Author Topic: Finding a financial planner  (Read 7002 times)

CommonCents

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Finding a financial planner
« on: October 24, 2013, 11:37:39 AM »
*Cough*  I know a financial planner is negatively viewed by most mustachians.  However, I'm in need of one for several reasons, including that my DH does not believe/trust the numbers we've turned out on retirement, savings, impact of kids on our 'stach, etc.  He is one giant worrywart, the ultimate pessimist, who thinks we need a stach the size of which works itself out to be about a 0.8% withdrawal rate of our current expenses.  (Yes, he may not believe the planner either, but he has offered to go and promises to try hard to believe the planner and the planner's projections.)

With this in mind, any recommendations on how to choose one?  There are so many it's a bit overwhelming.  I've heard of getting a recommendation, but we don't have enough of a stach to use the father of a friend's (he has probably 3-5+ million in the kitty).  And he's the only person I know that has one.

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Re: Finding a financial planner
« Reply #1 on: October 24, 2013, 12:00:01 PM »
Ask your friend for an introduction to the planner anyway. He/she may have recommendations even if you aren't at their minimum asset level.

Americans don't talk about money much (except here of course!). Ask around actively - you may be surprised.

willn

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Re: Finding a financial planner
« Reply #2 on: October 24, 2013, 12:09:56 PM »
Financial planner or not, DH needs to take some responsibility for his fear by gaining knowledge.  Books, magazines, a finance class.  And, he is prudent to skeptical of much advice in the finance industry, so you also need to acknowledge that his active risk meter has some validity.

Look for a fee-only advisor, no commission, or you'll end up with a charming ass selling you universal life insurance products and making it sound like a great deal.


CommonCents

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Re: Finding a financial planner
« Reply #3 on: October 24, 2013, 12:25:25 PM »
Financial planner or not, DH needs to take some responsibility for his fear by gaining knowledge.  Books, magazines, a finance class.  And, he is prudent to skeptical of much advice in the finance industry, so you also need to acknowledge that his active risk meter has some validity.

Look for a fee-only advisor, no commission, or you'll end up with a charming ass selling you universal life insurance products and making it sound like a great deal.

He's actually pretty knowledgeable about financial concepts, investing, etc., he just doesn't agree with things such as "safe" 4% (or 3% or 2% or any...) withdrawals, whether we're ever saving enough to stop worrying, etc.  I agree with him that we ought to not trust that Social Security will be there in the same form as now.  But I don't think that we need to plan for no Social Security, substantially higher taxes, AND taxation of the money in the roth accounts all at the same time, and that we can't have kids because we can't afford them (despite having a paid off apartment, half a million in investments, and a six figure household income).  I have never met anyone more pessimistic about the government/finances/life.  His own mom actually has money hidden in places around her house because she doesn't trust banks.  I hope we find it all when she eventually passes.

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Re: Finding a financial planner
« Reply #4 on: October 24, 2013, 12:31:48 PM »
Have you tried modeling your finances on cfiresim? It shows how your portfolio would have fared during x number of previous U.S. periods. (X depends on how long the period you model is. So, shorter period = more simulations.)

If he is a visual thinker / learner, it could be very compelling for him.

Psychstache

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Re: Finding a financial planner
« Reply #5 on: October 24, 2013, 12:47:20 PM »
Honestly, from what you have said I don't think that a financial planner is going to help. You say that he understands the math, but his worry and pessimism are keeping you two from seeing eye to eye. Sounds like the problem is personality and outlook, not mathematical.

If he is already pessimistic and down about retiring early, he will leave the planner's office saying "but what about this? or this? or that thing that may or may not happen int he future?" and you guys will have flushed good money down the drain.

I think your money might be better spent seeing a counselor than a financial planner to have a neutral party to work through your differing views. If his attitude is significantly impairing him, you may even want to consider talking to him about getting help in the form of medication. Anxiety Disorder is a real life impairing medical condition no different than high blood pressure or diabetes and there is nothing wrong with seeking help for it.

Also, tell him to stop watching CNN money and the local news and watch the anxiety melt away :P


CommonCents

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Re: Finding a financial planner
« Reply #6 on: October 24, 2013, 01:34:26 PM »
Also, tell him to stop watching CNN money and the local news and watch the anxiety melt away :P

lol :)  So true.

I've tried to get him into the doctor for depression etc to no avail.  Hasn't gone to the doctor in 15+ years.  He's even got an unexplained bump at the moment, a family with a history of cancer, and works in the field of cancer (not currently researching but has a phd) and will.not.go. to get it checked out.  You can lead a horse to water quote is incorrect.  Sometimes you can't even get the horse to the water.

Normally I'd agree, but this is the first time he suggested a planner out of the blue, so I wanted to seize the momentum and run with it.

vespito

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Re: Finding a financial planner
« Reply #7 on: October 24, 2013, 04:33:33 PM »
I haven't used them, but the Garrett Planning Network website should be able to list out fee only advisers in your area.  There is always your brokerage - depending on your total assets you may be able to get a free or reduced fee financial planning session.  I recently had one with Vanguard and was pleased; I had very specific questions that were answered.
« Last Edit: October 24, 2013, 04:35:05 PM by vespito »

abliviax

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Re: Finding a financial planner
« Reply #8 on: October 24, 2013, 06:13:35 PM »
CommonCents --

Get someone on this forum to pose as a financial planner.  My services are available for $50/hr via Skype ;)

In all seriousness, I know in part what you are dealing with  -- reminds me of my father (60ish) who has chosen not to invest at all, and has great distrust of 3% "safe" withdrawal rates.  Have you shown him the Trinity study(ies) that these numbers come from?  If he is technical/analytical that may help some.

Also, depression can be partially addressed with diet.  Omega fatty acids and Vitamin D and water have all had some effect on depression in studies.  This may not be enough, but I would try.  Cook fish (salmon esp.), eat nuts, flax seeds, and/or supplements, and get one of those Camel-bak water bottles so water can be with you all day long (and only a sip away, not having to unscrew lid - makes a difference).

Good luck!

MDM

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Re: Finding a financial planner
« Reply #9 on: February 26, 2014, 01:27:31 AM »
Common Cents: Any luck?  No need to reply if, to make a decent story, you would have to share too much personal detail - but the follow-up on actual "case study" results can be more educational than the original speculation.

NeverWasACornflakeGirl

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Re: Finding a financial planner
« Reply #10 on: February 26, 2014, 10:18:50 AM »
I'd also really like to hear how this went.  Just last night my SO said she'd like to visit a financial planner because she doesn't understand or trust what I'm telling her.  The numbers I give her don't mean anything to her.  When I say, "We've got a net worth of $700,000!  Isn't that great?!" (we're 43 years old) she just looks at me like I've got two heads.  But I've realized she would have the same reaction if I said we had $2 million, so it's not the amount.  She's nervous about me not working, period.  She doesn't have an anxiety disorder or anything, she just has a "work until you're 65" mindset.

As a first step we've made an appointment with a family lawyer/CPA for next week to go over our legal documents and make sure that we've structured everything appropriately for taxation, etc.  We're a lesbian couple without the benefit of marriage in our state, and we have an 8 year old daughter, and with the end of DOMA everything is in flux.

CommonCents

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Re: Finding a financial planner
« Reply #11 on: February 26, 2014, 02:03:08 PM »
Common Cents: Any luck?  No need to reply if, to make a decent story, you would have to share too much personal detail - but the follow-up on actual "case study" results can be more educational than the original speculation.

Hi MDM,

Not very much of an update yet.  We ended up incredibly busy for a time (going away on our very belated honeymoon, buying a house in late Dec, fixing up the condo to sell, holidays, a big event I was working on with my nonprofit, etc).  When he transferred money to his checking account for the downpayment, all of the sudden the bank became *very* interested in him, upgrading his account (available to those over $50K in account, although we've since dropped below it) and reaching out to him to set up a financial planning session for free.

We agreed to go see this guy, but then DH couldn't get back in touch with him.  He went in last week and discovered the guy may have left the bank, but the bank is now setting us up with someone else.  Due to work travel and other constraints I'm guessing it won't happen for another week or two.  We have low expectations of quality, but figure this is a "step 1" scenario, and we can go find a better/diff person later if we think it worthwhile.  We are prepared for them to try to sell us on products.

Once we sell the condo (btw, got WAAAY more than expected for offers this Monday, accepting one that was $15K more than our "best case" scenario - which helps his pessimism brighten a touch), we're planning to sit down and figure out more concretely a plan for our finances and budget.

In late Nov/Dec I did show him a spreadsheet showing a rough calculation of when we could be FI, without access to my pension (could get a teeny one at 10 years, max out 32 years, been here 2) or SS (he doesn't trust it, and due to my pension I can't get it, losing out on putting 10-15 years into SS already).  He said it would be very awesome if true, but was skeptical, although less so than before. 

My plan is to:
1) See the free financial planner
2) Collect up 6-12 mos worth of bills in the new house, to get a baseline of spending
3) Do up more spreadsheets/calculations/budget etc to present to him

I think I can't get away from the fact that he will want to overestimate our expenses, and underestimate the investment gains, but I am hopeful that as the stash really takes off in terms of dollars working for himself, he will relax and decide it just maybe is possible to retire early, even if we have kids (mid to late 30s, so right tight on time).

frugaldrummer

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Re: Finding a financial planner
« Reply #12 on: February 26, 2014, 02:49:50 PM »
If the only factor affecting his decision to have kids is whether they will impact his chances of early retirement - he should not have kids.

Really, no one should have kids unless they really WANT to have them.  And if you really WANT to have them, you wouldn't let early retirement stand in your way.


CommonCents

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Re: Finding a financial planner
« Reply #13 on: February 26, 2014, 03:05:57 PM »
If the only factor affecting his decision to have kids is whether they will impact his chances of early retirement - he should not have kids.

Really, no one should have kids unless they really WANT to have them.  And if you really WANT to have them, you wouldn't let early retirement stand in your way.

Thanks for your thoughts.  Before I even moved in with him while dating, we discussed kids and agreed to have kids because it was something very important to me.  After we got married, the only concerns he expressed were financial.  (One could easily reverse it and say if the only reason NOT to have them is financial, then one should have them if one can afford it.)  I certainly will not force him to have kids - I agree one should not be forced and that makes for bad parents.  But, I would also seriously consider leaving the marriage if that were the case, that he would go against what we had discussed and agreed earlier, and is important to me.  In any event, this is off-topic from the thread.

MDM

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Re: Finding a financial planner
« Reply #14 on: February 26, 2014, 11:47:13 PM »
CommonCents your plan looks great - also, agree completely with your expectation of and preparation for the bank rep.

What you describe in steps 2 & 3 is exactly what we did prior to leaving the workaday world about a year ago. 

We happen to use Excel and Quicken for tracking and projection.  Can't really compare Quicken to other options, just comment that it serves us well.  In short, we
- exported "last 12 months" spending from Quicken to Excel
- used Excel to evaluate expected spending changes "in retirement"
- put that spending budget back into Quicken and used Quicken's Planning tool to project annual net worth until ~age 90.

We were "somewhat conservative" in planning, assuming
- Soc Sec would pay only 50% of ssa.gov projections
- 3% inflation and 4% (1% over inflation) investment results
- annual spending 25% higher than what we expected from our Excel exercise

When the result came back "your plan is working" (i.e., positive net worth at age 90), the cord was cut.

In the past year (thanks in part to this blog) our spending was even less than projected, and the 2013 investment return was >>4%, so "so far so good". 

We didn't know any financial planners we could trust at the time, and knew a few whose advice we specifically did not believe, so again good to see your skepticism regarding the bank rep.  Recently we have found a firm who might provide a valuable perspective so we are going to have them look at our situation for an hourly fee.  Some might say we are now being overly conservative and wasting the fee, but so it goes. 

Oh, and as far as timing on the kids: we are in our mid-50s, with five kids.  The oldest is 26, the youngest is 12, and all doing well.  You can do the math :).  Good luck!

mh1361

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Re: Finding a financial planner
« Reply #15 on: February 27, 2014, 08:08:54 AM »
Question for MDM and CommonCents.

What specifically were you looking for when searching for a financial planner? Sounds like if someone can break away from the mold of how most of us view financial planners, there might be a niche market for them. I don't know how you would go about identifying who you think is just after your money, and who is really trying to help you. Can a financial planning firm be a non-profit? Would that make a difference to you? Sorry if this is "hijacking a thread." I can post elsewhere if necessary.

MDM

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Re: Finding a financial planner
« Reply #16 on: February 27, 2014, 11:26:35 AM »
We'll get back to you on our experience (both our reasons to go with this particular firm and how it worked out) after all is said and done.  Just in the "data gathering" stage now.  Thanks for the interest.

CommonCents

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Re: Finding a financial planner
« Reply #17 on: May 16, 2014, 12:22:32 PM »
UPDATE:  So we finally met with the financial planner.  I think the name is a bit of a misnomer as he did no financial planning with us.   During our hour meeting, DH started it off saying he was interested in the self-directed account, not in the advisory services account (the "cheap" option there costs $75 every trade they do).  We chit chatted, he collected information about our assets, selling of the condo etc.  Now, fellow mustachians, I am NOT an excel whiz like most of you.

  • I don't calculate out a detailed budget.  I can't even get into my mint account on most days, and it doesn't include everything. 
  • I don't have a detail spreadsheet of our assets down to the penny to track.
  • I don't have a retirement date scheduled out.

But apparently the fact that I could ballpark our liquid net worth (excluding money in house) at $700k and then while in the meeting, pull up my (MUCH MORE GENERAL than y'alls) spreadsheet, and correct myself to say it was $706k, but investable assets was that less $24k (as it included my state pension value and some locked assets), was apparently quite impressive to him (perhaps more so than the total figure).  He then proceeded to insult my husband slightly by saying that having even one partner tracking it was ahead of 99% of people out there.  (DH pays attention to his, admittedly bigger assets, but not in one document.  He doesn't really track mine.)

Anyhow, he took notes and then handed us paperwork...to open the account DH said he didn't want!  He was very nice (and not pushy) when DH explained again, but it made DH lose a bit of faith in it and wonder if he was going to push expensive services later.  It also doesn't seem as if they do retirement planning if you don't pay for their more expensive services.  So we may need to look elsewhere.

That all said, there are a few postive takeaways:
  • DH was startled by the net worth figure I quoted, questioning it.  I backed it up later.  It's approximately $150k more than he thought we had.  (Coincidentally, just about the level of assets I have alone...)  Not sure why he doesn't listen, as I have told it to him before but he doesn't believe it, but maybe now he will. 
  • DH agreed to sit down to go over the chart I drew up later, and make sure I've got the most up to date figures and to discuss it.
  • DH agreed we might need to look at finding an actual planner.

On the less positive personal side, DH is getting increasingly frustrated and depressed at his work situation.  A friend of mine was even asking me about it the other day, as she even noticed he's gone downhill considerably in the past few months, wondering what she could do to help me get him help, trying to brainstorm ideas.  His work has two open positions still, with no luck hiring anyone (in a *very* small group), and one person still out on maternity leave.  I told him a bit ago he should consider a sabbatical or quitting if need be, but he doesn't seem to agree.  In part he wants to see the product he launched succeed.  For the other part...I'm not sure what it is.  Partially believing it has to get better.  Partially not wanting to "quit" on something.  Perhaps partially a holdover from ~3 years ago with much lower assets, I was unemployed and somewhat freaked when he talked about just quitting his job from the stress, rather than actively looking for a new job.

MDM

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Re: Finding a financial planner
« Reply #18 on: September 24, 2014, 05:17:22 PM »
We'll get back to you on our experience (both our reasons to go with this particular firm and how it worked out) after all is said and done.  Just in the "data gathering" stage now.  Thanks for the interest.
Took even longer for us to schedule and complete discussions with a couple of firms.  One took a cursory look for free, and the other charged an hourly rate for a more detailed look.  Both had told us upfront that they would avoid load funds, didn't like annuities, etc. - so we knew going in that they thought more or less the same as we do.

Both confirmed our Quicken+Excel projections that considering current investments, spending, pension and SS options, "we should be ok."  This was the main result we sought: independent confirmation of our own work.  Much as testing one's own code (because the blind spots present during code development will likely persist into testing) is not as good as having someone else test it, we wanted another set of eyes with different tools and methods.

The free firm actually did a better job explaining load classes to DW's satisfaction.  The hourly fee firm did (as one would expect) a better job looking at things in more detail.  They did suggest a different allocation among 401k options that we may implement, and discussed 529 and pension options in more detail than we had considered. 

We will continue to self-direct our investments, but all in all it seemed a worthwhile one-time effort, including the fee paid. 

sobezen

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Re: Finding a financial planner
« Reply #19 on: September 24, 2014, 05:36:58 PM »
Out of curiosity did you consider using PersonalCapital's CFP review services? I had my net worth and overall strategy analyzed by their team and they helped confirm my own strategies were on-track. Also PersonalCapital has brick and mortar locations if that is a concern.  Lastly, I learned they also provide an added complimentary service of analyzing your 401k and even other accounts you do not bring over as part of your assets under management (AUM), so your portfolio is holistically aligned with your goals.

MDM

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Re: Finding a financial planner
« Reply #20 on: September 24, 2014, 06:09:08 PM »
Haven't tried Personal Capital, but have tried Future Advisor.  As this review notes,
Quote
As with traditional advisers, portfolio suggestions will vary by company, as this writer found. For my retirement portfolio, Personal Capital suggested I increase my U.S. and international stock exposure. Jemstep said I'm weighted too heavily in U.S. stocks and should increase my allocation to international equities. FutureAdvisor suggested I increase my exposure to international real-estate investment trusts, emerging markets and small-cap stocks.

Main problem I had with FA was that it didn't recognize a bunch of my holdings (individual stocks and non-qualified deferred compensation account).  Don't know if PC would have similar issues.