Poll

Do you use a financial advisor?

Yes
11 (8%)
No
121 (88.3%)
Maybe (explain in comments)
5 (3.6%)

Total Members Voted: 130

Author Topic: Do you use a financial advisor?  (Read 10395 times)

Zikoris

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Do you use a financial advisor?
« on: July 27, 2014, 03:38:43 PM »
I'm curious what percentage of Mustachians do their investing DIY and how many hire a financial advisor. It seems to be a pretty polarizing issue on Reddit and other personal finance spheres.

marty998

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Re: Do you use a financial advisor?
« Reply #1 on: July 27, 2014, 04:02:18 PM »
1) Spend less than you earn, and decouple your spending from income - just because it comes in doesn't mean it has to go out.
2) Do not take on debt for consumption purposes,
3) Do invest in cheap, tax-efficient index funds

There, just saved you all thousands in financial advice fees.

But, for those of you with very large amounts of assets, a good estate planner, tax accountant and legal advisor is invaluable.

frugaliknowit

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Re: Do you use a financial advisor?
« Reply #2 on: July 27, 2014, 04:44:08 PM »
Agree with Marty998, adding that advisers usually charge at least 1% per year (that's $1,000 per $100,000 or $10,000 per $million).  If you have a good strategy allocating index funds, why do you need to pay anyone?

Zikoris

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Re: Do you use a financial advisor?
« Reply #3 on: July 27, 2014, 04:54:38 PM »
I've never used one myself, but my situation is very simple.

Frankies Girl

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Re: Do you use a financial advisor?
« Reply #4 on: July 27, 2014, 04:59:32 PM »
I had one (including "professionally managed" accounts) for about 6 months. Once I got up to speed on how I wanted to invest, I moved everything over to self-managed. I still have access to a dedicated adviser for basic stuff but I don't have to pay for him due to the amount in my accounts (they consider it a courtesy for having over a certain amount invested with their company). It really isn't more than someone I can call and run scenarios by and ask for clarifications, but I believe if I have more detailed questions, he'd answer them as well.

erae

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Re: Do you use a financial advisor?
« Reply #5 on: July 27, 2014, 04:59:47 PM »
So I answered "no" to the poll, but the truth is actually, "we will use one soon."

A colleague from work turned me on to MMM and is has now launched his own Personal Finance company http://montelargo.co/aboutus.html He's damn smart and more mustachian than I am, so I trust him to advise us as we navigate some big life shifts on the horizon.

EarlyRetirementGuy

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Re: Do you use a financial advisor?
« Reply #6 on: July 27, 2014, 05:03:06 PM »
My work ran a free 1-hour appointment with a financial advisor once. I went along, explained my situation, pension, savings and shares. He literally told me to keep doing what I was doing because there was nothing he'd change.

I cant see the point of having a financial advisor unless you have a complicated tax situation or are consolidating multiple pensions.

deborah

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Re: Do you use a financial advisor?
« Reply #7 on: July 27, 2014, 05:36:39 PM »
My financial adviser has saved me more money than I will ever pay him, so I will probably continue to use his services for as long as he is around. He doesn't charge much and recently reduced his fees because he is changing to a cheaper platform. He considers anything involving money as financial, and so is prepared to give me advice that I would not have asked a financial adviser about in the past (for instance about insurance). He responds to any communication courteously and quickly, and gives me his opinion. Unlike other advisers, he is available whenever I want, rather than once or twice a year. Best of all, he was the one who convinced me that I had enough money to FIRE.

bigchrisb

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Re: Do you use a financial advisor?
« Reply #8 on: July 27, 2014, 05:41:32 PM »
I don't use a financial planner, but I regard my accountant (expensive) as money very well spent.  His advice is usually on structural and tax issues.

Catbert

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Re: Do you use a financial advisor?
« Reply #9 on: July 27, 2014, 05:44:03 PM »
I don't use a financial advice; however, I do talk to my tax CPA about tax strategies (e.g., how much Roth conversion to stay in same tax bracket, capital gains/loss harvesting, etc.)  My taxes are way to complicated for me to fully predict all the moving parts. 

deborah

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Re: Do you use a financial advisor?
« Reply #10 on: July 27, 2014, 05:46:17 PM »
I don't use a financial planner, but I regard my accountant (expensive) as money very well spent.  His advice is usually on structural and tax issues.
That's interesting - I guess my financial adviser's advice is usually in that area too.

Thegoblinchief

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Re: Do you use a financial advisor?
« Reply #11 on: July 27, 2014, 06:18:37 PM »
Tax or estate planning? Absolutely, if and when my situation demands it (not anytime soon).

But I assume you were asking about standard investment advisors, so I answered no in the poll.

pachnik

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Re: Do you use a financial advisor?
« Reply #12 on: July 27, 2014, 06:26:25 PM »
I do my RRSP by myself but about once a year I speak to someone at the investment company. We talk about what I am invested in and they make suggestions.  I will probably talk to them in September and i wonder if they will say anything about the change in my contributions.  For the last several months I've been sending in just over $1,000.00 each month.  Before coming across this website I sent in about $5,000.00 once a year.  So there has been a significant change in the pattern.

I have a financial planner who manages the money I received when i sold my apartment (believe me, it wasn't 'big' money).  My parents highly recommended this person and she has done a good job for me.  She works for the bank where my 'apartment' money is invested so I don't pay her directly.  She recommended some funds and they've done quite well.  We meet in person once a year. 

I have thought about bringing my RRSP over to her as well but don't like having all my eggs in one basket. 

*Just a note here - no one has ever asked me about my spending/budgeting. 
« Last Edit: July 27, 2014, 07:23:47 PM by pachnik »

ender

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Re: Do you use a financial advisor?
« Reply #13 on: July 27, 2014, 08:41:51 PM »
I'm loathe to say "no" since I consistently use the Internet for direct feedback on my financial plans.

But I don't pay anyone anything. Well except Vanguard/Fidelity ERs for their index funds, technically.

urbanista

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Re: Do you use a financial advisor?
« Reply #14 on: July 27, 2014, 08:48:27 PM »
My financial adviser has saved me more money than I will ever pay him, so I will probably continue to use his services for as long as he is around. He doesn't charge much and recently reduced his fees because he is changing to a cheaper platform. He considers anything involving money as financial, and so is prepared to give me advice that I would not have asked a financial adviser about in the past (for instance about insurance). He responds to any communication courteously and quickly, and gives me his opinion. Unlike other advisers, he is available whenever I want, rather than once or twice a year. Best of all, he was the one who convinced me that I had enough money to FIRE.

deborah, you are in Melbourne, right? Do you mind sharing your adviser's contact details via a pm? thanks

Dicey

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Re: Do you use a financial advisor?
« Reply #15 on: July 27, 2014, 10:51:08 PM »
I wouldn't be retired now if it weren't for my financial advisor. I had mustachian habits before Pete coined the term, but I didn't know shit about investing, so all I did was put it in Money Market Accounts. I didn't lose any money, but I sure wasted a lot of compounding years. At least I used some of it to buy real estate, which did really well.

Here's the big myth about what a financial advisor costs: I have more money after I'm done paying the fees than I ever would have had on my own. Now, I don't use your standard retail advisor who charges huge fees, but still, it kind of kills me when I see my statements, until I look at the total balance.

And hell, yes I use a CPA to handle my taxes! He's worth his weight in gold and doesn't charge a fortune.

Perhaps a good follow-up question would be to ask those who have retired early the same question. I suspect the results would be more in favor of professional advice. Can't stress this enough: Thanks to my planner, I can sit here reading the forums as late as I want on a Sunday night without a care in the world about what I have to do at "work" in the morning. Believe me, it's an awesome feeling.

Here's a thought that just occurred to me before I hit send. I really don't care if someone who is far from FI doesn't use a financial planner. I care about what has worked for people who have reached FI. Come to think of it, the reason I hired a planner is because I used to ask everyone I knew who was successfully retired for their best advice. The overwhelming majority used planners, so I paid a professional, got my financial shit together and fulfilled my dream.

pdxvandal

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Re: Do you use a financial advisor?
« Reply #16 on: July 27, 2014, 11:47:28 PM »
Never have, never will. Educate yourself and be as smart as those "advisors" in a few days. If you want someone else to do the work for you, then it's understandable. But I'd rather shave 1-3 years off my retirement and not use an advisor.

Good luck.

Primm

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Re: Do you use a financial advisor?
« Reply #17 on: July 27, 2014, 11:56:02 PM »
I went to a financial advisor once, just after my first husband left me. I was scared and stressed. I had two small children and I was facing a future of raising them and then looking after myself on my own. I'd been with this guy since I was 18. When he left me I was 33.

The financial advisor (early 30s male) told me not to worry too much about future finances because "you're young enough that you could very well meet someone and get married again, and then anything you do now would be irrelevant because you'd have your new husband's income in the mix".

Needless to say I didn't pay him for his time, and I've never talked to another financial advisor. I know they're not all like this. Still, once bitten.

TheNorwegianGuy

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Re: Do you use a financial advisor?
« Reply #18 on: July 28, 2014, 02:39:59 AM »
I would never use an advisor. The knowledge of personal finance and investing is so valuble and life lasting that I would feel stupid not to learn it myself... It does not seem very frugal to me to hire a guy to give me advice he have learned from a book.. Just buy/borrow the book instead and be your own advisor. You can pay yourself as high rate as you want to ;)

deborah

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Re: Do you use a financial advisor?
« Reply #19 on: July 28, 2014, 03:08:15 AM »
I have been thinking about this thread. Yes, I have a financial adviser - he offers me ADVICE. He isn't planning my life or my finances - yes, he offers suggestions, but I have control. Each person who has talked about having an adviser (whether an accountant, an adviser or whatever) has talked about being in control of their money, and getting advice. They have not talked about giving up control.

Those who are against financial advisers seem to be talking about giving up control to financial planners - rather than getting advice.

In fact we all have financial advisers - MMM is one of our financial advisers - other people on this forum are also our financial advisers. Books that we read are also excellent financial advisers. One reason I have a professional FA who I pay is that he offers advice specifically for my circumstances, and explains it. Most previous "advisers" I saw were only interested in parting me and my money and certainly not in educating me.

PeteD01

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Re: Do you use a financial advisor?
« Reply #20 on: July 28, 2014, 04:43:46 AM »
The problem with investment advisors is that by the time you have educated yourself sufficiently to be able to evaluate an advisor, you will also be able to do the job yourself. An investment advisor can only be judged by the advice given after all. Unfortunately, Return on investment is not an appropriate measure unless one believes that beating the market is why one has an adviser. After a five year bull market, only complete idiots would not be able to show nice returns, but remember, if you have returns matching the market return or even exceeding it AFTER FEES, odds are extremely high that your adviser is taking more risk with your money than you would have to take on your own for similar returns. There is no free lunch.
« Last Edit: July 28, 2014, 04:45:25 AM by PeteD01 »

Cwadda

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Re: Do you use a financial advisor?
« Reply #21 on: July 28, 2014, 05:11:38 AM »
My first financial adviser put me in an index fund that had a front load fee of 5.67% plus expense ratios 14 times higher than your typical Vanguard expense ratio. He also didn't bother telling my 18 year old self that you couldn't contribute more than your taxable income to a Roth IRA, which I'm now getting penalized for.

I learned my lesson.

Travis

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Re: Do you use a financial advisor?
« Reply #22 on: July 28, 2014, 06:44:10 AM »
All the financial advisers I've used over the years have either screwed me or were just terribly incompetent.  My experience was almost exactly like Cwadda.  At age 18 my meager savings went into a 5.5% front load mutual fund.  After finally getting rid of her my next experience was just shy of a churn.  I was in 26 different funds with expense ratios from .3 to 1.7%.  After a year I don't think I made a dime.  Basically my 20s were a lost decade as far as investing. 

My advisers are you all and the Bogleheads.

gobius

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Re: Do you use a financial advisor?
« Reply #23 on: July 28, 2014, 07:32:15 AM »
I had one for awhile; when I paid off my student loans (early 2010 when I was 25) I used an adviser who worked with my sister at a bank.  He had control of the investment money.  He did all right and made me money, but when I compared him to my Vanguard 401(k) after 4 years, Vanguard was beating him handily.  He charged 1% and the funds were anywhere from 0.3-1.5% on top of that.  He was a pretty sharp and honest guy but once I started reading and investing on my own I decided I didn't need to use him anymore; when I told him I wanted to do it on my own he understood and said that he got into the business from learning investing on his own.

Overall he had a decent strategy so if I didn't know anything about investing (which I didn't when I first started with him) he would probably do okay.

I probably wouldn't go to one like that to handle my money again since I like handling my own money, but as for getting advice, I may in the future.

PeteD01

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Re: Do you use a financial advisor?
« Reply #24 on: July 28, 2014, 07:33:13 AM »
My wife and I do for our Roth IRAs.  Hers was already in an EJ account, and my college roommate is an advisor.  Honestly, I love what Edward Jones has to offer.  We are starting to get to the point where we can invest in non tax-advantaged accounts and we are doing that separately.

Edward Jones? Wonder what they offer in addition to charging you fees and making you feel good about it. But maybe I am wrong here. Why don't you call your EJ agent and ask for a complete disclosure of the fees you have paid and are paying now. Loving what they have to offer is not really helpful and at best is inadvertent advertising.

http://www.bogleheads.org/forum/viewtopic.php?f=1&t=126432

Cpa Cat

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Re: Do you use a financial advisor?
« Reply #25 on: July 28, 2014, 07:50:44 AM »
I use one (a two-man team, actually). We have for many years. We hooked up with them when we sold our first business and were clueless with a giant windfall. They are standard 1%-fee guys.

Over time, I have become more educated (heck, I even became a CPA!), and I do realize that not everything they do is perfect. The truth is, we do a lot better as a team now that I'm financially knowledgable. During our meetings, we bounce a lot of ideas off each other and do pretty well.

My husband and I are of different investment mindsets and our risk appetites do not align. I think it benefits us to have someone independent/objective to manage our expectations and portfolio.

For instance, when we were experiencing scary losses during the recession, at no time did my husband have to turn to look at me and say, "Wtf are you doing with our money?!" Instead, we were able to have professional meetings with a third party and we came out ahead.

We might one day choose to dump our guys - but I don't think I would let that happen until my husband chooses to become independently educated about indexing, fees etc. I don't want to be in a position where I'm unilaterally making decisions for the both of us.

PeteD01

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Re: Do you use a financial advisor?
« Reply #26 on: July 28, 2014, 07:57:36 AM »
I use one (a two-man team, actually). We have for many years. We hooked up with them when we sold our first business and were clueless with a giant windfall. They are standard 1%-fee guys.

Over time, I have become more educated (heck, I even became a CPA!), and I do realize that not everything they do is perfect. The truth is, we do a lot better as a team now that I'm financially knowledgable. During our meetings, we bounce a lot of ideas off each other and do pretty well.

My husband and I are of different investment mindsets and our risk appetites do not align. I think it benefits us to have someone independent/objective to manage our expectations and portfolio.

For instance, when we were experiencing scary losses during the recession, at no time did my husband have to turn to look at me and say, "Wtf are you doing with our money?!" Instead, we were able to have professional meetings with a third party and we came out ahead.

We might one day choose to dump our guys - but I don't think I would let that happen until my husband chooses to become independently educated about indexing, fees etc. I don't want to be in a position where I'm unilaterally making decisions for the both of us.

At least you fully understand the finacial sacrifices your family is making.

matchewed

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Re: Do you use a financial advisor?
« Reply #27 on: July 28, 2014, 08:00:11 AM »
I have been thinking about this thread. Yes, I have a financial adviser - he offers me ADVICE. He isn't planning my life or my finances - yes, he offers suggestions, but I have control. Each person who has talked about having an adviser (whether an accountant, an adviser or whatever) has talked about being in control of their money, and getting advice. They have not talked about giving up control.

Those who are against financial advisers seem to be talking about giving up control to financial planners - rather than getting advice.

In fact we all have financial advisers - MMM is one of our financial advisers - other people on this forum are also our financial advisers. Books that we read are also excellent financial advisers. One reason I have a professional FA who I pay is that he offers advice specifically for my circumstances, and explains it. Most previous "advisers" I saw were only interested in parting me and my money and certainly not in educating me.

The question is regarding who hires financial advisors, not who takes financial advice. Most people who are against it just happen to see that there is a really simple template for investing that requires no paid advice. It is not about control it is about costs.

Melf

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Re: Do you use a financial advisor?
« Reply #28 on: July 28, 2014, 08:36:37 AM »
I had a FA for quite a few years but I can't say that I got any real benefit from the relationship.  I rarely heard from the guy unless I contacted him.  I opened a ROTH IRA and taxable investment accounts through his firm.  He put me into an assortment of high fee/loaded funds and charged me a yearly fee for both accounts on top of that.  I just recently dumped him and moved everything over to my new Vanguard accounts.  I don't know much about investing but I know enough from MMM and you guys already to know that I could have probably done better with just a broad market fund strategy on my own.

AssetGrinder

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Re: Do you use a financial advisor?
« Reply #29 on: July 28, 2014, 10:00:25 AM »
No but I have used several in the past.

My take, Dont trust anyone with your money and the best thing you can do is educate yourself.

I am sure there are great advisers out there but I think the problem is there are much more bad ones than good ones. Many people trust their own banks to provide advisers. Little do they know bank advisers are some of the worst pushing their own pricey products with big exit fees.

Frankly in the most part advisers disgust me. Most of them are predators trying to make a buck from your money and not looking out for your best interest.

If I everwere to use an adviser again I would look for a non product affiliated fee based adviser.

dandarc

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Re: Do you use a financial advisor?
« Reply #30 on: July 28, 2014, 10:22:27 AM »
Answered Maybe -

Used one when I first started investing seriously - I still have the Roth IRAs he set up for me and my wife, and our term insurance with him.  He has not really "advised" us on anything useful since setting up our life insurance.  I was extremely disappointed when I was setting up a Solo 401K on how little he even knew about this type of account - and the only option he presented was extremely expensive.  The term insurance he sold us was overpriced, but not that badly.

One thing he is much better at than I am is explaining things to my wife.  I need to work on that - I tend to research things extensively and then ask her if she is OK with what I've concluded is best - e.g. "what do you think of rolling all of our accounts (that we can) to Vanguard?" and then the response generally demonstrates that she doesn't really understand the question (which makes sense - I've done extensive research and she hasn't).  For example she objected to moving accounts to Vanguard because A.  She is comfortable with mutual funds and B.  she wants more diversification than Vanguard offers - both of these objections are obviously false to anyone who knows anything about Vanguard, particularly given that our alternative in this is American Funds.  So I should have started with "have you heard of Vanguard?".  My advisor wouldn't help with this specific question obviously, but is much better about starting at the beginning when we do talk with him.

So yes, I use an advisor, however I don't think he has added much value to the equation and I'm in process of getting away from the products he set us up on.

MrsPotts

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Re: Do you use a financial advisor?
« Reply #31 on: July 29, 2014, 08:46:08 PM »
I put my investment $$ in a target date  457 plan.   Fees are .4%.   Not sure if this is my best option.

stripey

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Re: Do you use a financial advisor?
« Reply #32 on: July 30, 2014, 04:50:10 AM »
I have used a financial advisor who had an insurance specialty to get insurance for something.  I had an atypical situation,  really needed insurance for it and I really needed to ensure I wouldn't get caught out with a loophole. They also cast their eye over my financial situation.  The comment was that I was already doing all the common sense things they recommend people do in my situation so further advice from them wouldn't likely be useful!

Cwadda

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Re: Do you use a financial advisor?
« Reply #33 on: July 30, 2014, 06:01:32 AM »
I put my investment $$ in a target date  457 plan.   Fees are .4%.   Not sure if this is my best option.

It's not awful, but there are better options out there. (Vanguard expense ratios are usually .07%)

dandarc

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Re: Do you use a financial advisor?
« Reply #34 on: July 30, 2014, 07:38:54 AM »
I put my investment $$ in a target date  457 plan.   Fees are .4%.   Not sure if this is my best option.

Not bad - and unless they offer a less expensive option still a good deal due to the 457 plan wrapper. 

My wife's work recently switched her over to a 2045 fund in her defined contribution plan (they dropped her old funds, which is just as well as they were quite expensive and amounted to a too conservative allocation in my opinion) - this one only has a .1% fee and is currently an 80/20 portfolio.  In the 457, she is also in a 2045 fund but it has a .58% fee and is a 90/10 portfolio.  If only we had the .1% fund available in both plans.  In both cases we can't do better on fees than these target date funds - all the other choices have higher fees, so this is by far the easiest part of the portfolio to manage - we might just switch to funds with further out retirement dates once the taper sets in if we want to keep the stock-bond ratio high for longer.

soccerluvof4

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Re: Do you use a financial advisor?
« Reply #35 on: July 30, 2014, 07:52:00 AM »
I dont but thats not to say I wouldn't have one review my portfolio just to see what they had to say. But I dont see me doing that in the near future.

Gone Fishing

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Re: Do you use a financial advisor?
« Reply #36 on: July 30, 2014, 08:40:50 AM »
I have not been impressed with any of the the advisors I have spoken with-most are just flashy salesmen-I usually give them advice. 

That said, I have a strong interest in finance.  If someone does not, I think it would be well worth paying a fee based advisor $500-$1000 one time to help them set up a long range plan, especially if they are inheriting a large sum or otherwise coming into money.

daymare

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Re: Do you use a financial advisor?
« Reply #37 on: July 30, 2014, 11:23:35 AM »
After college, when I moved to DC for my first job at 22, I did get an advisor (and had him for the next two years, at which point I decided to move to do a PhD, and now I have no advisor because I don't make much money as a grad student and am quite confident in my investment abilities and knowledge at this point).  I found him through NAPFA (fee-only advisors).

While I would never say anyone needs a financial advisor (and I'm not sure if/when I will use another one), it was a TREMENDOUS experience for me.  My advisor (Tom) works mostly with clients/families much wealthier than me - in fact, I was his youngest client, and we had a bit of a mentor-mentee relationship. (He even encouraged me to do the grad school thing)  Sure, he had a hard time wrapping his mind around the fact that I don't need 80K/year of income in retirement.  But he had the perspective of someone who had been investing for a long time, had software/analysis that would've been costly or time-consuming for me to do on my own on my 401K options, and educated me in many ways.  I told him about MMM and he did read a bit of the blog (which he found interesting, although wasn't entirely aligned with his views).  Having this advisor gave me a lot of confidence as a 22 yo just starting out.  And I also read basically every personal finance book I could get my hands on during those years, and I've gotten to a really good place thanks to all the above. :)

Beric01

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Re: Do you use a financial advisor?
« Reply #38 on: July 30, 2014, 11:37:29 AM »
I don't currently - I do my own research on all my investments. I might use a fee-based advisor at some point in the future, just to answer a couple questions I need to get past:
  • As a single person, how do I minimize my taxes in retirement?
  • When I reach FI and retire in a foreign country, how do I remove myself from California residency without having to spend a year somewhere? (I don't want to pay California state taxes while living abroad).

These and a few other questions. But I got plenty of time to even figure this stuff out on my own - I'm 9 years from FI.

MrsPotts

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Re: Do you use a financial advisor?
« Reply #39 on: July 30, 2014, 10:45:16 PM »
I put my investment $$ in a target date  457 plan.   Fees are .4%.   Not sure if this is my best option.

Not bad - and unless they offer a less expensive option still a good deal due to the 457 plan wrapper. 

My wife's work recently switched her over to a 2045 fund in her defined contribution plan (they dropped her old funds, which is just as well as they were quite expensive and amounted to a too conservative allocation in my opinion) - this one only has a .1% fee and is currently an 80/20 portfolio.  In the 457, she is also in a 2045 fund but it has a .58% fee and is a 90/10 portfolio.  If only we had the .1% fund available in both plans.  In both cases we can't do better on fees than these target date funds - all the other choices have higher fees, so this is by far the easiest part of the portfolio to manage - we might just switch to funds with further out retirement dates once the taper sets in if we want to keep the stock-bond ratio high for longer.

Switching to a "younger" fund is a good idea.  I am also contemplating putting some of it into the indx option, which is .15 cheaper.

Habilis

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Re: Do you use a financial advisor?
« Reply #40 on: July 30, 2014, 10:50:54 PM »
Just fired mine! 1% for nothing more than behavioral coaching wasn't worth it. I can do everything else myself.