New book of interest to forum members | General financial discussion | Discussion forum

I have the Blueprint book out of the library right now, and you have motivated me to sit down and actually read it. I've had it out from the library several times. So, I have gone through the first few chapters.

One thing you will likely disagree with that I have found so far is that the author believes absolutely that one should have a financial advisor AND one should have all one's investments under that one umbrella. He seems to think that a good advisor is worth the money, and gives several criteria for establishing if you have a good one. The problem I have with this is that he admits that there are very very few advisors who specialize in retirement INCOME planning. There are tons who can deal with "retirement planning," meaning building up your nest-egg, but very few who can talk intelligently about how to turn that into a sufficient and reliable income. I think this is why so many of us on this forum are asking so many questions that we have not gotten answers to elsewhere. So, good luck on finding such a person, unless you happen to live in Winnipeg where this guy has his business. (What is it about Manitoba and money??)

My second problem is that in this low-interest environment, given that most of us in the retirement phase will be relying more and more on interest and/or dividends to fund our retirement, where does the money come from to pay such an advisor, if you find one? Somewhere he mentions this person might take 2% of your money, annually. If you read the negotiating book, you can probably get it for less. But, let's say you have, for example, $1,000,000, divided equally between RRSP/RRIF on the one hand and non-registered and TFSA on the other; your return on this money from conservative investing is 4% before tax; you pay the advisor 1% or more, reducing what you get to 3% or less before tax. So, I have to ask, why not just stick with laddered GICs and such like? Tax treatment outside of RRSP/RRIF may be more expensive, but that would only apply to less than half of your income by the time you subtract TFSAs (which are increasing at the rate of a minimum of about $12,000/yr/couple including contribs and interest), and will depend on your tax bracket anyway (which you will have held down as much as possible by following all the advice which is readily available in books and articles and forums). Surely you don't need to pay $10,000 to $20,000 to an advisor to pick some dividend-producers or ETFs which will cost less in tax? One of the questions the author suggests you pose to a potential advisor is the deceptively simple one, "can you show me what it is that you do?" It's a good question. I would modify it to "what is it that you do that I can't do for someone in my position?" Where is the added value, can I depend on the validity of its value, and what is it really worth to me and my assets after inflation and taxes are considered?

His arguments for having all your money under one umbrella make sense on some levels: easier for executor or power of attorney to deal with, you may be able to negotiate better deals when you have more "business" to offer, easier for a couple to see what they have together and therefore to plan as one unit, easier to transition when you get too old or infirm to want to be bothered with it all. I am most impressed with the last argument. On the other hand, if something goes terribly wrong with that one institution where you have all your money, all I can say is, "ouch!" This is particularly problematic because he, like most authors, insists that you must choose an advisor in whom you have COMPLETE trust, and he really means this. I have never met such a person, personally, and have no expectation that I ever will. Thus, I don't think this recommendation is realistic. I recall Gordon Pape some years ago saying that he had, at that time, divided his money into two investment houses, "so that I can get two different opinions". Diversification is the mantra in all other financial planning matters, so why not in this one?

More later.