Investing Meetup Report (Part 3)

Last time I reviewed Mr. Know It All’s contribution to my recent Meetup experience. Today I discuss the presenters: a financial advisory team headquartered just across the street.

Yes, they were actually financial advisors! I can see your jaw on the floor so I’ll wait just a moment for you to pick that up.

One advertised purpose of this Meetup was to teach. How can they aim to teach gratis and work to financially advise us, which entails teaching for a fee? Without the fee, would they teach enough to enable us to invest on our own? No…

Another advertised purpose was for networking. Do they really want prospective investors to meet and potentially collaborate when that may preclude us from hiring financial advisors? No! Only if good feelings from meeting others translates to gratitude and perhaps the eventual hire of their company has the Meetup achieved its true marketing purpose.

For these reasons, I consider this Meetup to be a significant conflict of interest. If the organizers knew beforehand that no Meetup attendees would ever become clients then I doubt they would ever spend the money to create and fund this group.

In the presentation, one topic they discussed was “questions to ask potential financial advisors.” They discussed Commission-Only, Fee-Based, and Fee-Only advisors. They were eager to identify themselves as Fee-Only advisors. They said Fee-Only advisors have a fiduciary responsibility to the client and don’t make money off the particular funds sold. Fee-Only advisors pursue the client’s best interests at all times.

For me, the presentation fell apart when I asked about Dimensional Fund Advisors (DFA). I noticed their slides had “Blackrock” (a financial services company) in the lower left-hand corner. I asked if DFA is a competitor of Blackrock. The speaker looked around at his two colleagues and shrugged his shoulders. He explained something about how he sticks with the funds that trade in largest volume, that have the best and most experienced management, etc. He did not answer my question nor did he even acknowledge DFA.

What is wrong with this picture?