Author Topic: Using a financial advisor  (Read 6833 times)

Bartleby_the_Scrivener

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Using a financial advisor
« on: September 08, 2016, 07:24:06 PM »
I'm curious. How many people on the forum use a financial advisor? If you do use one, how did you select him or her? My wife and I have talked about hiring one a few times, but we haven't yet.

Fudge102

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Re: Using a financial advisor
« Reply #1 on: September 08, 2016, 08:10:09 PM »
I used to.  The came to college, a bunch of them.  Essentially had a fair and tried to convince us all why they were the right one.  I went with one.  Was it right?  Who knows.  But I now know that I paid a bunch of extra money to do what I could have done myself.  If you want to do it, shop around, read reviews, and most importantly, find out why they are better than an index fund.  Because most aren't.

Mother Fussbudget

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Re: Using a financial advisor
« Reply #2 on: September 08, 2016, 09:16:52 PM »
Same here.  I formerly had a financial 'advisor', but found them to be more interested in lining their own pockets than helping keep my assets aligned.  There are some things they will ALL tell you to do - most of which you can get from older investment books, like "The Wealthy Barber".
1) Make a will - a 'last will and testament'.  Do it online using a standard 'form', and fill in your specifics.  Get it notarized, keep a copy in a safe place, and give a sealed copy to your selected executor.  You do not want to have an accident, and die 'intestate' - in that case, the courts get control over distribution of your assets.  In some states this is worse than others.  Just setup a will.
2) Assign beneficiaries in your investment accounts - this is as important as having a will, but is no replacement. 
3) Pay yourself first - deduct your investment amount out of your paycheck before you even see it.  At a prior employer, I had they direct deposit $1000/paycheck directly into my Fidelity account, and direct deposit the balance into my checking account.
 
Pick a simple investment strategy - such as the "buy the market tracking low-cost ETF" strategy - and stick with it long term.  If you want to read a cautionary tale about 'financial advisors', you can look over my recent posts, and find the one about 'asshair#3' to find out why I'm still working (for another 19 months).  Don't second guess yourself.  You ARE as smart as the guys taking fees from mutual funds, and can do as well as or better than 90% of them year after year by simply investing in an S&P500 tracking fund (like VFINX).

Bee21

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Re: Using a financial advisor
« Reply #3 on: September 08, 2016, 09:42:02 PM »
The dude we saw wanted to charge 5k for the initial modeling, and then 300 per month ongoing fee. And could not explain what he was planning to do for us and how much money he was going to make for us. It was like, hand over a pile of cash in good faith, and we will see. We were not that stupid.

So watch out. Plenty of sharks.

Zikoris

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Re: Using a financial advisor
« Reply #4 on: September 08, 2016, 10:53:29 PM »
I use a robo-advisor service because it recreates what I'd do on my own with zero effort required from me, and keeps the fees low by using index ETFs and not wasting money on bullshit. I named it "Robotnik".

I just like low effort solutions.

Choices

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Re: Using a financial advisor
« Reply #5 on: September 09, 2016, 12:34:26 AM »
We met with three or four advisors but none of them would agree to a fee-only hourly rate. Instead, we read MMM and Bogleheads and a few books and now we do it ourselves with Fidelity and index funds.

Dicey

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Re: Using a financial advisor
« Reply #6 on: September 09, 2016, 01:04:37 AM »
I use a robo-advisor service because it recreates what I'd do on my own with zero effort required from me, and keeps the fees low by using index ETFs and not wasting money on bullshit. I named it "Robotnik".

I just like low effort solutions.
I'm in Zikoris' camp. No individual stocks for me, rather institutional shares of low-cost mutual funds, ETF's, highly diversified holdings, automatic rebalancing, etc. I tried more than one firm/investment style before I settled on my current strategy, and I am happy with my choice.

I always laugh when people scream about fees. By investing this way, I make far more than I would on my own, so I pay those fees out of much higher returns. I still end up with more money. Laughing all the way to the bank and FIRE to boot.

BTW, I think everyone should read and understand the jlcollinsnh stock series. It's incredibly valuable. I simply believe that more diversification is a better path, and I'm willing to pay a modest amount to have someone else do the legwork for me.

MoonLiteNite

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Re: Using a financial advisor
« Reply #7 on: September 09, 2016, 03:29:39 AM »
I personally have never used one, but i do plan on giving vanguard a call tomorrow, as well as my 401k account provider to see what kind of free services they offer.


I do know that if you do choice to pay one for their services you make sure they are also also a "fiduciary adviser" which means they tell you what is best for YOU, not for their own gains.

pbkmaine

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catccc

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Re: Using a financial advisor
« Reply #9 on: September 09, 2016, 07:17:36 AM »
I use a robo-advisor service because it recreates what I'd do on my own with zero effort required from me, and keeps the fees low by using index ETFs and not wasting money on bullshit. I named it "Robotnik".

I just like low effort solutions.
I'm in Zikoris' camp. No individual stocks for me, rather institutional shares of low-cost mutual funds, ETF's, highly diversified holdings, automatic rebalancing, etc. I tried more than one firm/investment style before I settled on my current strategy, and I am happy with my choice.

I always laugh when people scream about fees. By investing this way, I make far more than I would on my own, so I pay those fees out of much higher returns. I still end up with more money. Laughing all the way to the bank and FIRE to boot.

BTW, I think everyone should read and understand the jlcollinsnh stock series. It's incredibly valuable. I simply believe that more diversification is a better path, and I'm willing to pay a modest amount to have someone else do the legwork for me.

are you guys talking stuff like betterment, or what?  Just curious.  I'm DIYer when it comes to financial planning like most here, but I'm open to alternatives if they make sense mathematically.

Spork

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Re: Using a financial advisor
« Reply #10 on: September 09, 2016, 07:27:45 AM »
Let's rewind about 22 years.  There is internet... but nothing well developed like we have now.  There is certainly no MMM or JL Collins.  We were newly married DINKs.  We made PLENTY.  We looked at our savings and thought "Hmmm.  I wonder where all that money went."

So, yes, we went to a financial advisor.  We arbitrarily made an appointment at some chain... I think it might have been American Express Financial Services.  We really clicked with the advisor and he put us in whatever high cost/front load funds AmEx was pushing.  But more importantly than that, he showed us how we had nothing to show for our incomes and got us started on self examination.  A few years passed and we got savvy enough to move all of our funds to Vanguard -- and haven't talked to an advisor since.  (We did stay in touch with that original advisor and still trade Christmas cards.  He's no longer an advisor.  He's a computer nerd now.)

TL;DR: In prehistoric times, we used a FA to set us on a path.  I don't think that's so important today.

tonysemail

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Re: Using a financial advisor
« Reply #11 on: September 09, 2016, 07:28:44 AM »
I used an advisor when I first started indexing.
It was invaluable to me because I didn't know what I was doing and my wife and I were fighting too often about investments.
So it was nice to turn over asset allocation to an "expert" and not have to think about rebalancing.
But over the course of many years, we've gotten on the same page.
After reading jlcollins stock series and writing an IPS, we decided to pull all our money out of the advisor and line our own pockets with the fees.
A small percentage fee on a big balance is still a lot of money!

nereo

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Re: Using a financial advisor
« Reply #12 on: September 09, 2016, 07:31:34 AM »
I used to use a 'full-service' financial advisor but I weaned myself away after it became clear that I'd be better off managing my own money.
Short version: it was my parents advisor and when I got my first job as a teenager he offered to open up and manage my IRA account for me.  I stuck with him through my 20s never fully appreciating that I was always lagging the market by 1-2% (which was obscured by the way all my funds were invested, and the frequency he bought/sold funds). At one point I had >20% held in cash for my IRA and another 30% in bonds, despite my profile of 'high-risk, extremely long term outlook'.

I wrote a post about it over a year ago, but basically when I took an afternoon to compare my returns it cost me roughly $8,000 over a decade vs just investing in the SP500 through Vanguard.  Worse, during all that time I never felt like I got a useful service from my advisor, and I towards the end I spent more time just double-checking what he was doing with my money than I do now that I manage my own (super-simple investment strategy) funds.

FIREby35

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Re: Using a financial advisor
« Reply #13 on: September 09, 2016, 07:35:13 AM »
You can count me in the group that learned the hard way that financial advisors are wolves in sheep's clothing. I suggest you are much better off putting all your money into basic index funds and reading a bunch of books/blogs to learn how to manage your own funds. Spoiler alert, if you put your money in  index funds you'll find out you spent all that time reading and learning to confirm that low-cost index funds are the ultimately correct answer.

BTW, my nice-guy financial advisor easily cost me tens of thousands of dollars. I also have 100k dollars in investment accounts that I can't touch for another 8 years or I pay huge surrender fees. All of that was 100% in the interest of the advisor.

Books: A Random Walk down Wall Street, Bogleheads, JL Collins (Blog or A Simple Path to Wealth).

Spork

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Re: Using a financial advisor
« Reply #14 on: September 09, 2016, 08:28:47 AM »
I wrote a post about it over a year ago, but basically when I took an afternoon to compare my returns it cost me roughly $8,000 over a decade vs just investing in the SP500 through Vanguard.  Worse, during all that time I never felt like I got a useful service from my advisor, and I towards the end I spent more time just double-checking what he was doing with my money than I do now that I manage my own (super-simple investment strategy) funds.

Yeah, I just started looking into ML when my dad died.  His investments have been there for 20-30 years.  He was always proudly showing me his balance and I just kept thinking "Something is wrong with the math there.  It is a lot... but... it's not as much as it should be."

Long story short: If you look at studies, ML is the ABSOLUTE MOST EXPENSIVE option out there.  Estimates are that a $500k investment at ML will "cost" you just under a cool $1M in compounding earnings lost to fees over 30 years.

The sad part of this story is that other beneficiaries of my dad's estate are pretty much all leaving their money with ML.  I have tried to gently nudge them out, but they are all too afraid to try something on their own.

Zikoris

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Re: Using a financial advisor
« Reply #15 on: September 09, 2016, 08:37:57 AM »
I use a robo-advisor service because it recreates what I'd do on my own with zero effort required from me, and keeps the fees low by using index ETFs and not wasting money on bullshit. I named it "Robotnik".

I just like low effort solutions.
I'm in Zikoris' camp. No individual stocks for me, rather institutional shares of low-cost mutual funds, ETF's, highly diversified holdings, automatic rebalancing, etc. I tried more than one firm/investment style before I settled on my current strategy, and I am happy with my choice.

I always laugh when people scream about fees. By investing this way, I make far more than I would on my own, so I pay those fees out of much higher returns. I still end up with more money. Laughing all the way to the bank and FIRE to boot.

BTW, I think everyone should read and understand the jlcollinsnh stock series. It's incredibly valuable. I simply believe that more diversification is a better path, and I'm willing to pay a modest amount to have someone else do the legwork for me.

are you guys talking stuff like betterment, or what?  Just curious.  I'm DIYer when it comes to financial planning like most here, but I'm open to alternatives if they make sense mathematically.

I'm Canadian, so no Betterment, but same idea. I use Wealthbar, and there are several others as well - Wealthsimple, Nestwealth, etc.

Travis

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Re: Using a financial advisor
« Reply #16 on: September 09, 2016, 08:43:44 AM »
Let's rewind about 22 years.  There is internet... but nothing well developed like we have now.  There is certainly no MMM or JL Collins.  We were newly married DINKs.  We made PLENTY.  We looked at our savings and thought "Hmmm.  I wonder where all that money went."

So, yes, we went to a financial advisor.  We arbitrarily made an appointment at some chain... I think it might have been American Express Financial Services.  We really clicked with the advisor and he put us in whatever high cost/front load funds AmEx was pushing.  But more importantly than that, he showed us how we had nothing to show for our incomes and got us started on self examination.  A few years passed and we got savvy enough to move all of our funds to Vanguard -- and haven't talked to an advisor since.  (We did stay in touch with that original advisor and still trade Christmas cards.  He's no longer an advisor.  He's a computer nerd now.)

TL;DR: In prehistoric times, we used a FA to set us on a path.  I don't think that's so important today.

My first FA was also associated with my credit union.  My parents and I (I was 18) made the mistake of thinking the two were related somehow.  Nope, she just rented out an office and got to put the credit union's name and logo on her business cards.  I didn't get wise to how badly I was getting screwed for about 12 years.  Thanks to the websites and books everyone just listed I do it all myself now and requires about 10 minutes per week to maintain.

Goldielocks

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Re: Using a financial advisor
« Reply #17 on: September 09, 2016, 08:54:10 AM »
Let's rewind about 22 years.  There is internet... but nothing well developed like we have now.  There is certainly no MMM or JL Collins.  We were newly married DINKs.  We made PLENTY.  We looked at our savings and thought "Hmmm.  I wonder where all that money went."

So, yes, we went to a financial advisor.  We arbitrarily made an appointment at some chain... I think it might have been American Express Financial Services.  We really clicked with the advisor and he put us in whatever high cost/front load funds AmEx was pushing.  But more importantly than that, he showed us how we had nothing to show for our incomes and got us started on self examination.  A few years passed and we got savvy enough to move all of our funds to Vanguard -- and haven't talked to an advisor since.  (We did stay in touch with that original advisor and still trade Christmas cards.  He's no longer an advisor.  He's a computer nerd now.)

TL;DR: In prehistoric times, we used a FA to set us on a path.  I don't think that's so important today.

I have a similar story - also 22 years ago, and self-managed accounts may have been available, but not heard of.  Buying stocks cost $30 a trade, etc.   Hence the rise of mutual funds.

I digress...  Although we also got put into very expensive funds, I do remember the goal setting session, and on a followup session, we (1 year out of university with good incomes) got great advice about not overspending / eating out when we commented how great it was to finally not live like students.

Also -- I now realize that high fund accounts are not a big deal, in the early stages, as you build your first $50k.   an extra 1% net fees is only $500..  A lot back then but we would have otherwise spent that money on entertainment or cars.

---------------

Today, a financial advisor can be a great decision, but you need to figure out what you want from one.

-- Are you looking for investment advice / balancing?
-- Are you tired / have trouble triggering trades and rebalancing yourself, so you want to be hands off, but informed?
-- Do you want goal planning support with you and SO?  e.g. planning to start a family and want to know how to achieve SAHP?
-- Do you need retirement calculation and projections, and don't feel comfortable with just cfiresim and your own checks?
-- Are you interested in learning about how to reduce taxes, net?
-- Do you want help identifying insurance strategies that are best for you?  What insurance is important?
--Estate planning strategies?
-- True financial planners (certified) should also be able to look at things like "rent vs buy", "is this job offer / benefit package a good one?", "Should I move"?  etc.

Obviously, most financial planners focus on the investment portion of the above, or on sales of insurance or asset management.   You need to know what you want, and be prepared to ask questions to weed out the person that can help you  (value for money).


Start by looking here --

Why Hire a Certified Financial Planner

http://www.plannersearch.org/why-hire-a-certified-financial-planner#why

Goldielocks

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Re: Using a financial advisor
« Reply #18 on: September 09, 2016, 09:02:15 AM »
The Financial planner model that I like is a "Money Coach".   (but using a CFP, not a random person off the street)

They only charge an hourly rate or a lump sum, and do not invest for you, rather help you determine your asset mix, goal strategy, and mentor you as you learn how to do it confidently yourself. 

50/50 on whether they sell insurance or just refer you to someone else, but will give you an unbiased outline of how much you need.

Note, this model is no where near as profitable for them, so the "fee only CFP money coaches" are rare, but sometimes getting great planning advice is worth paying $150 per hour, or $100 per month for a few months of coaching.

Cpa Cat

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Re: Using a financial advisor
« Reply #19 on: September 09, 2016, 09:38:16 AM »
I have one.  They are traditional AUM fee financial advisers. They went independent a few years ago, and since then stopped pushing products and focus on good investment management, instead. They are not indexers, though. They choose actively managed mutual funds.

Our CPA referred them to us (in my prior life as a non-CPA). We were clueless, successful, and in serious need of assistance. Knowing what I know now about financial advisers, I realize that we lucked out.

My husband doesn't understand indexing and doesn't want to understand it. He thinks he would blame me during downturns if I was managing our portfolio solo. I am concerned that our risk tolerance is different and I might do a poor job of representing what he wants. Having a third party to take care of it works for us. I remain engaged, ask questions, and I did negotiate the AUM fee. My husband is not engaged - so it is nice to have people on my team to bounce ideas off of.

We've been with these guys through some changes. When they were at a larger firm, there seemed to be a product-oriented philosophy. Now that they're independent, they never try to sell us products. Several years ago, an adviser with an actual finance degree and an MBA joined the team and the quality of their investment management has improved dramatically.

Now that I'm a CPA, I've had occasion to meet many different financial advisers, all hoping that I'll refer clients to them. There is a stark difference between advisers with a university degree in Finance and individuals with no university degree or a completely unrelated degree (those with accounting or other business degrees land in the middle, but fall far short of Finance degrees). Basically anyone can become a financial adviser - and that's why most are low quality.

I have a few warning signs for financial advisers:

1. Is their AUM fee over 1%? [While a 1% fee may be high to to Bogleheads and MMMers, it is the industry standard - which means anyone charging more than that is more interested in their own fees than serving their clients]

2. Do they try to sell whole/universal life insurance or variable annuities? [I think term life insurance is an important part of a financial plan, and so should a financial adviser - but why would they offer universal life before term life?]

3. Do they have a degree in Finance? [If not... then what, exactly, are their qualifications? Is all of their education coming from sales brochures?]

4. Do they get defensive when you question their fees or their decisions? [This relationship is financial, not personal. As a financial adviser, they should be prepared to discuss finances objectively and explain all of their investment decisions to their clients].
« Last Edit: September 09, 2016, 05:23:48 PM by Cpa Cat »

chesebert

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Re: Using a financial advisor
« Reply #20 on: September 09, 2016, 09:49:30 AM »
I use FA for about 75% of my financial assets, pay fees on 50% @1.5%. I manage the remaining 25% through Vanguard. The FA will adjust AA of the 75% portion based on what I do in the 25% and 401K. Fee paying portion of the portfolio is invested in individual stocks (trading fees are already part of the AUM fee). The other portion is invested in mostly ETFs but are managed together from AA perspective.

I discuss my portfolio with my FA at least 4 times year. I get fairly prompt responses whenever something big happens with the market/economy.

My goal for the FA has always been get me somewhat close to S&P performance without the volatility - okay performance for the last 5 years (my EU exposure has really hurt the return during the SP bull years)

Majority of the fees are tax deductible and my blended fees for all accounts are little over 1% (0.33% ex FA advisory fees).

I have borrowed money through the FA's financial institution at 2% for years and have borrowed money for the down payment on my current house at 4% (not part of the mortgage). All these have been very helpful to keep me fully invested during the upswing. I am steadily paying off the 4% loan as I think my current carry trade is not as profitable.

FA suggested term life instead of other insurance products, which is what we have now.

My FA is a registered FA and has a bunch of FINRA series certification (probably stock broker, investment adviser, etc) and has been doing this for 30+ years.



 
« Last Edit: September 09, 2016, 09:58:47 AM by chesebert »

Mother Fussbudget

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Re: Using a financial advisor
« Reply #21 on: September 09, 2016, 10:12:34 AM »
Start here:
http://jlcollinsnh.com/2012/06/06/why-i-dont-like-investment-advisors/

Then read the rest of the stock series from the start.  Then just put your money in VTI and you're set!
+1.  This.

Jlcollinsnh's advice:
"2)  Avoid Money Managers.  They are expensive at best and will rob you at worst. 
Google Bernie Madoff.  Seek advice cautiously and never give up control. 
Itís your money and no one will care for it better than you. 
But many will try hard to make it theirs.  Donít let it happen."



[And a shout out to pbkmaine:  THANK YOU for linking that Financial Planning checklist.]

Travis

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Re: Using a financial advisor
« Reply #22 on: September 09, 2016, 11:27:13 AM »
I have a few warning signs for financial advisers:

1. Is their AUM fee over 1%? [While a 1% fee may be high to to Bogleheads and MMMers, it is the industry standard - which means anyone charging more than that is more interested in their own fees than serving their clients]

2. Do they try to sell whole/universal life insurance or variable annuities? [I think term life insurance is an important part of a financial plan, and so should a financial adviser - but why would they offer universal life before term life?]

3. Do they have a degree in Finanace? [If not... then what, exactly, are their qualifications? Is all of their education coming from sales brochures?]

4. Do they get defensive when you question their fees or their decisions? [This relationship is financial, not personal. As a financial adviser, they should be prepared to discuss finances objectively and explain all of their investment decisions to their clients].

Nailed it.  The last time I talked to a financial adviser (he called me) he was academically qualified and at least had the professionalism to admit defeat when I explained my index fund portfolio was working as well as what he proposed he could do.

Dicey

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Re: Using a financial advisor
« Reply #23 on: September 09, 2016, 11:43:41 AM »
I use a robo-advisor service because it recreates what I'd do on my own with zero effort required from me, and keeps the fees low by using index ETFs and not wasting money on bullshit. I named it "Robotnik".

I just like low effort solutions.
I'm in Zikoris' camp. No individual stocks for me, rather institutional shares of low-cost mutual funds, ETF's, highly diversified holdings, automatic rebalancing, etc. I tried more than one firm/investment style before I settled on my current strategy, and I am happy with my choice.

I always laugh when people scream about fees. By investing this way, I make far more than I would on my own, so I pay those fees out of much higher returns. I still end up with more money. Laughing all the way to the bank and FIRE to boot.

BTW, I think everyone should read and understand the jlcollinsnh stock series. It's incredibly valuable. I simply believe that more diversification is a better path, and I'm willing to pay a modest amount to have someone else do the legwork for me.

are you guys talking stuff like betterment, or what?  Just curious.  I'm DIYer when it comes to financial planning like most here, but I'm open to alternatives if they make sense mathematically.

I can't speak for Z, but I am not a fan of Betterment by any means. Especially for people just starting out.

I believe it was disingenuous of Pete to caption his B'ment plug something like "Why I invested my last 100k with B'ment." Seriously, it was the last portion of a big-ass chunk of money he got after selling a property, after he was already FI, after this blog exploded and gave him an income stream he never imagined. I think B'ment might be worth considering if you find yourself in Pete's position, but seriously, what percentage of his readership has his NW or income? I want to cry every time I see a case study where someone says proudly, "I opened a B'ment account and I've managed to save 10k" and that's all they have! They have no need for B'ment's only potential saving grace, which is tax loss harvesting.

I'm not gonna shill publicly for the firm I use unless they pay me to, the way Betterment pays MMM. FWIW, I chose a firm whose style I understand and appreciate. I want wide diversification and frequent rebalancing. I know I am too lazy to do it myself, so I am willing to pay a small amount to outsource this function. It is not a retail operation, because I'm still a mustachian. And yes, I kissed a few other frogs and did a ton of research before ending up there.

All of this was way before Jlcollinsnh, or MMM. I still believe in 98.6% of what both of these smart people have to say. If I were a rule maker, I would proclaim that no person should be allowed to take a SL or buy a car or get a CC without first sitting at the feet of these wise men.

BTW, the Madoff Clients were silly not to wonder why their checks and their statements went to/came from him. Your money should be held by a third party, not your Financial Advisor. I know exactly where my money is and if I absolutely needed to, I could walk to a local branch and verify my funds on deposit, or pull all my money out. Those Madoff folks could never do any such thing.

Edited for typos. Did I get ' em all?
« Last Edit: September 09, 2016, 06:52:57 PM by Diane C »

Catbert

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Re: Using a financial advisor
« Reply #24 on: September 09, 2016, 02:35:18 PM »
"Financial Advisor" is a meaningless generic term.  I could hang out a shingle as "Financial Advisor" just because I choose to call myself that.  You need to clarify to yourself what you want from a "financial advisor".  Things that you might want:  on-going mngt of portfolio; long term tax advice; current tax advice; help in determining whether to take pension or lump sum; general look at finances; life insurance advice/sales; second opinion on your retirement plan or, or, or, the list is endless.

All of these are things that you could figure out yourself depending on your interest and willingness to spend time learning/doing.  Whatever you do don't select someone who calls themselves a "financial advisor" without know whatever other designation they have (e.g., CPF, CPA) and what that designation actually means in terms of eduction/testing/licensing.

Personally, the only thing I've used a "financial advisor" for was long term tax planning.  That was a CPA who specialized in taxes.

Bartleby_the_Scrivener

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Re: Using a financial advisor
« Reply #25 on: September 10, 2016, 06:54:16 PM »
So perhaps I should have mentioned a little more detail in my earlier post. I learned the hard way about "financial advisors" working for large investment companies.

Fortunately, I read William Bernstein's An Investor's Manifesto and moved all my money to passive Vanguard index funds. Using the "advisor" cost be about $1000 before I became wise to the scheme. Now, I would never hire someone without a fiduciary responsibility to me.

I'm not so interested in investing advice for the stock market. I'm more interested in tax and estate planning along with a comprehensive long-term plan. My wife and I are looking into alternative income streams. That, and I left a job with a pension in a relatively well-funded plan and don't know whether to withdraw the money or leave it there.

Pigeon

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Re: Using a financial advisor
« Reply #26 on: September 10, 2016, 07:53:37 PM »
I have TIAA for my employer sponsored retirement plan.  They provide a "wealth management advisor" at no additional charge.  He's been pretty helpful in taking a basic look at the big picture periodically.  They have additional levels of advisors with fees associated, but we haven't done that.

calimom

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Re: Using a financial advisor
« Reply #27 on: September 10, 2016, 11:04:41 PM »
Diane C., this is the SECOND post of yours today I have nodding my head to. Thank you for your clearheaded response.

Bernie Madoff is to financial planners as Olive Garden is to real Italian food.

I worked with a FA for several years after my husband died when I was 31. While I wasn't a compete idiot about money, I had a lot to learn. The FA worked with my credit union, they were alerted to a fair amount of cash marinating in savings and directed me to one of their in-house advisors. She looked at the overall picture: young kids, a mortgage, future goals, and helped me work up a plan. Yes, the direction she lead me in benefitted various firms she was affiliated with, but I also made money, even with the fees. She looked at the IRA, REIT and stocks I already had and didn't try to direct them elsewhere; she said they were (and remain) good investments. When I used part of my funds to invest in an income property, she advised me to move with caution, which I did, and it worked out.

She left the CU after awhile, and I've made some changes in my overall financial picture, but she gave me a good basis to work with, and for that I'm grateful.

Tjat

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Re: Using a financial advisor
« Reply #28 on: September 11, 2016, 08:47:19 AM »
I wouldn't ever go with a financial advisor/salesman. A CFP maybe if I develop a complex situation, but I don't need to pay anyone to earn LESS than the market.

ender

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Re: Using a financial advisor
« Reply #29 on: September 11, 2016, 09:06:57 AM »
I'm curious. How many people on the forum use a financial advisor? If you do use one, how did you select him or her? My wife and I have talked about hiring one a few times, but we haven't yet.

The Internet is my financial advisor.


Dicey

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Re: Using a financial advisor
« Reply #30 on: September 11, 2016, 10:58:21 AM »
Diane C., this is the SECOND post of yours today I have nodding my head to. Thank you for your clearheaded response.
Thanks calimom! It makes me happy to be able to help others on the path to FIRE. Twice in one day? Amazeballs.

I wouldn't ever go with a financial advisor/salesman. A CFP maybe if I develop a complex situation, but I don't need to pay anyone to earn LESS than the market.
Excellent point, Tjat!I probably should have been a little more specific. I person/firm I use is a CFP*, not just a "Financial Advisor", which I realize is a fairly elastic term. FWIW, I also use a CPA, an MD and a DDS. I'm willing to spend reasonably to maintain personal health and fiscal health.

*Sorry, wonky syntax. The firm consists of a number of CFP's, all dedicated to the same investing style. Even knowing the firm's style, I tried out several CFP's until I got one that understood me and my motivation best. I would not be FIRE now had it not been for their guidance. Was that early parole from the workaday grind worth paying a small price for? Hell, yes! Everyone gets to make their own decision. I made mine and it worked out very well for me. Some financial advice is worth paying for, some is simply too damn expensive. Do your homework, make your own decision. BTW, B'ment isn't free either.

Bobberth

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Re: Using a financial advisor
« Reply #31 on: September 12, 2016, 03:53:49 PM »
To answer your question, the first step is to only look in the group of financial advisors that are are fiduciaries. Per the SEC, Registered Investment Advisors (RIAs) have a fiduciary duty to their clients. If you don't know, fiduciary means that they legally have to put the interests of their clients above their own. Legally. Many of the horror stories  on this post and that you will hear about are from stock brokers and other advisors that only have to meet the SECs suitability requirement, that the investment be "suitable" for a client, not what is best for them. Penny stocks for a 98 year old pensioner could be argued to meet the suitability standard but would never pass the fiduciary standard. Edward Jones and Morgan Stanley are being sued by their own employees for the dastardly act of....using their own investment products in their 401k plans. It is legal for them to sell over-priced and under-performing investment products to you, they are "suitable" after all; but they can't meet the high fiduciary standard that is required in 401k plans. This is why there is such a big fight right now about trying to enforce a fiduciary standard for all financial advisors. Big Wall Street firms are highly against it and everybody else is for it.

Another group that has a fiduciary standard is Certified Financial Planers, CFPs. This is an independent organization that licenses the use of it's marks for professionals who meet their requirements to use. It does not have the legal standing that an RIA has, but it is difficult to pass their tests and initial requirements and most won't want to risk losing their credentials if they don't act as a fiduciary.

**Full disclosure** I am a CFP that works at an RIA. I am not saying these things above as an advertisement for what I do but I sought out being a CFP and working at an RIA because they have the highest ethical standards.

There are many ways advisors can add value, even though most advisors get paid based on, and most people think of and judge on, the investment aspect of the job. Taxes, Estate Planning, Asset Allocation and sometimes just talking people out of selling in a down market are a big part of the job. There is something to be said about working with people who work with these topics everyday and the expertise and experiences they have. But they are not for everybody.

Dezrah

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Re: Using a financial advisor
« Reply #32 on: September 12, 2016, 06:25:16 PM »
<-- Went to Edward Jones when I first started but wised up in less than a year.

Here's the thing that makes me cringe/nauseous when I think about it now:

After showing me some funds he thought would be good, I asked how exactly he would get paid.  He said, "Don't worry.  I definitely will get paid."  I was too timid and trusting to push further.  At no point did he explain commissions or front-loading. 

BTDretire

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Re: Using a financial advisor
« Reply #33 on: September 12, 2016, 07:06:22 PM »
  To borrow a few lines:   
 Mr. McGuire: I want to say one four words to you. Just one four words.
    Benjamin: Yes, sir.
    Mr. McGuire: Are you listening?
    Benjamin: Yes, I am.
    Mr. McGuire: Plastics. No Load Mutual Funds

Please don't get a financial advisor, get just a little education to get started, then as your money grows, so will your knowledge, if you have just a little natural curiosity.
Go to the Bogleheads site and learn,  go to Bob Brinkers site and see his recommended reading list. Setup a Vanguard account, and put your money in VTSAX for now.
 Three things I want you to know.
 1) Management Fees accessed on your accounts can put a serious chunk of YOUR
money into someone elses pocket.  Try to stay under 0.3% but 0.07% is better.
2) You can't time the market, so just stay in, until you are 10 years from retirement, then you may need to make some changes. By then you will know.
3)I have been through 2000 and 2008, when the market took big slides. It always comes back up.