Like-minded PP Financial Advisors?

[Bonafede]

So kind of an out of left field question, but does anyone happen to know of or would recommend any like-minded PP financial advisors?

For those who aren't necessarily 100% comfortable setting up a PP/VP mix by themselves, thought it might be helpful to point to some financial planners (if there are any) who share the same mindset as Harry Browne.

Thoughts?

[Plumbline]

I have square danced with a few brokers.  Many were fine gentlemen.  The last one told me: "son you are not an investor, you ask too many questions and you have to many of your own ideas".  Paying a broker to set-up and manage a PP is like paying someone to change the oil in your 1983 Ford F-150.  It is a very simple concept and most people can do it, but most don't.  Do it yourself.  We trust the man behind the curtain too much because he makes it sound way too complicated.  I can think of one circumstance to use a broker for a PP; when a Trustee is commissioned to steward the resources of another. 

[Storm]

I'd have to agree with what Plumbline has said.  We chose the PP because we are, for the most part, "do it your self-ers" who discovered there is a better way to invest our money than the way the professional financial advisors want us to.  I've only met two types of financial advisors:  Type 1 wants to charge a 1-2% annual management fee and have complete control over your money, and type 2 gets a commission every time you trade so they need to always convince you to sell what you have and buy the latest hot stock (netting them a nice commission and, who knows, maybe they are also the market maker for that stock so they just got themselves the difference between bid and ask as well).

There are a lot of ways for financial advisors to make money, but almost none of them involve "just stick your money in LT treasuries, gold, and index funds and let it ride."

Another reason why I think financial advisors give such bad advice is that famous quote by Upton Sinclair:  "It is difficult to get a man to understand something when his salary depends upon his not understanding it."  If your financial advisor's salary is paid mostly by stock commissions or management expenses, and he is dependent upon the equities market for his income, he's probably going to recommend an equities heavy portfolio.

[MediumTex]

HB is one of the few financial advisors that have ever impressed me as having knowledge, insights and judgment that I might be willing to pay for.

Among the current crowd of celebrity market pundits, I do enjoy listening to Hugh Hendry.

As far as hiring someone to assist with setting up a PP, what specifically would you be asking them to do?

[julian]

I  am an independent fee based financial advisor and have 100% of the firms 300 clients & $200 million of assets invested in the Permanent Portfolio allocation strategy. If anyone would like to speak with me, I can be reached at 561-955-8500 or you can visit my website at www.americanasset.net.

[MediumTex]

I  am an independent fee based financial advisor and have 100% of the firms 300 clients & $200 million of assets invested in the Permanent Portfolio allocation strategy. If anyone would like to speak with me, I can be reached at 561-955-8500 or you can visit my website at www.americanasset.net.

Tell us more.

How did you learn of the PP strategy?

How long have you been running a 100% PP allocation for your clients?

What strategy(ies) were you advocating prior to learning of the PP?

Are you following the PP recipe as HB delivered it, or do you tweak it?  If you tweak it, are your tweaks consistent or do they change?

What are your personal thoughts about the PP?

What was your experience in winning clients over to the strategy?  

What has the abandonment rate been as the equity markets have recovered?

What do you say when clients ask you what value you are offering if your bottom line is you have no idea what the future holds?

Do any of your master of the universe colleagues make fun of you for not have a market narrative ready at all times?

How do you invest your personal money?

What do you charge your clients?

What would you say to a client who wanted to buy PRPFX instead of going with your firm?

If you have $200 million under management, that would mean you have somewhere around $50 million in gold under management.  How is this held?  How has your approach to PM holdings evolved over time?

EDIT: I took a look at your website.  It answers some of my questions.  I'm curious, how did you become aware of this forum?  Do you tell your clients that your strategy is based on Harry Browne's books and research?  It looks like you do a radio show--do you talk about Harry Browne on the radio show?  If not, why not?  If you do, how do you frame Harry Browne's contribution to developing the strategy?

[6 Iron]

In the contract, there is a 1% annual fee for assets under management.

[julian]

How did you learn of the PP strategy? - Browsing the web

How long have you been running a 100% PP allocation for your clients? Started in 2007 but only went 100% in 2010

What strategy(ies) were you advocating prior to learning of the PP? - fixed income portfolio primarily Preferred Stock & MLP's

Are you following the PP recipe as HB delivered it, or do you tweak it?  If you tweak it, are your tweaks consistent or do they change? - tweaked with mutual funds for the equity portion but have since moved to VTI

What are your personal thoughts about the PP? - the best & only investment allocation

What was your experience in winning clients over to the strategy?  - very easy

What has the abandonment rate been as the equity markets have recovered? - very little

What do you say when clients ask you what value you are offering if your bottom line is you have no idea what the future holds? - As no one knows what the future holds we are offering a 40 year track recors of consistent returns that worked in 2008.

Do any of your master of the universe colleagues make fun of you for not have a market narrative ready at all times? - no

How do you invest your personal money? - 100% in the PP allocation

What would you say to a client who wanted to buy PRPFX instead of going with your firm? - The fund is not pure as it follows the original but not final allocation HB designed. In addition, the fund is a poor choice for people who need monthly inome as you are basically selling every month as opposed to living off the cash portion & giving the other 3 investments a chance to grow.

If you have $200 million under management, that would mean you have somewhere around $50 million in gold under management.  How is this held?  How has your approach to PM holdings evolved over time? - Combo of GLD & IAU


What do you charge your clients? - 1%

[moda0306]

Julian,

By asking you about what value you offer, I think MT was saying "How do you justify your services at 1% after telling a client a simple 4x25 portfolio is what you suggest?"  I'm not saying there's not value to add (overall balance sheet/ income statement/cash flows... tax planning, etc)... Just that it might be difficult to explain to a client after preaching the theories of a man who was so skeptical of timing the market and having someone else manage your money.

[moda0306]

So it's 1% on top of any individual fund fees, correct?

How do you tend to split the assets between taxable and tax-deferred accounts for your clients?

Do you use individual security identification for basis to reduce gains?

Do you do anything to capture losses and skirt the wash sale rule? (ie, Sell shares of VTI at a loss to offset some gold gains, but immediately invest in an S&P index or something)

[AdamA]

He said he was using mostly MLP's and preferred stock for income investors, so I'm guessing it was a little easier for him to explain the strategy to his clients than it would be to someone who has been watching Mad Money for the last 5 years.

Am I right?

[julian]

Julian,

By asking you about what value you offer, I think MT was saying "How do you justify your services at 1% after telling a client a simple 4x25 portfolio is what you suggest?"  I'm not saying there's not value to add (overall balance sheet/ income statement/cash flows... tax planning, etc)... Just that it might be difficult to explain to a client after preaching the theories of a man who was so skeptical of timing the market and having someone else manage your money.

Just like the oil change example, some people find it easy to DIY and others have no clue how to do it. Seriously, I would never attempt nor want to chng the oil in my car. But more then that, knowing which ETF's, tax wash, rebalnce, etc has value. In addition, keeping ppl on track & not jumping ship is also very important. I cannot tell u how many clients want to scrap the cash portion & buy NLY or Australian denominated CD's. Or the clients that KNOW rates will rise & we MUST SELL TLT.

[julian]

So it's 1% on top of any individual fund fees, correct? - yes

How do you tend to split the assets between taxable and tax-deferred accounts for your clients? If the tax situation of a client warrants it, we will keep the gold & TLT in the IRA

Do you use individual security identification for basis to reduce gains? of course

Do you do anything to capture losses and skirt the wash sale rule? (ie, Sell shares of VTI at a loss to offset some gold gains, but immediately invest in an S&P index or something) - yes

[julian]

[quote="Adam1226"]
He said he was using mostly MLP's and preferred stock for income investors, so I'm guessing it was a little easier for him to explain the strategy to his clients than it would be to someone who has been watching Mad Money for the last 5 years.

Am I right?

100%. My client base already undertood how foolish it was to chase individual stocks. It never ceases to amaze me that even after 2008 ppl actually believe their is a way to get rich quickly. Great new book that is getting a lot of attention The Investment Answer is a start to get ppl to understand HB

[moda0306]

Julian,

I like all the tax strategies you employ.  Do you feel that others in your industry properly employ proper tax avoidance strategies?

Also, you find gold more appropriate for IRAs than stocks?  I was trying to weigh the same thing with the 28% rate compared to having to pay tax on dividends.  It's somewhat apples and oranges, but I'd like to hear your input on gold vs stocks being in a tax deferred account.

[julian]

Julian,

I like all the tax strategies you employ.  Do you feel that others in your industry properly employ proper tax avoidance strategies?

Also, you find gold more appropriate for IRAs than stocks?  I was trying to weigh the same thing with the 28% rate compared to having to pay tax on dividends.  It's somewhat apples and oranges, but I'd like to hear your input on gold vs stocks being in a tax deferred account.

Do not really know about others but I am sure some do & some don't. That is why the fee is not the issue, it is the intelligence of the advisor that matters. Hard to believe how many advisors know nothing about tax.

Dividends are taxed at 15% so clearly gold is the first choice followed by TLT as the interest on TLT is taxed as ordinary income.

[moda0306]

Julian,

But think about the timing of the taxes... Dividends are taxed every year as you receive them.  Gold throws nothing out, so someone who's contributing a lot wouldn't have to pay tax for some time.

I was torn on the issue, as my initial thought was the same as yours.

I am not really sure what the dividend yield on VTI is right now... at what yield level would you rethink the gold/stock position in tax-deferred accounts?

[moda0306]

http://www.multpl.com/s-p-500-dividend-yield/

Looks like the S&P is about 1.73%.  Probably not too far off from VTI.  Something to think about... maybe throw a few hypothetical situations into a spreadsheet.

[moda0306]

Do you ever have your clients buy physical gold?  Do you consider that as part of your "managed portfolio?"

[AdamA]

Also, you find gold more appropriate for IRAs than stocks?  I was trying to weigh the same thing with the 28% rate compared to having to pay tax on dividends.  It's somewhat apples and oranges, but I'd like to hear your input on gold vs stocks being in a tax deferred account.

I struggle with the same thing.  My solution is to hold gold in both my IRA and my taxable account.  I try to rebalance by using income I earn from my job to buy the weaker assets, but sometimes that is not possible and I have to sell off a stronger asset. 

I use GTU in my taxable account, because you can pay long term capital gains tax on it instead of collectibles tax.  I also trust them a bit more than some of the ETFs.

Adam

[Bonafede]

Whoa, another interesting post. Julian, thanks for the response. And in case others are wondering, this was not a plant by any means.

Julian, I find it refreshing that there is actually an investment advisor who employs the PP strategy. Do you also work with clients on their VP strategy as well, and looking at both the PP/VP from a complete picture?

I've always found it hard separating them both, and then tracking returns separately and then collectively.

-b

[julian]

Julian,

But think about the timing of the taxes... Dividends are taxed every year as you receive them.  Gold throws nothing out, so someone who's contributing a lot wouldn't have to pay tax for some time.

I was torn on the issue, as my initial thought was the same as yours.

I am not really sure what the dividend yield on VTI is right now... at what yield level would you rethink the gold/stock position in tax-deferred accounts?

I just feel that since I will eventually have to pay the 28% tax on a 40% increase in gold and the dividend on VTI is less then 3% a year, I am better off w gld in the IRA

[julian]

Do you ever have your clients buy physical gold?  Do you consider that as part of your "managed portfolio?"

No because as we r based in Florida with hurricanes I think it is too risky since many of us leave in the event of hurricanes and I would be in a panic leaving 25% of my net worth behind.

[julian]

Whoa, another interesting post. Julian, thanks for the response. And in case others are wondering, this was not a plant by any means.

Julian, I find it refreshing that there is actually an investment advisor who employs the PP strategy. Do you also work with clients on their VP strategy as well, and looking at both the PP/VP from a complete picture?

I've always found it hard separating them both, and then tracking returns separately and then collectively.

-b

I am so risk averse that I don't have a VP & 9.5% CAGR is good enough for me.

[AdamA]

Do you worry about counter-party risk with GLD and IAU? 

Have you ever considered GTU or even Goldmoney.com?