Have you used a financial advisor?

[kib]

I decided to put a bit of my money into an income generating investment (as opposed to growth).  I had a few questions about the product and had to spend 15 minutes being grilled by a 20-something 'adviser' who simply could not wrap his head around the idea that someone would want conservative stream of income investments AND still have an interest in putting some money into long term but volatile, potentially risky dice-rollers.  "Those are not compatible strategies".  I want reliable income for the rest of my life to fund a bare bones but adequate existence.  Guaranteed.  NOW.  I also want the option of taking additional investment funds and seeing what I can do.  I don't see how that's incompatible.  Basically, I have enough money that I don't have to worry about making the most money I can. That isn't my strategy.  I'm much more interested in first guaranteeing the financial safety of my quiet little frugal life, and then experimenting with what's left.

It made me realize that part of the reason I've never been to a professional financial adviser is because none of the people who supposedly excel in the field of banking and investment ever seem to grasp the concept of ER, they all seem to be consumer drones.

So what's your experience?  Have you used someone?  Have you gotten intelligent advice?

[MDM]

One I talked with said "You have won the game (i.e., have "enough" to retire) so you have a choice: a) stop playing (i.e., invest conservatively) or b) be aggressive because you can tolerate losses.  Or c), do a little of each." 

See more discussion about this at http://forum.mrmoneymustache.com/ask-a-mustachian/finding-a-financial-planner/ (and there are other threads).

[kib]

Thank you.  This is a dumb-ass question, but how do you guys come up with related threads so quickly?  I must be doing something wrong with the mmm search engine, it takes forever and returns almost nothing.  Is there a "hall of fame" somewhere for commonly visited topics?

[MDM]

Thank you.  This is a dumb-ass question, but how do you guys come up with related threads so quickly?  I must be doing something wrong with the mmm search engine, it takes forever and returns almost nothing.  Is there a "hall of fame" somewhere for commonly visited topics?

It helps (a lot) when one has posted in said related thread.  E.g., I can add MDM into the "By user" field, along with some relevant key words, and voila!.

[Eric]

Thank you.  This is a dumb-ass question, but how do you guys come up with related threads so quickly?  I must be doing something wrong with the mmm search engine, it takes forever and returns almost nothing.  Is there a "hall of fame" somewhere for commonly visited topics?

A combination of a good memory and google.  If you type the following into google "site:http://forum.mrmoneymustache.com/investor-alley/ [search term]" it will search only the investor alley (no other websites or forum sections).  Change the URL to broaden the search if you want to search all forum sections.  Obviously replace [search term] with the terms of your choice.  Note that there's no space between site:http but there is a space after the web address.  Clear?

[Quinn]

Thank you.  This is a dumb-ass question, but how do you guys come up with related threads so quickly?  I must be doing something wrong with the mmm search engine, it takes forever and returns almost nothing.  Is there a "hall of fame" somewhere for commonly visited topics?

A combination of a good memory and google.  If you type the following into google "site:http://forum.mrmoneymustache.com/investor-alley/ [search term]" it will search only the investor alley (no other websites or forum sections).  Change the URL to broaden the search if you want to search all forum sections.  Obviously replace [search term] with the terms of your choice.  Note that there's no space between site:http but there is a space after the web address.  Clear?

^+1

the mmm search is pretty terrible. i always search through google instead

[Indexer]

Here is the sad reality.  To have the title financial advisor do you know what you need?   Not really anything. 

Insurance agent with only a life insurance license:  Financial Advisor on his business card.
Guy at the bank selling variable annuities:  Financial Advisor on his business card.
Guy who sold used cars for 20 years and just got a job at XYZ brokerage firm 3 months ago:  Financial Advisor on his business card.

Independent Certified Financial Planner who has been doing comprehensive financial planning using low cost index funds for 20 years:  Financial Advisor on his business card.... plus a little CFP®.

Financial Advisor doesn't mean a thing.  Look for a CFP® or CFA.  That means at the very least they know a whole lot more about investing than someone with just an investments license(series 7). 

I've never been to a professional financial adviser is because none of the people who supposedly excel in the field of banking

Banking =/= Investing.   Some of the least financially savvy people I've ever met worked in banking. 

[deborah]

Getting back to the original title...

Yes, I use a financial advisor. He's great at giving me alternatives, and anything to do with money is "financial" to him. We have arguments (and probably would have the argument the OP gives), but we end up with what I want to do, and he has good ideas.

You need an advisor rather than a salesman. It is a pity that most "advisors" are really salesmen.

[Cwadda]

You need an advisor rather than a salesman. It is a pity that most "advisors" are really salesmen

It's because that's how they make money. They take a cut from whatever you buy. And high expense ratios are for the fund managers to get paid.

[dungoofed]

I have. It was the most expensive lesson of my life, bar none.

[dungoofed]

Thank you.  This is a dumb-ass question, but how do you guys come up with related threads so quickly?  I must be doing something wrong with the mmm search engine, it takes forever and returns almost nothing.  Is there a "hall of fame" somewhere for commonly visited topics?

A combination of a good memory and google.  If you type the following into google "site:http://forum.mrmoneymustache.com/investor-alley/ [search term]" it will search only the investor alley (no other websites or forum sections).  Change the URL to broaden the search if you want to search all forum sections.  Obviously replace [search term] with the terms of your choice.  Note that there's no space between site:http but there is a space after the web address.  Clear?

^+1

the mmm search is pretty terrible. i always search through google instead

Slashdot (I think) has a great thing where as you're typing a new topic it is parsing the contents in realtime suggesting "does one of these threads answer your question?"

[a1smith]

Here is the sad reality.  To have the title financial advisor do you know what you need?   Not really anything. 

Insurance agent with only a life insurance license:  Financial Advisor on his business card.
Guy at the bank selling variable annuities:  Financial Advisor on his business card.
Guy who sold used cars for 20 years and just got a job at XYZ brokerage firm 3 months ago:  Financial Advisor on his business card.

Independent Certified Financial Planner who has been doing comprehensive financial planning using low cost index funds for 20 years:  Financial Advisor on his business card.... plus a little CFP®.

Financial Advisor doesn't mean a thing.  Look for a CFP® or CFA.  That means at the very least they know a whole lot more about investing than someone with just an investments license(series 7). 

I've never been to a professional financial adviser is because none of the people who supposedly excel in the field of banking

Banking =/= Investing.   Some of the least financially savvy people I've ever met worked in banking.

Don't just look at the position title; as you have indicated it really means nothing.  A better indicator of whether or not the person knows what they are talking about is to check the certifications after their name.  For example, here are a few:

CFP® - Certified Financial Planner

ChFC® - Chartered Financial Consultant

CRPC® - Chartered Retirement Planning Counselor

CLU® - Chartered Life Underwriter

The person has to pass an exam to get these certifications.  My financial advisor has all four of these.

There are advisors that only charge for meeting with you and developing a plan that you implement.  So, they aren't charging a fee based on AUM (assets under management).

If you do get an advisor to manage your money for you (some or all accounts) make sure they are fee-only and not fee-based.  A good starting point to find one is here: http://www.napfa.org/ 

[Retire-Canada]

So what's your experience?  Have you used someone?  Have you gotten intelligent advice?

I've had 4 FA with various levels of skill/experience.

I got similar generic advice from them 3 of them and 1 was mostly useless.

I learned more from reading JL Collins stock series for free than I ever did from any of these FAs who I was paying in one way or another.

http://jlcollinsnh.com/stock-series/

I eventually decided that it made no sense to trust any FA if I could learn enough to equal or best their advice. From start to finish that process to less than 4 months of work in my evenings/weekends.

-- Vik

[Financial.Velociraptor]

I've never used a formal financial advisor but I regularly pay for investing advice from the Motley Fool, Palm Beach Letter, and Stansberry Research.  I have learned a lot for a lot less than my MBA cost me.

[Maxman]

I have an advisor now. He is in fact a very popular person who wrote a book on passive index investing. I'd rather not give his name. We are being charged .6 % per year. Now in our 5th year with him, we feel that we don't get value for our cost other then twice a year calls to go over our unchanging investments and talk about how our life is going. He is very slow to respond to questions, uses a primative lifetime withdrawal program (we are retired), and we feel that for 6 grand a year we should get much more value. I would think that our account including phone calls takes him 3 to 5 hours a year in time.

We are most likely going to go to betterment as we get one year free. We are also considering Vanguard Life Strategy Moderate Growth fund. We looked at the ten year returns on the Vanguard fund and they were at 5.75%, while a 60/40 split at betterment back looking averaged over 7% after fees.

[forummm]

I do not have a financial advisor. I make all my own decisions and I've done very well at it. Generally, if you use the standard Vanguard funds, it's hard to go wrong.

[Dodge]

We are most likely going to go to betterment as we get one year free. We are also considering Vanguard Life Strategy Moderate Growth fund. We looked at the ten year returns on the Vanguard fund and they were at 5.75%, while a 60/40 split at betterment back looking averaged over 7% after fees.

A few comments on that:

1.  Looking at past returns of a Vanguard LifeStrategy fund doesn't mean much, because the fund was dragged down by an active management component.  Vanguard removed the active management portion of the fund after the crash, and has committed to staying index-only for the future.  A current LifeStrategy fund would also have gained over 7% from 2004-2014:



2.  Betterment wasn't around 10 years ago.  Taking their current portfolio and extrapolating it back 10 years is an invalid comparison.  Who knows what changes they would've made in 2008 to "protect capital".  As shown above, even Vanguard's LifeStrategy fund made changes.  Is it unlikely?  Sure, but it's possible.  Even Vanguard, as shown above, made changes after the crash, and I'd guess that a young company with VC investors to please would be more likely to stray from the course than Vanguard, who is owned by the people who own their funds (us).

3.  I'd recommend not looking at past results to predict future mutual fund performance.  The SEC feels this is such a bad idea, they've made it a requirement for managers to state this.  If you want a 60/40 portfolio, I'd recommend taking the lowest-cost path to get there.  Right now, I like Lifestrategy.  If you really want the lowest cost in your IRA, you could go for WiseBanyan, they do everything Betterment would do for your IRA, but with no fees:

https://wisebanyan.com

I'm sure you can get an invite from someone on the forums.  Of course, the absolute lowest fee possible is a 3 fund portfolio:

Total US Stock Index Fund - https://personal.vanguard.com/us/funds/snapshot?FundId=0585&FundIntExt=INT

Total International Stock Index Fund - https://personal.vanguard.com/us/funds/snapshot?FundId=0569&FundIntExt=INT

Total Bond Market Index Fund - https://personal.vanguard.com/us/funds/snapshot?FundId=0584&FundIntExt=INT

Total yearly fee of Betterment's investment portfolio (Betterment's fee + the fee from the Vanguard investments they put you in), if you have over $100,000 invested:  About 0.31%
Total yearly fee of Vanguard's LifeStrategy investment portfolio: 0.16%
Total yearly fee of WiseBanyan's portfolio: About 0.11%
Total yearly fee of 3 fund portfolio: 0.089%

Good luck with your decision!

[Maxman]

Wow Dodge! Thank you very much for the effort you did on my behalf. I can see the rational behind going with the Vanguard Life Strategy over the Betterment account.

BTW I have a small investment with WiseBanyan just to check out their strategy. I don't think that they are ready for prime time yet with large investments and withdrawals. I do think however that as they inevitably grow they will put pressure on Betterment and Wealthfront to drop their fees. That will be a good thing for all.

[Dodge]

Wow Dodge! Thank you very much for the effort you did on my behalf. I can see the rational behind going with the Vanguard Life Strategy over the Betterment account.

BTW I have a small investment with WiseBanyan just to check out their strategy. I don't think that they are ready for prime time yet with large investments and withdrawals. I do think however that as they inevitably grow they will put pressure on Betterment and Wealthfront to drop their fees. That will be a good thing for all.

Interesting!  We've all been looking for reviews of WiseBanyan.  I don't want to clutter up this thread too much, do you mind posting your experience in one of these threads?

http://forum.mrmoneymustache.com/investor-alley/wise-banyan-users-thread-(wisebanyan)/msg551409/#msg551409
http://forum.mrmoneymustache.com/investor-alley/what-are-the-pros-and-cons-of-using-wisebanyan/