Author Topic: Doubting myself after meeting with financial advisor.  (Read 14702 times)

nyxst

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Doubting myself after meeting with financial advisor.
« on: October 03, 2016, 10:15:54 PM »
After meeting with a financial advisor I have known for many years, I'm starting to doubt what I have been doing and whether I'm going about things correctly or not. I tend to get a bit defensive sometimes, and I try to keep that in check, but I really feel like this financial advisor was angry that I was able to save money.  She doesn't like where I decided to put everything (vanguard), she said that by pulling the funds out of American funds and moving them to vanguard, I am screwing myself and my co-workers out of a better front end load rate... She wants me to stop contributing to my company sponsored plan (except what they match) and stop contributing to my Roth IRA in favor of building up an emergency fund of around $30,000 first.
I'm disappointed. She is an advisor I have know for many years and gave me good ideas when I was younger, and  I truly expected her to look at my current situation and be impressed, or maybe even a little proud, that I have been saving and investing.  I am divorced and am a single with three kids...not a high wage earner, but doing good enough to save. Mid-thirties. No cable. Cheap cell phones.
Anyway, now I have been trying to decide if what I'm doing is all wrong... I don't have a lot saved by mustachian standards, but I've max out both the company sponsored Simple IRA ($12,500/year) and my Roth IRA ($5500/ year) for the past few years. I keep about $3,000 in a checking account as cash. I always sort of figured my Roth was my emergency fund... I have access to credit and could use that until the funds came out of the Roth... I own my home with very little left to pay off... I have a car loan, but it is at 0% interest. I have no other debt... Low monthly expenses.
So, I guess I'm asking what you guys think.... Should I stop and save $30,000 as cash in a bank account before I continue maxing out retirement plans, or should stay the course and ignore her advice?

sol

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Re: Doubting myself after meeting with financial advisor.
« Reply #1 on: October 03, 2016, 10:28:28 PM »
Do you have a job that provides irregular income?  Are you in danger of being unemployed soon?  Are your expenses over $60k/year?

In general, if you have a secure job and moderate expenses, then keeping more than six months of emergency fund on hand in addition to your Roth and lines of credit is probably just wasteful.

Keep in mind that financial advisors have no credentials or required training, and are not legally required to represent your best interests.  They make money by convincing you that you are stupid and incapable of buying index funds on your own.  Like car salesman, they will use whatever tactics they think will be effective to introduce that element of doubt into your convictions, hoping you will decide you need the supposed safety and expertise they are selling.  It's a mindgame. 

In this case, she's probably just upset that you're investing funds in low-cost funds from which she is not earning a commission.  Her salary is based on investing your money for you, so when she finds out that your'e investing funds without her, she has just learned that she missed out on a whole bunch of income skimmed from those investments.  Advisors are always in search of new clients with more funds to invest, because they get a percentage, so the last thing they want to hear is that you have extra funds that they're not getting a cut of.  She wants to control all of it.

Financial advisors work for you.  You are their boss.  They need to keep you happy, and provide more value to you than you are paying them.  If they fail to meet any of these criteria, you can always cut them off 100% today.  You don't even need to say anything, just walk out and then have Vanguard transfer all of the funds on their end and you never have to talk to her again.

marty998

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Re: Doubting myself after meeting with financial advisor.
« Reply #2 on: October 04, 2016, 12:42:26 AM »
You know you are doing the right thing. Your financial advisor has a vested interest in those American Funds.

She doesn't like where I decided to put everything (vanguard), she said that by pulling the funds out of American funds and moving them to vanguard, I am screwing myself and my co-workers out of a better front end load rate... She wants me to stop contributing to my company sponsored plan (except what they match) and stop contributing to my Roth IRA in favor of building up an emergency fund of around $30,000 first.

She actually said this? Wow, she's got some Kahunas on her...

I think this means that the advisor (her) gets a tiered commission depending on the total contributions put in by the Company & employees. If the total increases above a certain level (e.g. $500,000 per year) the commission % rate goes down, but her overall commission in absolute $ terms still goes up.

Basically, the rest of the co-workers are paying a higher % rate because people like you have chosen to go elsewhere and pay nothing.

Stay the course, and stay away from her.

Good luck.

chasesfish

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Re: Doubting myself after meeting with financial advisor.
« Reply #3 on: October 04, 2016, 05:03:11 AM »
You need to ask the "advisor" how they get paid.  Did you pay her a fee for the hour she spent with you?  If not, consider her "advice" from the standpoint of a commissioned salesperson who makes no money in Vanguard but is paid by American Funds.


nyxst

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Re: Doubting myself after meeting with financial advisor.
« Reply #4 on: October 04, 2016, 05:17:44 AM »
To me that is the strangest part... She is not a financial advisor for my company at all!  she is someone who was the financial advisor for a company I worked for 15 years ago. So she doesn't get any commission at all of what I do. I think that's the reason I've been being so bothered by it.
But... she did ask me for my company's business, including life insurance policies, at the end of our meeting before I left so maybe she was being pre-emptive. She won't be getting our business, I'm sure of that... but because she's not tied to it it made me really wonder if I was doing something terribly wrong! I even had her pull up a website that I used to look at comparison results between funds to show her that American Funds was way worse than what my Vanguard funds were doing (fees and returns), but she told me that I was reading the whole chart wrong. So overall I think she's crazy and gaslighting me a bit. I will just avoid her for the future. Anyway thanks for your replies! I feel a little bit better :-) and I think I'm just going to keep thinking of my Roth as my emergency fund for now and save everything like I have been.

Zamboni

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Re: Doubting myself after meeting with financial advisor.
« Reply #5 on: October 04, 2016, 06:26:11 AM »
1) It sounds like you have your act together. Well done!
2) It sounds like she is a parasite . . .  spray her with some parasite repellant next time she is near you!

ender

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Re: Doubting myself after meeting with financial advisor.
« Reply #6 on: October 04, 2016, 06:38:56 AM »
How much do you spend?

If you spend $15k/month then a $30k emergency fund is a good idea.

If you spend $1.5k/month it's hugely overkill.

radram

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Re: Doubting myself after meeting with financial advisor.
« Reply #7 on: October 04, 2016, 07:01:06 AM »
To me that is the strangest part... She is not a financial advisor for my company at all!  she is someone who was the financial advisor for a company I worked for 15 years ago. So she doesn't get any commission at all of what I do. I think that's the reason I've been being so bothered by it.
But... she did ask me for my company's business, including life insurance policies, at the end of our meeting before I left so maybe she was being pre-emptive. She won't be getting our business, I'm sure of that... but because she's not tied to it it made me really wonder if I was doing something terribly wrong! I even had her pull up a website that I used to look at comparison results between funds to show her that American Funds was way worse than what my Vanguard funds were doing (fees and returns), but she told me that I was reading the whole chart wrong. So overall I think she's crazy and gaslighting me a bit. I will just avoid her for the future. Anyway thanks for your replies! I feel a little bit better :-) and I think I'm just going to keep thinking of my Roth as my emergency fund for now and save everything like I have been.

Do you have a job that provides irregular income?  Are you in danger of being unemployed soon?  Are your expenses over $60k/year?

In general, if you have a secure job and moderate expenses, then keeping more than six months of emergency fund on hand in addition to your Roth and lines of credit is probably just wasteful.

Keep in mind that financial advisors have no credentials or required training, and are not legally required to represent your best interests.  They make money by convincing you that you are stupid and incapable of buying index funds on your own.  Like car salesman, they will use whatever tactics they think will be effective to introduce that element of doubt into your convictions, hoping you will decide you need the supposed safety and expertise they are selling.  It's a mindgame. 

In this case, she's probably just upset that you're investing funds in low-cost funds from which she is not earning a commission.  Her salary is based on investing your money for you, so when she finds out that your'e investing funds without her, she has just learned that she missed out on a whole bunch of income skimmed from those investments.  Advisors are always in search of new clients with more funds to invest, because they get a percentage, so the last thing they want to hear is that you have extra funds that they're not getting a cut of.  She wants to control all of it.

Financial advisors work for you.  You are their boss.  They need to keep you happy, and provide more value to you than you are paying them.  If they fail to meet any of these criteria, you can always cut them off 100% today.  You don't even need to say anything, just walk out and then have Vanguard transfer all of the funds on their end and you never have to talk to her again.



+1 on the comment regarding the adviser using any tactic available.  After my wife's Uncle passed away, his adviser proceeded to try to get us to reinvest his annuity back with him, and according to him it was a pressing issue that had to be wrapped up in 30 days.  His best "investment" was a lifetime annuity yielding less than 2%.  Absolute bullsh*t  but it worked with my wife's brother.  My wife and her sister did a 1035 exchange, us with vanguard and her sister with another adviser that was recommending investments that were better than the annuities we were shown, but the fees were higher than our vanguard options.  The Uncles POS adviser actually told my sister in law that her Uncle would be disappointed in her for not buying the annuity.  This was 14 days after his death.  I am sure some advisers are OK, but this guy is absolute scum. He was at the funeral talking about how expensive his sailboat is getting to be. He is the poster child for every financial adviser stereotype you have ever heard. What is even better is that my mother and father in law absolutely LOVE him.  He is like the son they never had. That's right, they actually DID have a son.  He is the one that bought the annuity.  I would bet that he controls about 80% of what the in laws  own, so we will deal with him again someday.

If you want confirmation that you are doing the right thing, ask to see ALL of the advisers investments for the past 10 years.  I am confident she will either pass, or you will see that your returns are comparable, after fees.

She is clearly in a long play to get more business.

Villanelle

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Re: Doubting myself after meeting with financial advisor.
« Reply #8 on: October 04, 2016, 07:25:59 AM »
She sounds like an awful advisor and kind of a slimy person.

I will say that unless there are special circumstances, I probably do agree with her about stopping investments in your company plan beyond what they match. You can likely do better with that money in Vanguard index funds.  Contribute to the company plan up to the match, then to the retirement accounts.

Rubic

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Re: Doubting myself after meeting with financial advisor.
« Reply #9 on: October 04, 2016, 07:27:28 AM »
Wow.

I'm not surprised, but wow.  I get how financial advisers develop a personal
relationship with their clients and establish the idea that finances are so
complicated that you need experts who need to charge high fees.

I have four friends (two couples) that shared the same financial adviser.  They
were always talking him up about what a great job he was doing -- essentially
repeating to me what he told them about how well he was managing their
accounts (e.g. switching assets just before a likely downturn, high trading
activity, etc.).

Nothing I could say would convince them otherwise, until they watched
John Oliver's takedown of retirement plans:

https://www.youtube.com/watch?v=gvZSpET11ZY

A week later everyone switched to index funds.

fattest_foot

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Re: Doubting myself after meeting with financial advisor.
« Reply #10 on: October 04, 2016, 08:10:41 AM »
She sounds like an awful advisor and kind of a slimy person.

I will say that unless there are special circumstances, I probably do agree with her about stopping investments in your company plan beyond what they match. You can likely do better with that money in Vanguard index funds.  Contribute to the company plan up to the match, then to the retirement accounts.

That tax deferring attribute of a Simple IRA makes it worthwhile to still max out, assuming you have low fee funds to invest in. Mad Fientist has a really good article about why tax deferred investments beat out taxable in the long run.

RosieTR

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Re: Doubting myself after meeting with financial advisor.
« Reply #11 on: October 04, 2016, 08:16:10 AM »
She sounds like an awful advisor and kind of a slimy person.

I will say that unless there are special circumstances, I probably do agree with her about stopping investments in your company plan beyond what they match. You can likely do better with that money in Vanguard index funds.  Contribute to the company plan up to the match, then to the retirement accounts.

There may still be a tax benefit for contributing to the work plan. The OP indicated already maxing Roth separately. It would depend on fees and available funds (ex. only high churn/poor diversification).

As for Efund...depend on your spending, other resources, job security and possible likely emergencies. As a single parent it might be good to keep some more at low risk, and highly available. 30K seems excessive unless you expect your job to go away and it to take a long time to find another. Presumably you would get unemployment though, so the greater worry IMO is a big unexpected health issue with one of the kids or house issue such as the urgent need for a new furnace/ac/window/water heater/whatever.

Genevieve

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Re: Doubting myself after meeting with financial advisor.
« Reply #12 on: October 04, 2016, 08:21:01 AM »
I work in the financial industry, and I think you're on the right track. Personally, I might beef up my liquid cash a bit more, but to an amount closer to 3 months of expenses or enough to handle a big purchase like a car, a move, a house repair, or a health insurance deductible.

Once you take money out of the Roth, you can't put it back in (past a grace period), so I think of my Roth as SHTF emergency fund.

boarder42

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Re: Doubting myself after meeting with financial advisor.
« Reply #13 on: October 04, 2016, 08:36:36 AM »
I work in the financial industry, and I think you're on the right track. Personally, I might beef up my liquid cash a bit more, but to an amount closer to 3 months of expenses or enough to handle a big purchase like a car, a move, a house repair, or a health insurance deductible.

Once you take money out of the Roth, you can't put it back in (past a grace period), so I think of my Roth as SHTF emergency fund.

but why?

he is maxing a SEP IRA and a roth IRA ... that would be 1500 a month he could just put that contribution on hold and have 3k available within 2 months to cover any charges on a CC before tapping anything else.

CowboyAndIndian

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Re: Doubting myself after meeting with financial advisor.
« Reply #14 on: October 04, 2016, 08:39:50 AM »
After meeting with a financial advisor I have known for many years, I'm starting to doubt what I have been doing and whether I'm going about things correctly or not. I tend to get a bit defensive sometimes, and I try to keep that in check, but I really feel like this financial advisor was angry that I was able to save money.  She doesn't like where I decided to put everything (vanguard), she said that by pulling the funds out of American funds and moving them to vanguard, I am screwing myself and my co-workers out of a better front end load rate... She wants me to stop contributing to my company sponsored plan (except what they match) and stop contributing to my Roth IRA in favor of building up an emergency fund of around $30,000 first.
I'm disappointed. She is an advisor I have know for many years and gave me good ideas when I was younger, and  I truly expected her to look at my current situation and be impressed, or maybe even a little proud, that I have been saving and investing.  I am divorced and am a single with three kids...not a high wage earner, but doing good enough to save. Mid-thirties. No cable. Cheap cell phones.
Anyway, now I have been trying to decide if what I'm doing is all wrong... I don't have a lot saved by mustachian standards, but I've max out both the company sponsored Simple IRA ($12,500/year) and my Roth IRA ($5500/ year) for the past few years. I keep about $3,000 in a checking account as cash. I always sort of figured my Roth was my emergency fund... I have access to credit and could use that until the funds came out of the Roth... I own my home with very little left to pay off... I have a car loan, but it is at 0% interest. I have no other debt... Low monthly expenses.
So, I guess I'm asking what you guys think.... Should I stop and save $30,000 as cash in a bank account before I continue maxing out retirement plans, or should stay the course and ignore her advice?

nyxst, please watch John Oliver to understand what Financial planners are. Watch this every time  you loose confidence in your self and start believing the Financial Advisor. I work on Wall St. (In technology, not finance) and everything he says is true.

https://youtu.be/gvZSpET11ZY

Your financial advisor is wrong! She want more fees, so she is leading you to a front end load fund so that she makes a bundle of fees. She is screwing you over.

My suggestions
  • Drop this Advisor like a hot potato. She is toxic and is screwing you. She was grooming you to be fleeced when you started making money. She is now trying to collect.
  • Move your funds to Vanguard
  • Keep Contributing to your 401k (Check and see if the fees are not abysmal and there are no front/backend loads)
  • Follow Sols advice about the emergency fund
  • Watch the John Oliver video every week!

PS: I see rubic had suggest John Oliver also. Good advice from all of the folks here.
« Last Edit: October 04, 2016, 08:42:32 AM by CowboyAndIndian »

nyxst

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Re: Doubting myself after meeting with financial advisor.
« Reply #15 on: October 04, 2016, 08:42:38 AM »
She sounds like an awful advisor and kind of a slimy person.

I will say that unless there are special circumstances, I probably do agree with her about stopping investments in your company plan beyond what they match. You can likely do better with that money in Vanguard index funds.  Contribute to the company plan up to the match, then to the retirement accounts.

There may still be a tax benefit for contributing to the work plan. The OP indicated already maxing Roth separately. It would depend on fees and available funds (ex. only high churn/poor diversification).

As for Efund...depend on your spending, other resources, job security and possible likely emergencies. As a single parent it might be good to keep some more at low risk, and highly available. 30K seems excessive unless you expect your job to go away and it to take a long time to find another. Presumably you would get unemployment though, so the greater worry IMO is a big unexpected health issue with one of the kids or house issue such as the urgent need for a new furnace/ac/window/water heater/whatever.


I am still trying to figure this part out also... my company offers the Simple IRA and we aren't big enough to do a 401k.  They match the first 3% I put in it. I put in $12,500 per year and these funds HAVE to go into American Funds with a front load of 3.5%.  Then, I roll them out of American Funds into my Vanguard IRA, so i keep the tax deferred status on the up and up... I did the math a few years back and I determined it was better for me to let the growth happen in Vanguard. I recently found out my boss is doing the same thing (moving his out to Schwab) so I don't think that our company would be moved to a better fee "bracket" even if I left my money there.  My boss and I are the only contributors that put in more than the match.

I think i will shoot for $10,000 in the cash emergency fund for the time being. That should cover a new roof, and that would likely be my most expensive emergency. 

nyxst

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Re: Doubting myself after meeting with financial advisor.
« Reply #16 on: October 04, 2016, 08:46:35 AM »
How much do you spend?

If you spend $15k/month then a $30k emergency fund is a good idea.

If you spend $1.5k/month it's hugely overkill.

I spend about $3,000 per month (on the high side) and am working hard to get that down to $2,500 per month.  I was thinking about maybe $10,000 in a bank account would be good.  Even then, I doubt I would ever be out of work for very long unless I was injured or sick.  I am thinking my $3k isn't enough.

CowboyAndIndian

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Re: Doubting myself after meeting with financial advisor.
« Reply #17 on: October 04, 2016, 08:47:27 AM »
I am still trying to figure this part out also... my company offers the Simple IRA and we aren't big enough to do a 401k.  They match the first 3% I put in it. I put in $12,500 per year and these funds HAVE to go into American Funds with a front load of 3.5%. 

That is bad. 3.5% front end load is awful (not as bad as my company which has a Putnam fund with 5% front end load). I believe that kickbacks maybe involved here.

Quote
Then, I roll them out of American Funds into my Vanguard IRA, so i keep the tax deferred status on the up and up... I did the math a few years back and I determined it was better for me to let the growth happen in Vanguard. I recently found out my boss is doing the same thing (moving his out to Schwab) so I don't think that our company would be moved to a better fee "bracket" even if I left my money there.  My boss and I are the only contributors that put in more than the match.

But you still loose the 3.5% (with match of 3%, it is still a loss.) I bet the 3.5 load is on the company contribution also....
You are doing the right thing to move it to Vanguard.

nyxst

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Re: Doubting myself after meeting with financial advisor.
« Reply #18 on: October 04, 2016, 08:49:21 AM »
1) It sounds like you have your act together. Well done!
2) It sounds like she is a parasite . . .  spray her with some parasite repellant next time she is near you!

thank you.. I won't be meeting with her again. 

nyxst

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Re: Doubting myself after meeting with financial advisor.
« Reply #19 on: October 04, 2016, 09:02:28 AM »
I am still trying to figure this part out also... my company offers the Simple IRA and we aren't big enough to do a 401k.  They match the first 3% I put in it. I put in $12,500 per year and these funds HAVE to go into American Funds with a front load of 3.5%. 

That is bad. 3.5% front end load is awful (not as bad as my company which has a Putnam fund with 5% front end load). I believe that kickbacks maybe involved here.

Quote
Then, I roll them out of American Funds into my Vanguard IRA, so i keep the tax deferred status on the up and up... I did the math a few years back and I determined it was better for me to let the growth happen in Vanguard. I recently found out my boss is doing the same thing (moving his out to Schwab) so I don't think that our company would be moved to a better fee "bracket" even if I left my money there.  My boss and I are the only contributors that put in more than the match.

But you still loose the 3.5% (with match of 3%, it is still a loss.) I bet the 3.5 load is on the company contribution also....
You are doing the right thing to move it to Vanguard.

It is awful.  I hate the 3.5% frontload, but I think it is unavoidable.  I put in $12,500 and my company puts in $1740 per year.  So the total going in is about $1200 per month, minus the front end load of about $42 per month (3.5% of $1200), so its not like ALL of what my company contributes is a loss...

CowboyAndIndian

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Re: Doubting myself after meeting with financial advisor.
« Reply #20 on: October 04, 2016, 09:11:16 AM »
But you still loose the 3.5% (with match of 3%, it is still a loss.) I bet the 3.5 load is on the company contribution also....
You are doing the right thing to move it to Vanguard.

It is awful.  I hate the 3.5% frontload, but I think it is unavoidable.  I put in $12,500 and my company puts in $1740 per year.  So the total going in is about $1200 per month, minus the front end load of about $42 per month (3.5% of $1200), so its not like ALL of what my company contributes is a loss...

Yeah, you are right. I misread it as 3% of your contribution, while it is 1-1 match of the first 3% of your contribution.

NoStacheOhio

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Re: Doubting myself after meeting with financial advisor.
« Reply #21 on: October 04, 2016, 09:25:31 AM »
She sounds like an awful advisor and kind of a slimy person.

I will say that unless there are special circumstances, I probably do agree with her about stopping investments in your company plan beyond what they match. You can likely do better with that money in Vanguard index funds.  Contribute to the company plan up to the match, then to the retirement accounts.

There may still be a tax benefit for contributing to the work plan. The OP indicated already maxing Roth separately. It would depend on fees and available funds (ex. only high churn/poor diversification).

As for Efund...depend on your spending, other resources, job security and possible likely emergencies. As a single parent it might be good to keep some more at low risk, and highly available. 30K seems excessive unless you expect your job to go away and it to take a long time to find another. Presumably you would get unemployment though, so the greater worry IMO is a big unexpected health issue with one of the kids or house issue such as the urgent need for a new furnace/ac/window/water heater/whatever.


I am still trying to figure this part out also... my company offers the Simple IRA and we aren't big enough to do a 401k.  They match the first 3% I put in it. I put in $12,500 per year and these funds HAVE to go into American Funds with a front load of 3.5%.  Then, I roll them out of American Funds into my Vanguard IRA, so i keep the tax deferred status on the up and up... I did the math a few years back and I determined it was better for me to let the growth happen in Vanguard. I recently found out my boss is doing the same thing (moving his out to Schwab) so I don't think that our company would be moved to a better fee "bracket" even if I left my money there.  My boss and I are the only contributors that put in more than the match.

I think i will shoot for $10,000 in the cash emergency fund for the time being. That should cover a new roof, and that would likely be my most expensive emergency.

Do your contributions have to get invested? Most accounts have some kind of low/no cost, stable value or cash equivalent option.

nyxst

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Re: Doubting myself after meeting with financial advisor.
« Reply #22 on: October 04, 2016, 03:00:51 PM »
She sounds like an awful advisor and kind of a slimy person.

I will say that unless there are special circumstances, I probably do agree with her about stopping investments in your company plan beyond what they match. You can likely do better with that money in Vanguard index funds.  Contribute to the company plan up to the match, then to the retirement accounts.

There may still be a tax benefit for contributing to the work plan. The OP indicated already maxing Roth separately. It would depend on fees and available funds (ex. only high churn/poor diversification).

As for Efund...depend on your spending, other resources, job security and possible likely emergencies. As a single parent it might be good to keep some more at low risk, and highly available. 30K seems excessive unless you expect your job to go away and it to take a long time to find another. Presumably you would get unemployment though, so the greater worry IMO is a big unexpected health issue with one of the kids or house issue such as the urgent need for a new furnace/ac/window/water heater/whatever.


I am still trying to figure this part out also... my company offers the Simple IRA and we aren't big enough to do a 401k.  They match the first 3% I put in it. I put in $12,500 per year and these funds HAVE to go into American Funds with a front load of 3.5%.  Then, I roll them out of American Funds into my Vanguard IRA, so i keep the tax deferred status on the up and up... I did the math a few years back and I determined it was better for me to let the growth happen in Vanguard. I recently found out my boss is doing the same thing (moving his out to Schwab) so I don't think that our company would be moved to a better fee "bracket" even if I left my money there.  My boss and I are the only contributors that put in more than the match.

I think i will shoot for $10,000 in the cash emergency fund for the time being. That should cover a new roof, and that would likely be my most expensive emergency.

Do your contributions have to get invested? Most accounts have some kind of low/no cost, stable value or cash equivalent option.

This is the best question anyone has ever asked me... apparently... YES there is a money market option where they don't charge me a front load and it still falls within the Simple IRA tax shelter..... you may have just knocked 5 years off of my working life with that little gem :) :) :) i love this forum!!!! more research will be done tonight!

Zamboni

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Re: Doubting myself after meeting with financial advisor.
« Reply #23 on: October 04, 2016, 04:52:06 PM »
^Awesome! . . . I'm glad the forum helped you figure this out, because that front load fee is outrageous.

startingsmall

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Re: Doubting myself after meeting with financial advisor.
« Reply #24 on: October 04, 2016, 06:10:20 PM »
So thankful for this post. I've been blindly maxing my Principal 401k for a while, but apparently never bothered to see what I was actually invested in. Oops. Changed everything tonight.... switched from their supposedly-balanced garbage to index funds with better yields and lower expense ratios. Better late than never, I guess.

nyxst

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Re: Doubting myself after meeting with financial advisor.
« Reply #25 on: October 04, 2016, 06:39:27 PM »
^Awesome! . . . I'm glad the forum helped you figure this out, because that front load fee is outrageous.

yes!! me too.. I called and all new deposits will go to the money market with no load or fees, and then I can move them over to vanguard.... so I will be investing $500 more per year just because of this... an extra $55,000 or more if I keep it going for 30 years... amazing how knowing the right question can change things so much.... outstanding! now I'm so glad the financial advisor angered me enough to write the original post!!! See, she's not ALL bad :)

LeRainDrop

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Re: Doubting myself after meeting with financial advisor.
« Reply #26 on: October 04, 2016, 06:57:26 PM »
I spend about $3,000 per month (on the high side) and am working hard to get that down to $2,500 per month.  I was thinking about maybe $10,000 in a bank account would be good.  Even then, I doubt I would ever be out of work for very long unless I was injured or sick.  I am thinking my $3k isn't enough.

Your plan for $10k in the emergency fund sounds reasonable to me.  Agree with all the others to stay away from this financial advisor -- her interests are NOT aligned with yours.

sol

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Re: Doubting myself after meeting with financial advisor.
« Reply #27 on: October 04, 2016, 07:07:21 PM »
This is the best question anyone has ever asked me... apparently... YES there is a money market option

The real conundrum here is why your so-called financial advisor didn't already advise you of this.

NoStacheOhio

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Re: Doubting myself after meeting with financial advisor.
« Reply #28 on: October 04, 2016, 07:26:39 PM »
She sounds like an awful advisor and kind of a slimy person.

I will say that unless there are special circumstances, I probably do agree with her about stopping investments in your company plan beyond what they match. You can likely do better with that money in Vanguard index funds.  Contribute to the company plan up to the match, then to the retirement accounts.

There may still be a tax benefit for contributing to the work plan. The OP indicated already maxing Roth separately. It would depend on fees and available funds (ex. only high churn/poor diversification).

As for Efund...depend on your spending, other resources, job security and possible likely emergencies. As a single parent it might be good to keep some more at low risk, and highly available. 30K seems excessive unless you expect your job to go away and it to take a long time to find another. Presumably you would get unemployment though, so the greater worry IMO is a big unexpected health issue with one of the kids or house issue such as the urgent need for a new furnace/ac/window/water heater/whatever.


I am still trying to figure this part out also... my company offers the Simple IRA and we aren't big enough to do a 401k.  They match the first 3% I put in it. I put in $12,500 per year and these funds HAVE to go into American Funds with a front load of 3.5%.  Then, I roll them out of American Funds into my Vanguard IRA, so i keep the tax deferred status on the up and up... I did the math a few years back and I determined it was better for me to let the growth happen in Vanguard. I recently found out my boss is doing the same thing (moving his out to Schwab) so I don't think that our company would be moved to a better fee "bracket" even if I left my money there.  My boss and I are the only contributors that put in more than the match.

I think i will shoot for $10,000 in the cash emergency fund for the time being. That should cover a new roof, and that would likely be my most expensive emergency.

Do your contributions have to get invested? Most accounts have some kind of low/no cost, stable value or cash equivalent option.

This is the best question anyone has ever asked me... apparently... YES there is a money market option where they don't charge me a front load and it still falls within the Simple IRA tax shelter..... you may have just knocked 5 years off of my working life with that little gem :) :) :) i love this forum!!!! more research will be done tonight!

*High five*

BlueHouse

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Re: Doubting myself after meeting with financial advisor.
« Reply #29 on: October 04, 2016, 07:26:57 PM »
my company offers the Simple IRA and we aren't big enough to do a 401k. 
How big do you need to be for a 401K?  My 401K plan allows my company to grow from one employee (me) to a few hundred. 

Quote
I did the math a few years back and I determined it was better for me to let the growth happen in Vanguard.
This is awesome. So few people do the math and that's what these financial predators are banking on.  Good on you!
Quote
I recently found out my boss is doing the same thing (moving his out to Schwab) so I don't think that our company would be moved to a better fee "bracket" even if I left my money there.  My boss and I are the only contributors that put in more than the match.
I hope you are fired up enough at your former friend that you approach your boss and then together the two of you approach whoever is responsible for selecting the retirement plan for the company.  It sounds as if the two of you together understand the cost / benefits well enough to explain it to the people who can make a decision to change your benefits.  You can make a big difference for everyone in the company!

feelingroovy

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Re: Doubting myself after meeting with financial advisor.
« Reply #30 on: October 04, 2016, 07:54:45 PM »
I agree with BlueHouse. My company's Simple IRA is with Vanguard. There are no fees to the company and the annual fee to the employee accounts is just $25. This is waived if you have $50k in other accounts at Vanguard.

Can you and your boss convince the company to switch?

nyxst

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Re: Doubting myself after meeting with financial advisor.
« Reply #31 on: October 04, 2016, 08:11:47 PM »
I agree with BlueHouse. My company's Simple IRA is with Vanguard. There are no fees to the company and the annual fee to the employee accounts is just $25. This is waived if you have $50k in other accounts at Vanguard.

Can you and your boss convince the company to switch?

I will try. I had them looking at 401k accounts a few months ago, but then they picked ADP Payroll as the plan sponsor and I told them to forget about it.  that company is terrible with our payroll, I certainly don't want them anywhere near my retirement funds.  I called vanguard and they didn't have anything they could offer me... I don't know if I was asking the wrong questions again or what.. I was talking to Betterment also, but there setup is too different from the norm to appease the overlords... I actually do have some muscle to change the plan we are using, but I cant find the right fit, we only have 5 people contributing now.... we don't have enough (I think vanguard needed a million in assets), but in January we will be adding 4 or 5 more contributors.  I would like to make any changes before the end of the year, so I will call vanguard again tomorrow and see what they say.
« Last Edit: October 04, 2016, 08:54:11 PM by nyxst »

Cwadda

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Re: Doubting myself after meeting with financial advisor.
« Reply #32 on: October 04, 2016, 10:24:45 PM »
Quote
She doesn't like where I decided to put everything (vanguard), she said that by pulling the funds out of American funds and moving them to vanguard, I am screwing myself and my co-workers out of a better front end load rate...
This is disgusting.

pbkmaine

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Re: Doubting myself after meeting with financial advisor.
« Reply #33 on: October 04, 2016, 10:44:33 PM »
Quote
She doesn't like where I decided to put everything (vanguard), she said that by pulling the funds out of American funds and moving them to vanguard, I am screwing myself and my co-workers out of a better front end load rate...
This is disgusting.

+1

dess1313

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Re: Doubting myself after meeting with financial advisor.
« Reply #34 on: October 05, 2016, 01:01:53 AM »
that john oliver video is amazing!!!!  book marking that one for the future!

I wish i could control my own pension but that's not an option for me here

NoStacheOhio

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Re: Doubting myself after meeting with financial advisor.
« Reply #35 on: October 05, 2016, 05:57:01 AM »
I agree with BlueHouse. My company's Simple IRA is with Vanguard. There are no fees to the company and the annual fee to the employee accounts is just $25. This is waived if you have $50k in other accounts at Vanguard.

Can you and your boss convince the company to switch?

I will try. I had them looking at 401k accounts a few months ago, but then they picked ADP Payroll as the plan sponsor and I told them to forget about it.  that company is terrible with our payroll, I certainly don't want them anywhere near my retirement funds.  I called vanguard and they didn't have anything they could offer me... I don't know if I was asking the wrong questions again or what.. I was talking to Betterment also, but there setup is too different from the norm to appease the overlords... I actually do have some muscle to change the plan we are using, but I cant find the right fit, we only have 5 people contributing now.... we don't have enough (I think vanguard needed a million in assets), but in January we will be adding 4 or 5 more contributors.  I would like to make any changes before the end of the year, so I will call vanguard again tomorrow and see what they say.

Did you try Fidelity or Schwab? They should have some low-cost options.

Goldielocks

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Re: Doubting myself after meeting with financial advisor.
« Reply #36 on: October 05, 2016, 06:26:19 AM »
Your 10k savings plan sounds like a good one.

Depending on your situation and expected tax rate in retirement, putting a portion of your monthly savings into a non registered fund instead of maxing out 401k may work for you. Especially if you will retire early with a high withdrawal rate.

Also, a $30 k savings ( invested in at least a bond fund, please!) is great if you want a home down payment or to replace a car, or saving for college, plus emergency. There COULD be a good reason.

catccc

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Re: Doubting myself after meeting with financial advisor.
« Reply #37 on: October 05, 2016, 07:29:30 AM »
To me that is the strangest part... She is not a financial advisor for my company at all!  she is someone who was the financial advisor for a company I worked for 15 years ago. So she doesn't get any commission at all of what I do. I think that's the reason I've been being so bothered by it.

My mom used to work as a financial advisor, and she mostly sold American Funds.  Believe me, she gets $$ for your $$ invested in American Funds.  My mom had us fill out a specific form that stated she would forgo commissions and I would forgo paying certain fees.  This was only allowed because of our relationship.  Everyone else she steered toward American Funds, she made commissions on their investments.  She learned more and doesn't do this work anymore.  And now recommends Vanguard to people.  I've since sold off all of my American Funds and put my $ in Vanguard.  I am forever grateful that she put me on the path to saving, though.  I remember I graduated college in December 2002, and the following tax season, maxed out both my 2002 Roth IRA and my Roth for 2003.  So you can also be grateful for what your advisor has done for you, but move on because you know better now.  If she bellyaches about it, it is just selfishness.

Axecleaver

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Re: Doubting myself after meeting with financial advisor.
« Reply #38 on: October 05, 2016, 02:40:07 PM »
Might want to check out Guideline for low cost 401k's. They just launched a plan that only costs $500 to set up for the whole business, then $8/person/month + 0.03% custodial fee per year. No AUM fees (the financial advisor 1% wrap fee they add into the fund charges). All Vanguard funds. I'm looking into this now and will likely switch over from Ubiquity, which charges my company $2k a year + $6/person/month.

beardsweater

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Re: Doubting myself after meeting with financial advisor.
« Reply #39 on: October 05, 2016, 08:30:10 PM »
I think it's time to part ways with that advisor!

I decided to part with my financial advisor about a year and a half ago. It was tough because he is one of my best friends from college  and is someone I would trust with anything (and luckily no hard feelings, we still hang out pretty often). But I decided after reading the stock series on JL Collins that i don't need a financial advisor and I can learn enough on my own to do just fine (well better than fine!). The real kicker for me was American funds and their stupid load fees and high expense ratios. Happy to say it's all in vanguard now and I won't be using a financial advisor in the future. Also happy to say my brother and sister did the same thing and we are all sticking with vangaurd after pulling out of the stupid high fee funds.

chesebert

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Re: Doubting myself after meeting with financial advisor.
« Reply #40 on: October 05, 2016, 10:13:21 PM »
DD's 529 is in American Funds. I told my FA American Funds' expense ratio is too high. They are doing their homework and will figure out if I should move to my state's 529 plan or another state's plan with low expense funds. I told them I don't like high expense ratio funds for retirement accounts so they switched all the managed funds to ETFs and individual stocks.

I think FAs these days need to be more flexible and listen to their client. It helps FA is a fiduciary and not just a broker. 

K-ice

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Re: Doubting myself after meeting with financial advisor.
« Reply #41 on: October 05, 2016, 10:15:15 PM »
I'm meeting with a new "financial advisor" from the bank at the end of the month.

I'm not quite sure what that conversation will entail.

I am currently putting all my savings in Vanguard & just have a few old locked in RRSP investments at that bank.

But I think it's good to have an "advisor" on your side because they can get you better mortgage rates.

We do the mortgage renewal thing about every 5y here in Canada.

I might need to play dumb, let her think I'm not saving much, I do contribute quite heavily to my work pension so it's believable that I don't have much else to invest.

My spouse preferres to invest in real-estate so neither of us are great clients for a bank advisor.

A few years ago we had a good advisor. That branch made us feel like royalty. Literally, if we went to the teller once I swiped my card they were like "sorry I can't help you here, come over to this comfy chair, would you like a tea or coffee?"

Seriously, I found the service odd since we didn't have big bucks invested.

We moved, had to change branches, nothing has changed in our banking, but now we are treated like Everyone else.

She will be the third new advisor in 5 years at this branch so I'm curious to meet her.

Does anyone else find it helpful to be friendly with the bank advisor/manager?
What, if anything, should I try to get out of her?






Cwadda

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Re: Doubting myself after meeting with financial advisor.
« Reply #42 on: October 06, 2016, 07:39:39 AM »
IMO one should assume all financial advisors are trash unless they're a fiduciary. I know it's not always the case, but it's the reality of what goes on.

nyxst

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Re: Doubting myself after meeting with financial advisor.
« Reply #43 on: October 06, 2016, 07:49:57 AM »
IMO one should assume all financial advisors are trash unless they're a fiduciary. I know it's not always the case, but it's the reality of what goes on.

Is there a list of advisors that are fiduciary advisors somewhere? How do you find them?

boarder42

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Re: Doubting myself after meeting with financial advisor.
« Reply #44 on: October 06, 2016, 07:56:46 AM »
IMO one should assume all financial advisors are trash unless they're a fiduciary. I know it's not always the case, but it's the reality of what goes on.

Is there a list of advisors that are fiduciary advisors somewhere? How do you find them?

ask them they have to tell you. not many are.

CowboyAndIndian

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Re: Doubting myself after meeting with financial advisor.
« Reply #45 on: October 06, 2016, 08:08:45 AM »
IMO one should assume all financial advisors are trash unless they're a fiduciary.

+1

I know it's not always the case, but it's the reality of what goes on.

Fixed that for you ;-)

When there is money involved in the equation, very quickly the advisor decides in the advisors favor, not yours.

Cwadda

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Re: Doubting myself after meeting with financial advisor.
« Reply #46 on: October 06, 2016, 10:50:58 AM »
IMO one should assume all financial advisors are trash unless they're a fiduciary. I know it's not always the case, but it's the reality of what goes on.

Is there a list of advisors that are fiduciary advisors somewhere? How do you find them?

They're few and far between. You can call say Vanguard or Fidelity and ask. They will likely take a flat fee to act as a fiduciary. Could be a hefty one too.

I think the best thing you can do is challenge yourself to get educated and manage your own money. I know it's scary but the more knowledgeable you are, the more comfortable you are too. Don't let the advisors scare you "oh, the market is volatile, you could lose your whole retirement!" That's the stupidest hokey scare tactic to take your money.

IMO one should assume all financial advisors are trash unless they're a fiduciary.

+1

I know it's not always the case, but it's the reality of what goes on.

Fixed that for you ;-)

When there is money involved in the equation, very quickly the advisor decides in the advisors favor, not yours.
Yes, they could be the nicest person ever and really they're just trying to make a living, not steal from people. But they're not going to make a living on my dime by scaring me and saying I'm too stupid to manage my own funds. Or by saying I'm screwing over my coworkers by driving up annual fees. That's plain horseshit.

Cwadda

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Re: Doubting myself after meeting with financial advisor.
« Reply #47 on: October 06, 2016, 10:52:51 AM »
Oh, one more thing. I was in American Funds too a couple years ago.

I switched over my entire account to Vanguard without telling my advisor at the time. He didn't even bother calling me (had already taken his 5.75% front load fees). Goes to show you that he was only in it for the money.

Goldielocks

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Re: Doubting myself after meeting with financial advisor.
« Reply #48 on: October 06, 2016, 10:56:32 AM »
I'm meeting with a new "financial advisor" from the bank at the end of the month.

I'm not quite sure what that conversation will entail.

I am currently putting all my savings in Vanguard & just have a few old locked in RRSP investments at that bank.

But I think it's good to have an "advisor" on your side because they can get you better mortgage rates.

We do the mortgage renewal thing about every 5y here in Canada.

I might need to play dumb, let her think I'm not saving much, I do contribute quite heavily to my work pension so it's believable that I don't have much else to invest.

My spouse preferres to invest in real-estate so neither of us are great clients for a bank advisor.

A few years ago we had a good advisor. That branch made us feel like royalty. Literally, if we went to the teller once I swiped my card they were like "sorry I can't help you here, come over to this comfy chair, would you like a tea or coffee?"

Seriously, I found the service odd since we didn't have big bucks invested.

We moved, had to change branches, nothing has changed in our banking, but now we are treated like Everyone else.

She will be the third new advisor in 5 years at this branch so I'm curious to meet her.

Does anyone else find it helpful to be friendly with the bank advisor/manager?
What, if anything, should I try to get out of her?
At Cibc the FA has nothing to do with getting best rate mortgages, they call them in and you need to do your homework ahead to know what to ask.

Some FA are really smart people, good for a talk but not to invest. Some are a utter waste of time.

Trudie

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Re: Doubting myself after meeting with financial advisor.
« Reply #49 on: October 06, 2016, 01:26:32 PM »
To me that is the strangest part... She is not a financial advisor for my company at all!  she is someone who was the financial advisor for a company I worked for 15 years ago. So she doesn't get any commission at all of what I do. I think that's the reason I've been being so bothered by it.
But... she did ask me for my company's business, including life insurance policies, at the end of our meeting before I left so maybe she was being pre-emptive. She won't be getting our business, I'm sure of that... but because she's not tied to it it made me really wonder if I was doing something terribly wrong! I even had her pull up a website that I used to look at comparison results between funds to show her that American Funds was way worse than what my Vanguard funds were doing (fees and returns), but she told me that I was reading the whole chart wrong. So overall I think she's crazy and gaslighting me a bit. I will just avoid her for the future. Anyway thanks for your replies! I feel a little bit better :-) and I think I'm just going to keep thinking of my Roth as my emergency fund for now and save everything like I have been.

She may not get any commission on what you do directly, but she may get one on her entire American funds book of business (it's a volume thing).  There are all kinds of fees buried in funds and I would venture to guess she is not fully disclosing them.

I think you are doing really well and are making sound decisions.  Stay the course.