I don't know any specifics about this particular issue, but here are some other thoughts from the point of view of someone who has a basic concept of online promotions/marketing etc.

The stockbroker doesn't need to make a profit on 100% of accounts. If they run a promotion where they make substantial profits on 99% of accounts (because they encourage more customers to do more business with them) then that will offset the 1% who they may suffer some trivial losses with.

Secondly, if they see that they're being abused by a small number of customers, they can simply tell you to leave.

Thirdly, the cost to any individual to "abuse" this system is worth some significant percentage (possibly more than 100%) of £10 of time. You may well be able to spend an hour to save £10 of time... but I suspect that your time can probably be spent in more productive ways.

A reasonable analogy is in running an online poker site: some percentage of your customers will use fraudulent credit cards. That's part of the cost of doing business on the internet, and the operator can (and should) take steps to reduce that cost... but they want to make sure that those costs minimise the impact on honest customers, so they handle such systems on a case-by-case basis, rather than setting up complicated rules about how you need to deposit X times or maintain the direct debit for Y months or whatever.

I don't mind a discussion. All of my questions come back to expenses because I believe it is one of the two biggest factors in determining an investment portfolios return.

Also, a lot of FP / FA's are glorified insurance salesman that have no interest in making you money, only themselves.

Ok, maybe my idiot comment was a little strong, but at least the question will expose what he thinks is important.

A 5th question would be what asset allocation he would recommend for OP and why.

Yeah, a lot of people who call themselves FAs are insurance salesman, bankers, or asset gatherers who don't really understand what is going on and/or don't really care about their clients.

Love this question. I'd recommend taking it a set further and request a full financial plan that fits OP.

The only reason I questioned your emphasize on expenses is because some ITT pick funds solely on their expenses. I'm convinced that if I had a time machine & everyone ITT could go back and change their investment choices based on hindsight some would still sacrifice after expenses returns for lower expenses.

ok guys. I have read the last few pages, funny last few comments were similar to what I read in the bogle heads beginners guide to investing(tonight), like many of these planers and advisors are greedy and only worried about their bottom line. anyway, learning a bit. now to my question: where do I park my cash? my only real goal is to max my Roth Ira each year. vanguard? I am currently with prudential and want to reduce my expenses. I may one day be a DIY investor, I dunno, for now I want easy and low expenses but yet something that will be effective. 32 years or so until I touch the allocated money, let's hope.

I'm a Boglehead at heart. I think it is really hard to argue against buy and hold passive investing.
Easy and low expenses:
Vanguard Target Retirement 2045 Fund (VTIVX)

As far as FA /FP's, I have no problem paying someone for their services, as long as I know what I'm paying. I just have problems with the people that recommend investment vehicles that are hard to understand and loaded with hidden fees.

Had a nice conversation with my FP. We didnt even talk about my SEP that much. Going to be opening a cash value life insurance account. $50/mo is all it takes. I get 5.6% on my dividends to start he claims it will only go up, I can borrow money/take out loans, and put all the money back in, no cost to him for this, he just makes a commission. Slower growth, but by the time I retire i'll have some extra money. Seems like a no brainer when you compare it to a savings account or a cd.

Edit: As for my SEP, he wants me to fill out a little survey/questionaire to calculate my tolerance risk, so he can figure out where I fall on the pie charts. Balanced/Big Market Companies.

How much is he getting paid for that?

dude, please do not do this.

Immediately get rid of your FP.

Why is this so bad?

He is getting paid a commission for my life insurance account.

For the SEP I have to pay a 5.5% sales charge up front, then an expense ratio for wherever I choose to put my money.

This guy has worked with my dad for several years, and has opened several accounts with him. My dad is a very smart successful business man who has owned his own business for 35+ years.

Can I get something more then a double facepalm and reasons as to why this is a bad way to begin to invest money?

Try googling "cash value life insurance as an investment".

5.5 front end load + I am going to guess around a 1.6% ER is huge. You are paying monster rake. Also his commission for the insurance comes from somewhere and there is a reason you don't know his commission amount because it most likely well surpasses whatever fee you think is reasonable for his "service"

lololol cash value life insurance

dude, 20 year term life insurance only. and stop paying for a financial advisor. you can put yourself in far better financial shape by using your brain and a computer than by mindlessly doing what a guy that you pay tells you to do, especially when he makes money off your decisions

pretty good breakdown of cash value life insurance

http://whitecoatinvestor.com/8-reaso...o-consider-it/

this is just what i was talking about, ppl worried about their own bottom line, i have been with prudential guy for ~10 years, a bit before but ten years i have threw poker money his way, moreso in the first 5 years of that. but when i was young and more naive, he had me set up with some LI as well where i paid like 6k a year or some **** lolz, like i needed it, he says i did. OK SIGN ME UP

My father is a successful attorney and who ran a law firm for twenty years, he still fell for this very same trap. I begged and pleaded with him to get out of it, and he finally did like 3 years ago.

What everyone else said, plus, do you even need life insurance? You need life insurance if someone is depending on your income to survive, i.e. wife and kid(s).
Also, there is no return guaranteed in writing in your contract, regardless of what he verbally told you.

Edit, after reading the white coat investor link posted above, I am willing to concede my statement about no guarantee being in the contract could be wrong. I guess what I was thinking of is they give you a better projected rate that never comes true.

http://whitecoatinvestor.com/debunki...ife-insurance/

This is the even better whole life explanation from the link amoeba posted above.

I have to address something.

Fees REALLY matter in the long haul. You can Google "investment fees" or "expense ratio" and spend 15-30 minutes of your life learning about something that can costs you literally hundreds of thousands of dollars. Fees mean a TON. In 1-5 years it doesn't matter, but in 20-40 years it is absolutely gargantuan. PLEASE pay attention to them.

https://investor.vanguard.com/mutual-funds/low-cost

To piggyback on wils fees comment:
http://apps.finra.org/fundanalyzer/1/fa.aspx

I've selected an American Funds Global Balanced fund with a 5.5% front end load and a Vanguard target retirement fund to compare. Set the investment to $50,000, the annual return to 8%, and the time period to 20 and you will see you are missing $40,000 dollars. I know you are not investing 50K upfront but over time you will be adding to your investment, and this calculator did not allow additions.

Personally, I would rather have that $40K rather than the fund company.

Makes sense.. thanks for your perspective. This is prob exactly how they handle it.

Being a "successful business man" does not automatically qualify you as a knowledgeable investor in the same way a successful dentist doesn't automatically qualify you as a knowledgeable gynecologist.

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