FAs charge anywhere from 0.35% (35 basis points) to 1% per year for their services.

FAs should have passed the Series 7 exam as well as either the Series 65 or 66 exam (for fee-based fund management programs).  They should also have a state certification to sell insurance products like annuities.  In addition, they should have a CFP (Certified Financial Planner) designation - which shows that they are commited to honoring fiduciary responsibilities toward their clients.

CFP stands for Certified Financial Planner.  It is an important designation that shows that the FA is commited to honoring fiduciary responsibilities toward their clients.

The prevailing investment community considers a balanced or moderate investment portfolio to be comprised of about 50% stock funds and the rest spread out across investment-grade bond funds, REITS, commodity-sensitive funds and cash.

The best performing asset class since 1926 has been stocks (the benchmark U.S. stock index).  It has averaged 8.75% per year in real terms.

The worst performing asset class since 1926 has been commodities (the CRB index).  It has averaged -1.56% in real terms per year.

Stock funds are about 4 times as volatile as investment-grade bond funds.

Profit factor is the summation of all the up years (or up periods) divided by the summation of all the down years (or down periods).  Real profit factor subtracts inflation from the numerator and denominator of this ratio.  

As shown in the video, the impact of a 1% advisor fee on  a Roth IRA over a 40-year period (assuming 7.5% average annual total returns), would be $200,000.  This is money that leaves your pocket and goes to the investment advisory firm.

It's not so much the quantitatve questions, but the qualitative questions that are factored in risk tolerance surveys.  These include psycho- emotional questions dealing with market risk and expected returns from the markets.  The other problem is that no matter how you answer the questions in a risk tolerance survey, you will inevitably be placed in an asset allocation that is overweighted to stocks.

A target date fund automatically reduces its allocation to stocks relative to investment-grade bonds the closer you get to retirement.  Only problem is that they are all heavily overweighted to stock funds. Typically, you start out with about a 90% allocation to stocks and end up with a 45% to 50% allocation to stock funds at the start of retirement.  This poses significant risks for seniors!