Answers
I have money invested in a series of mutual funds through a financial advisor. Every so often, based on market performance, he will sell the funds that aren't doing well, and re-invest the money in more profitable funds. My question is, when the old funds are sold, does this count as "income" that should be reported to the IRS? I'm a bit confused on the issue.
If its not in a tax-sheltered account, such as an IRA, your capital gains are taxed either as short or long term. It doesnt matter if its reinvested the same day in something else, six months from now or a year from now. You owe taxes on the sale. And it doesnt matter if the money stays in your account with your broker or you take possession of it. You owe taxes on the sale, if its not in a tax-sheltered account.
Mutual funds and financial advisors easily siphon off half of your nestegg in fees and taxes over 10 years. Wall Street and the media have a ...
Is a bachelor degree necessary or not?
I know that a license is not necessary, but for those who want to sell stocks, bonds, mutual funds a certification is necessary; so what can a personal financial advisor do without a license?
Anyone can call themselves a personal financial adviser, but unless they are certified by a nationally recognized organization, such as the "Financial Planning Association," their advice is not worth anything. Savvy clients understand that, so you better get your certification.
But, no, you do not need a degree in financial planning...just the certification
I am considering a move into financial advising career and I wanted to know where to find good information on the federal or CA state regulations. Do I need to be licensed to manage my customers portfolios (buy/sell stocks or mutual funds)? If I only have few accounts, can I do it with a power of attorney?
There should be a local securities commission that can advise you on what you need to be a Financial Advisor.
In Canada, if you pose as a Financial Advisor or charge money to do so, without licensing you could be seriously fined or go to jail. Every State and province ooperatesa little different though. Personally, I would NEVER work with someone with my money through someone that doesn't have some sort of proof of licensing or designation...FAR too many scams out there these days and there is far too much to know about taxation and whatnot for someone to do it part time or half assed.
I was given a job offer from a company that sells mutual funds, life insurance, annuities, college savings 529, fixed. How do you actually make money on this career. It seems you have to sell to all of your friends and family otherwise you won't get enough clients. Anyone have experience doing this? Thanks.
I was offered $30,000 for the first year base + commissions. This sounds really good for a recent college grade but I don't want to bug my friends and family every day to sell something.
First of all, you'll need your Life Insurance producer's license, and the Series 7 and state license exams if necessary in your state. Starting fresh out of college will be tough. To be successful you need to sell, and sell often. Selling your friends won't do much for you as they won't be putting much into the market. Consider mutual funds at a front load of 4.5%. If you get 10 friends to each set aside 100 a month in an IRA invested in mutual funds, your commission will be $45.
You need to land a couple of big clients every now and then to keep you going, but it's hard to do as the wealthiest people will know as much as you do, and probably have had relationships with their advisors for years.
Having a base salary to work with is a great way to get started in the business for your first year, but it goes away fast and then it's sink or swim. One thing to consider; if you feel like you'd be bugging your friends or family, people who know and trust you, just imagine how a cold prospect will feel. You have to believe in the stuff you're selling, otherwise you'll either 1.) Go broke or 2.) Give poor advice just to bump up your commissions.
To put it simple, I want to sell high and buy low, but if the price of your shares are down, should I still go ahead and trade into a better performing fund? That is what my financial advisor is advising, and he adds "it's never a good idea to wait for your principal to recover".
Also, how to trust worthy are those financial advisors at major brokerage firms? I was told by mine that he makes no commission on my trade, and he's on salary, and he's simply trying to increase the value of my portfolio?
Any opinions on my two questions?
I would rather just hold my shares to wait out this financial catastrophe, but all the advisors I spoke with encourage me to trade. This brokerage is one of the very well know SIPC insurance brokerage.
Without knowing what you're invested in now, it's hard to comment. But if you've got a broadly diversified mutual fund(s) - large caps, mid caps, small caps, international, I say stick with them.
Your broker may make no commission, but is there not a fee involved in moving from one fund to another??
Everyone of my funds, is down from where it was a year ago. But I've got a diversified allocation, with a decent group of funds. So I am content to stick with them. You may well want to do the same.
Why you Should Fire your Broker or Financial Advisor - About Brokers
Why you should fire your broker or financial advisor
by David C. Arena
The recent bear market should have opened the eyes of investors, making them realize that you can't possibly think someone else, such as a financial advisor or broker can care more about your financial situation than you do. Now that investors have lost in some cases over 80% of their retirement accounts, all that these so called 'advisors' can do is put their hands up in the air and say I was wrong. That is simply not good enough for clients who have trusted that professional for 10, 15 or 20 years. I know people that literally had to put retirement plans on hold and go back to work because they can't financially support themselves after these losses. Brokerage firms teach their brokers to advise clients that thinking long term by making them sit in mutual funds for years and years is the way to come out ahead. This is done in an attempt to easily control that client for a long time while continuing to collect commissions no matter if your money is growing or not. What if after years, your funds didn't grow enough to meet your goals? When we have a market fallout like we did a few years ago, advisors simply say, 'that's ok, we planned for these ups and downs, now we have to stay invested and wait for it to go up'. They are preying on a person's fear. 'If I leave this advisor, will I be wrong'? This keeps most investors with an advisor for much longer than they need to be. There is no excuse for having major losses like this, it is simply the advisor's fault. You either were not diversified, the investment choices were poor or they didn't take profits and manage losses properly. Believe it or not, the main problem is that brokers and advisors don't know enough about the investments they are recommending. The major brokerage firms influence their brokers by pushing whatever product they want clients to buy. They will even sponsor nice lunch meetings with the sales staff, so the brokers rally behind this product and then immediately sell as much as possible to their clients. These recommendations are regardless if the investment is appropriate for the client or not. The brokerage firm will even offer contest incentives to those that push the most product. Does this type of selling seem like it has the investor's best interest in mind? Then once you buy it, they make sure you feel comfortable just sitting there not making any major decisions and hoping the advisor knows what he is doing. It's about time people knew that there is nothing glamorous about a financial advisor or stock broker, they are simply over glorified salesmen. Most couldn't predict the correct direction of a stock if his or her life depended on it. And independent financial advisors do the same thing. They may not have a large firm telling them what product to push, but they have several mutual fund choices to pick from, each offering incentives or certain commissions for using their fund. And why all the mutual funds? Because they are easy to sell and the broker doesn't have to worry about getting calls every day from annoying clients wondering if the 50 shares of some stock they just bought is going up or down. Mutual funds are for the long term they tell you, so you are supposed to sit and wait. The most ironic thing about mutual funds is that they claim to be long term investments, but the fund managers are actively trading in and out of positions daily without the client even realizing. But these brokers tell you that active trading is dangerous. Why? Because they do not have the know how to manage such an account, having to give you advice sometimes intra daily. They also have no interest in actively managing such an account. It takes up way too much of their time to baby sit a bunch of clients, but more so, they do not have the expertise to correctly advise you of what to trade or how to manage risk. What an advisor wants is to put everyone in the same few long term investments and review everyone's portfolio once a year. Then, they can sit back and manage more clients and more assets, collecting a small percentage on those assets for their trouble. Minimal work for maximum gain. And what if you are ready to retire after waiting for 20 years through a good market and the bubble bursts like it did a few years ago and suddenly you have only a fraction of your retirement account left? What then? You work some more? Is this a position you want to be in after all is said and done, because you put faith into some other person looking after your finances? How much attention do you think you will receive from a so called 'full service' broker? The really savy ones will call you after they haven't spoken to you in a few months and tell you about a great new mutual fund that he heard of over 'lunch' and advise that you buy some. So, after he just railroaded you for a 5% percent fee on the last mutual fund, he will take your money out of the fund he just sold you and pop you into another one, so he can earn another 5% on the same money. Not only is this immoral, it's also illegal. And it's done everyday. Anyone with an interest in being a successful investor needs to learn how to do their own research and make their own trades. In today's market, you must be an educated, active trader who has more knowledge than most retail brokers or financial advisors. If you can do that, you will be a wealthy investor. If not, you will simply be an average investor or perhaps even worse if you allow the market to control you instead of controlling the market.
...News
Financial Advisors -- How many do you need?Vancouver Sun - Feb 24, 2010
Planner) or RFP (for Registered Financial Planner) work on commissions received by the mutual funds they sell. The letters after a financial advisor's and more »CNNMoney.com - Feb 24, 2010
We are 3800 people total, and we regulate 35000 public entities: 12000 public companies for their disclosure, 11300 investment advisers, 8000 mutual funds, and more »Economic Times - Feb 24, 2010
But that is what investors are doing with respect to their mutual fund investments,” said Mumbai-based financial planner Gaurav Mashruwala. and more »Bloomberg - Feb 18, 2010
Holly Hunter, an independent financial adviser in Portsmouth, New Hampshire, who handles about $60 million for clients, says she feels burned after turning and more »Toronto Star - Feb 24, 2010
Even for investors who shy away from picking their own stocks, there are ways to save when buying mutual funds online. The Royal Bank of Canada,Southtown Star - Feb 23, 2010
Teen's Roth IRA can be savvy investmentFor larger amounts, you may want to seek a brokerage or mutual fund company, where account minimums can run from $1000 to $3000. and more »NewsOK.com - Feb 25, 2010
Tree at root of neighbors' spatDEAR BRUCE: I always hear of investing in things like money markets and mutual funds, and I would like to, but I don't know where to begin. and more »