth management group. What questions should I ask when meeting for the first time?

OST

What's your net worth and credit score?

Ask them how they get paid.  That will tell you a lot.

Then get Ric Edelman's book "The Truth About Money."  Read it.  Read it again. Then proceed to pick your advisor. He has a chapter on how to do this.

The Truth About Money on Amazon

Yes.  How are they paid?  Per the meeting, hour, sales commission?
Is there a fiduciary interest?(spelling might be wrong)

probably depends on what you want done.

Do you want him/her to examine your entire financial life so you know your spending habits and where you're leaking money?
Get yourself out of debt?
Invest monthly amounts from now to retirement?
Invest a big sum of money for him/her to grow?
Protect your assets in case of death/disability, or just pick stocks/bonds/ETFs/mutual finds?

I wouldn’t meet one. I would take the time and learn to do it yourself. No one cares as much about your money than you do.

how they add value

Some of the things I wanted to know when we were interviewing them:
-Education and designations (personally not impressed by on line degrees, especially if its the only degree)
-Experience (have they been stable)
-How they are compensated (We ended up at a firm that pays their advisors a salary, not commission)  It's associated with my employers 401K so its a natural fit.

I personally understand finances pretty well but wanted/needed someone who could help us look at the big picture and take into account things like SSI, pensions, health care costs etc.... as we near retirement.  I don't want to miss something and make a big mistake so I want another set of educated eyes looking at our situation.
I wanted someone with the education and attitude that could walk through it with me.
I had a few questions about IRA's etc.. that I knew the answers to that I'd ask.  If I knew more about it than they did, fail.
If they even mentioned Annuities in the initial interview.  Fail, next.
If they start talking about "guaranteed income" possibilities that are earning well in excess of CD type rates.  Again, next.  There are no free lunches and guarantees of free lunches make me very nervous.  The sharks will ignore the "risk" they are putting your money at and try to keep you from understanding the true risk.
I literally "interviewed" 5 candidates before I found someone I felt comfortable with.  Don't settle just because its easy.  Too much at stake.

I handled my own investing for 25 plus years and did very well with a very simple diversified portfolio of ETF's and the like that were oriented 100% to stocks.  This was while we were young and had a long investment horizon so we rode out a couple of downturns and did very well in the end.  I'm not nearly as aggressive now at about a 40% stock weighting, but I don't need to be.

If they are so smart financially, why are they working for someone else and trying to get your business?

Ask them about whole / cash value life insurance (assuming they dont bring it up).

If they say pretty much anything other than "bad idea", PASS.

IT would be nice to know the true fees involved, but you’ll never get a real answer. Your basically dealing with a car salesman. Hire a by the hour CPA to answer your tax related questions, do the rest yourself.

The power of compounding interest can work for you, or in the case of an advisor getting it, against you

who says they have to work for someone else?

99% true.

Followed by, if you have any financial acumen at all, why are you even talking to me?

OPM.

It's easier to make money off Other People's Money than off your own.

This.  Unless you have substantial money to use,  there isn't much incentive for them to waste their time.

Think about it.  Let's say you have 100k. I don't know what they get but let's say a few points.  How hard is an educated man with skills going to work for a grand or two?

They'll ask a few questions and put you on one of 5 or so cookie cutter programs they recommend to everyone based on risk,  age, etc.

This.  No offense to those folks, but listening to one of them is likely a step back for anyone that has real financial skills.

I want to hear from people that make more than I do,  not less.

I know a lot of people that made more money that you in 2014...think millions a year.

over half of them lost all of their shit because they wouldn't listen to me who makes less than millions a year.

Think about that for a second.

unfortunately that is true for 95-99% of the Advisors out there.

It's rare as fuck that I run across someone who actually doesn't just use modern portfolio theory.

That's fair.  I've went broke once before for swinging too hard so to speak.

My theory has always been that it takes risk to get to the point you make millions a year.  If you fail, all that matters is that you have enough left to try again.

As a rule of thumb,  I strongly dislike traditional investments like stocks, bonds,  mutual funds, etc. I feel like they are safe and the outcome is already predetermined. If you want to get rich you need something you can control, like business ownership, rentals, etc. They only thing I keep in the market is my emergency money.  Like I'm about to lose all my stuff again and I need to stave off bankruptcy type of thing.

On the other hand,  as good as you are at what you do,  I can't fathom how you could give me any advice that would have gotten me from going broke to where I am.  Or where I am to where I eventually make a million or multiple millions a year.

If you're average and want to work a job maybe retire with a million in a portfolio then an advisor is for you.  If you want to be above average then educate yourself and find ways to make above average money.

Like anything you need to set a goal and work backwards from there with steps to get there.  An advisor doesn't fit into my personal plan.

I don't even have a problem with it.  Just reality of the business model.

If you want average, that strategy will get you there. No one really needs more than a million or two to retire very well.  Some of us want more bc there is a voice in the back of our head that won't stop. We aren't able to stop.

I don't think you understand that there is more to what some advisors do than just managing a pre set allocation of investments.

Google things like fee based, they cover a myriad of ways they can help a small business owner.

I understand it.  Just don't see a value in it.

Probably for the uneducated owner there is.  None of my partners even understand what a balance sheet is.  My best friend does 15 to 20 million in revenue a year and doesn't know if he made a profit until a month after the year is over and his accountant has organized his shoebox full of papers.

For me I've found the best help is advice from other people more successful than myself and industry specific classes to see what other businesses are doing and how they perform in the same field. My experience with advisors and consultants hasn't ever been positive.

I just can't see how they add value beyond that. One poster mentioned they help them understand health care costs and pensions as they near retirement. That sounds like people that should have educated themselves several decades ago.

Just my 2 cents.  Op is welcome to go to an advisor if he thinks that will get him to the next level. We all have different goals and different ways to get there.

some people don't have the time, resources, capability, or inclination to learn how to do certain things, such as invest their money.

When you need your engine rebuilt, do you grab a Chilton's manual and spend 100 hours learning how to tear it down, or do you take it to a mechanic?  99% of people will take it to a mechanic to fix it in 6 hours rather than devote a week to learning it, purchasing tools, doing, etc.

So, some people are more comfortable taking their money to a financial advisor than learning it themselves.  If you're a DIYer in that arena, fine, but not everybody is like you.

Managing your money isn't a 1 time thing like rebuilding an engine. It's kind of the whole thing.

If they had an engine that needed rebuilt every day until they retired, most people would educate themselves.

And as I said,  if that fits their goals,  have at it.  Makes no difference to me. Just offering my input.

Are fees based on performance or based on any financial transaction.

I wouldn't expect someone with your personality to see the value in it.

I may be wrong, but I take it you are the person that would rather take cash and put it towards a business or other type of investment instead of rendering control of those funds for an Advisor to manage?

an IAR can not charge a fee based on performance.

They can charge per hour or % of assets under management.

I just wanted to clarify that.

I'm a libertarian.

As a rule of thumb,  I wouldn't render control of anything under any circumstances to anyone who has no vested interest in seeing it succeed and isn't effected by it's failure. if anyone wants control of my money they need to put their house up for collateral,  quit their job and be my partner.

I'm not bashing you midcap,  you're a good guy with a lot of knowledge.  I'm just offering other points of view if the op wants to go that direction. Thinking inside the box isn't for everyone.

No jimmies rustled here.

I am not hating on you either....but I am very familiar with your personality type.

It's one of the reasons that you are successful and you may be lucky in that your industry does not swing wildly up and down like it does in my area.

I inability to relinquish control is a double edged sword sometimes.

But it's all good, I serve a particular subset of folks out there. My clients fit 1 or 2 molds. If they don't fit the molds then I am really of no help to them.

Kind of thread hi-jacking here

But why does everyone keep pitching Life Insurance with a cash value, as a investment I need?
Get that the seller makes a better commission on this....
But the basic pitch, and I have gottin this from three different guys over the past two months.
Is give us money, we will pay you around %5 guaranteed interest rate , "maybe better " Pay into this regularly, when you get into your 60's you will have all this cash.
(no kids, no wife, never see this changing, early 30's)

What is the deal with this?
And everyone trying to push me to get this so hard.

( it would be tax deferred right?).

If you're meeting with Ed Jones advisors, ask them if their college degree was in art history or political science.

For a cash investment long term its not a bad option. Better yield than the long term treasuries at the moment.

Unless you're extremely risk adverse would keep it as a small part of the overall portfolio if you wanted to diversify out of stocks and bonds.

Can you sell me some annuities and whole life insurance policies?

I dunno I’d rather have someone who knows what they are doing and has a successful track record then do it myself. Once I changed advisors a few years back and I too nervous to risk a few million on my own.

I’d rather just run our businesses and make more money the way I know how.

Before I say, "because the premiums are fat and that guy may only be insurance licensed and biased" are you even maxing out your IRA?

it's funny because it's true...also the majority aren't degreed.

This is something that gets pitched HARD by young inexperienced life insurance agents, who have a sales manager indoctrinating them and breathing down their neck to sell it to somebody, anybody....  and those young life insurance agents rarely construct the policies in a way that works out well for the client.

Having said that, here is how it works.

Every life insurance premium payment you make, some of your money goes towards a reserve for paying death claims, some goes towards overhead (think: the insurance company headquarters overhead, agent commission, etc), and some goes into your cash value. The formula of how much goes toward reserves vs. overhead vs. cash value slowly changes over the life of the policy so that more of the premium payment goes into the cash value in the later years.

The cash value inside a life insurance contract grows tax-free; the annual growth is called a "dividend" but it's not a stock dividend, it's a return of premium to you, so the IRS says it's not taxable (I have the 1990 GAO report in which Congress looked at this issue and confirmed it).  This works best with mutual companies, in which the policyowners own the company not shareholders.

So for the first few years in a normal whole life policy, you get very little cash value, because you're normally paying the lowest premium possible for the most death benefit possible.  Most of your premium is going to pay for that death benefit.  After a few years, you start getting a little cash value accumulation.  There is a guaranteed portion, and on top of that, every year, the life insurance company -- if they have a surplus of premiums paid over the death benefits and overhead -- gives that surplus back to the policyowners, and it's called a dividend.  That guaranteed portion + dividend has historically been around 6-9% of whatever your cash value is, depending on the company.  And it's tax-free.

Now, it's not 6-9% of your premium payment, it's 6-9% of your accumulated cash value, growing tax-free, and since it's not in the market it doesn't dip with the market.  6-9% compounding annually, with no chance of loss, tax-free is pretty potent over 30+ years.

Then, when you want to take the money out of the policy, you can either (a) withdraw money from the policy's cash value, but if you withdraw more than the total payments you've made then the amount you withdraw over that is taxable, or (b) take a low-interest loan out from the insurance company using the cash value as collateral and you pay only the interest on the total amount borrowed (don't have to repay the loan).  Some insurance companies dock your cash value for the amount of the loan ("direct recognition"), so if you have $500,000 of cash value and take a $100,000 loan then your annual dividend is based on $400,000.  Some insurance companies do not ("non-Direct recognition").  When you die, the death benefit is reduced by the amount of loans you have out against the policy.

The problem is that a normally-structured whole life policy takes a looooong time to get any cash value, and takes 15+ years to reach the point where 100%+ of your premium payment is being credited straight into cash value.  So if you want to put a LOT of money into that plan, you buy a HUGE death benefit and make a HUGE premium payment, and most young inexperienced insurance guys sell it like that because that's how their sales manager tells them to sell it because it's got the biggest commission.

HOWEVER.....

If a person is doing this as a life insurance retirement supplement plan, the better way to do it is to get the lowest death benefit possible in that whole life policy by having only a part of the premium go towards the death benefit, and using the rest of the premium to go right into the cash value (it's a bit more technical than that, but for this conversation it suffices).  That way, you're "overpaying" into the cash value where it can grow at compound interest annually tax-free without dipping or chance of loss in the market.  FYI: The insurance agent's commission is based on the premium going toward death benefit, and the commission on the overpayment is minimal at best.  So the agent actually makes less commission under this design.

So, it's kinda like having a Roth IRA in which your payment isn't tax-deductible, the balance grows tax-free, and you take the money out tax-free (via the low-interest loan from the insurance company with the cash value as collateral).  Except unlike a Roth, the balance doesn't dip with the market, and there there aren't any income limits on how much premium you can pay.  You can see the appeal for high-income earners who get screwed out of Roth contributions, screwed out of deducting traditional IRA contributions, and cannot put more than $18,500 into their 401k (and if they are a highly-compensated employee then their 401k contributions are limited by how much the rank and file employees put in).

The IRS caught on to this in the mid-1980s and now puts limits on how much you can overpay into a whole life policy.  If you put too much of your premium payment into cash value and not into buying death benefit, the policy is no longer a life insurance policy but now becomes a Modified Endowment Contract and all the growth is taxable, with penalties under certain circumstances.

Whole life as a LIRP is less appealing right now because of the low-interest-rate environment for the past 10 years.  15 years ago, whole life dividend rates hovered around 7.5%.  An amount compounding tax-free at 7.5% steadily for 15-30 years can be awesome.  But now rates are down around 5% or below, so it's less appealing.  Thanks, Obama-era Federal Reserve.

There are also indexed universal life policies, but that's another story entirely...

I'm not advocating for or against it, just giving a brief overview of how it works.  It works quite well for the right people who have low risk tolerance or want to do better than a bond fund in their low-risk portion of their portfolio.  Plus, it's self-completing if the insured dies early (the death benefit replaces the future years of investment growth), it's self-completing if the insured becomes disabled and bought the waiver of premium for disability rider, etc.  It can also be structured to be "paid up" at a certain date so you're not making premium payments in retirement.  If you get the accelerated benefits/critical care rider, you can get long-term care costs paid for as an advance against the death benefit.  There are other tricks and nuances too.

Hope this helps.

ETA: I know all this because several years ago I had my life insurance license in Virginia (along with various FINRA licenses) and used to set these policies up, plus now I am getting back into that business in FL after a 4-year hiatus.  I've researched it pretty well from numerous sources, but I don't come at it from the perspective of "it's the only way, everything else sucks!"

For 99.9% of peoplenits a fucking rip off. It is also complex enough that you don't notice that but simple enough a monkey can sell it. Oh and the commissions are great.

if it is a standard whole life policy, I agree.  If it is structured as I described, not so much.

If you are the exception you know enough to not have to ask about it.

As to OPs question. Therr most important thing to me is aligning interests.  Fee for time only or don't do it. Also avoid any steering, don't place any investments under them.

Just get pure advice. This should be like talking to a professor not a salesman.

Also you have to read "the big investment lie" before you meet them. If they contradict anything in that book walk the fuck out.

This, find someone who educates and informs, not someone who treats you like you just walked onto a car dealer's lot.

LOL.....anything eh...

You are free to explain a point that is wrong and we can discuss it.

I've spoken about it before in the realm of asset allocation before.

I'll admit though I haven't read the whole book.

But...I have to assume it basically harps on the idea that it's impossible to beat the SP500 consistently. am I right?

No, not entirely. Of course its not impossible just statistically impossible once enough transactions take place.

I need to read the book.

it sounds like they've assume commissions are still the norm.

In addition to that, generating allocation alpha is real, through positions that have asymmetrical mean distributions.

It's something I've been constantly working in for over a decade.

I haven't  assumed comissions are the norm. I have assumed if it is anything other than simple fee for time interests are not aligned. I have assumed you cant know all the deals, but if you dont place investments the same place you get advice there are no misaligned goals.

As to the book it assumes in most cases the primary prediction pf sucess are fees as in less fees more money. Commissions arent the only type of fees.

Give me a concrete example of this awesome alpha?

Super simple example

What if you limited your download  to 5% loss on 25% of your equity holdings? Then the market falls ten?

You just bought yourself time

Wouldnt you agree that adds alpha?