Do Pro Poker Players Make Good Clients For A Financial Advisor?

[snowbank]

DesertCat,

A smart investor putting everything into Vanguard is like a great poker player playing the penny tables because there's so little risk. Yes, Vanguard is nice if you want to be safe with your money. People who invest usually want to maximize their returns. I'd rather be a winning 15/30 player and pay a rake than play the penny tables and not be worried about paying a rake because the pots usually don't get big enough.

[DesertCat]

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People who invest usually want to maximize their returns.

[/ QUOTE ]

Exactly why I recommend Vanguard. Studies have repeatedly shown that when you pay advisors or managers fees, you are more likely to trail the market than beat it. That's why I recommend index funds. An index fund with a .25% expense ratio is already 1-2% ahead of an active manager on Jan. 1 of each year. Some studies say it's enough edge to beat 95% of active money managers.

Now if you are a skilled investor and can make your own investment decisions, by all means go ahead. But just like poker, track your results so you don't fool yourself. I do my own investing and have a very satisfactory record for the last 5 years, but I also spend at least 4 hours a day on research. And if you must have active management there are a few active mutual funds with long term records of beating the indexes (I would demand at least 10 years and preferably 15-20 with the same manager). And I'm sure there are one or two financial advisors out there who won't rip you off with excessive or hidden fees. But I don't know how to find or vet one.

That's why my recommendation is if you are unsure about doing your own investing, go to vanguard (or some similar vendor of no-load index funds or ETFs). You won't beat the market, but you won't trail it either, and you can sleep safe knowing you're not getting ripped off. BTW, this is exactly what Warren Buffett recommends to investors as well.

[snowbank]

I think if you are just going to invest in stocks/bonds, Vanguard might be the way to go for the passive investor. There's also much more lucrative investments. Doing 4 hours of research a day is also a huge opportunity cost. Not arguing, just wanted to point out that a financial planner who knows about more than just the stock market could have you making much more than Vanguard.

[zaxx19]

IF THEY WERE A SPECTACULAR ANALYST THEY WOULDNT BE "FINANACIAL PLANNERS" WHICH IS BASICALLY THE BOTTOM RUNG IN THE FINANCIAL SERVICES INDUSTRY THEY WOULD BE FUND MANAGERS WHO DONT HAVE TIME TO TALK 2 YU....HONESTLY AS SOMEONE WHO HAS 30K PLUS IN THE MARKET AS A 23 YR OLD I WISH TOO PUT IT INTO REAL ESTATE AS FAST AS POSSIBLE EVEN WITH THE FORTHCOMING BUBBLE...STOCKS ARENT THAT GREAT.

[TrumpchumP]

Vee- you are a client of mine. Not personally, but I call on Financial Planners in NY and PA. A couple of thoughts for this post.

Zaxx- I like your comments in most threads, and respect them even more given that you are 22. Your age and lack of perspective handicaps you in this particular topic. Interest rates are effectively at a 50 year low, making it incredibly easy to purchase real estate. At the same time real estate is at an all time high - most professional real estate analysts would call it a bubble. Yet now is when you are eager to buy real estate and avoid stocks. This is the exact same thing as every conservative investor finally jumping into stocks (particularly growth/tech stocks) in 1999-2000. The worst feature we have as investors is that we can extrapolate what has happened over the last 3-5 years and convince ourselves that it will continue for the next 5-10 years. It won't. I can't tell what will be working, neither can any credible Financial Advisor. Thier role is not to max out how much you can make in any one mutual fund, rather it's ideally to prevent you from making mistakes that cripple your bankroll (principle).

Beyond that, poker pros in general will not make for great clients. You would have to be THE financial planner to the pros. Poker as a profession drives an income that is directly related to the time you spend playing. (a select few can make an exponential return because of tournaments - but it is not common)Few pros make beyond some factor 2-4x their big blind rate.

It just doesn't relate to a large number or prospective clients with account minimums of $100k.

There is nothing better than working in an industry or with a clientele that you have a true passion for. I would think that executives from Publicly held casinos would be a better niche.

[rgreenm90]

I read an article once about some of Dewey Tomko's ridiculous investment choices--raising the Titanic? (gulp) Anyway, as a result of that I think that they might need the help, but then I might just be generalizing.

I'm really surprised that none of the douches have gotten on Vee for "posting in the wrong forum"

[zaxx19]

Or just Steve Wynn...lol lol (id like to make a buy for 13k shares of berkshire hathaway plz...thank you)


I fully understand that real estate is on a bubble and dont really care. I would be buying real estate solely in areas I knew not to be overvalued and for the long term(I would buy real estate before 4 yrs ago with my money as it is historically, when bought in areas with oustanding public school systems and low vulnerability too white flight or population flow, the best investment in the U.S . Id also be renting the properties and wouldnt be looking for any equity pull out within 5 yrs so....bAasically you are correct now is not the optimal time to buy real estate bbut my point is much broader...due to market sluggishness which will extend for the better part of the decade and bc of tax incentives, I still will be putting money into real-estate after I get a real job and paycheck...

REMEMBER 1) GOOD SCHOOLS 2) POPULATION PRESSURE(THINK MIDDLING SUBURBS STUCK BETWEEN SATURATED URBAN AREAS AND EXPANIDING LESS DESIRABLE X-BURBS)3) No white flight Im not a rascist but I think you can figure this one out for yourself...

There will be substantial costs to buying in such areas but there is VERY little vulnerability to actually loosing money and while the prices WILL not grow at the rate thats has been seen since the tech burst...It will be in excess of 4-5% a yr, this when coupled with tax breaks and any potential positive cashflow from renting(If the ratres grow more people will be forced to rent correct?? this is the classic real estate hedge for the long term investor.) and real estate is amazing.

[Vee Quiva]

They have been predicting the demise of full service brokerage firms since Charles Schwab opened their doors. What was that like 25 years ago (or before you were born)?

I guess another measurement of success would be to compare the full service brokerage firms stock performance to that of Schwab or any of the internet trading firms.

I get paid to help my clients reach their financial goals. My clients' goals are never to beat the market. It's a secure retirement, putting their kids through college, or leaving a legacy for their kids or a charity. I then show them the most conservative way to reach their goals.

My real question is when you are out of school and have accumulated $200,000 of investments are you still going to feel absolutely sure of yourself on making 100% of your own investment decisions? Investing $2000 in a stock versus $30,000 can be a totally different decision, emotionally for a lot of people. The vast majority of investors with real wealth often feel more comfortable having an expert help them with these decisions are usually willing to pay something for the service. Plus a lot of the service I provide for my clients is not which investment I recommend, but stopping them from making a portfolio wrecking mistake by buying into the latest fad or headline from Fortune magazine.