Author Topic: Newbie here with basic questions re locating a reputable financial advisor.  (Read 3904 times)

m3110w

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(If this post belongs in another forum please move as needed. Thanks.)

Hi All,

Financial newbie here with some simple questions. I'm retired with part of my portfolio being managed by a Registered Representative (contract employee) of Lincoln Life group. I don't think he has a fiduciary relationship to me. Most of my funds with him are in various mutual funds with percentage fees around 1% or so. They're averaging about 7% net return per year.

Recently I've been researching ETFs and websites like Betterment.com. From what I can gather, one possibly good option for me is transfer my funds to Betterment.com. Looks like it may have lower percentage fees.

So my main question is what is the best way to locate a reputable independent financial advisor (IFA) who would have fiduciary responsibility to me? My current and only FA was recommended to me by a friend so I've never searched on my own for an IFA. Is there some website(s) or forum for locating a good IFA? Any suggestions most appreciated.

Thanks,

lpep

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I don't know if you're going to get many helpful responses, because I think most people on this forum believe that there's no better financial advisor for your own money than yourself. Why not read up on it and take over your own money?

m3110w

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Yep, that is true. I'm now trying to teach myself some of the basics, but I don't have time to do all the detailed research I'd like to do. And sometimes a consultation at the beginning with an expert can save one from common mistakes. For my case one good consultation will probably be worth it. I found the NAPFA website that has some good guidelines.

Aphalite

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Hi mellow, welcome, try this website: http://www.napfa.org/

And ask the agents you interview these questions:
http://www.marottaonmoney.com/ten-questions-to-ask-a-financial-advisor/

Make sure to look for a fee only advisor while you transition into learning about how to manage money yourself

m3110w

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Hello Aphalite,

Thanks for the 10 Questions link. Excellent. That's just the kind of info to help a newbie like me get started in the right direction.

Right now it looks like putting assets into the Betterment ETFs is a good option for me as a long term, mostly passive, low to med risk investor.

Thanks,

VanTran

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I would just buy an index or conglomerates like Berkshire, Fairfax, etc. You also have access to asset management firms on the market like Oaktree and Gabelli.

If an adviser is what you want, I like Francis Chou. He refunds fees if his performance isn't up to par and there is plenty of information on him. I know of several excellent advisers, but cannot recommend because there isn't much info on them online.

simplified

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Most of the people on this forum manage their own finances. As a newbie, you think at least one consultation with a financial advisor is a good thing. See, that is the problem. Financial Advisors are what you do not need. No financial advisor will tell you that you should stay away from financial advisors. For that reason, nothing good can come out of meeting a financial advisor.

m3110w

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I don't want to mess around trying to manage my own portfolio. From all that I've read Betterment looks like an excellent option. They do active rebalancing at very low fees. I read a bunch of reviews on Betterment and they're all pretty positive. If anyone here has used Betterment or has some opinions about it I'd love to hear. Right now I'm leaning toward switching to Betterment.

Thanks,

Another Reader

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Betterment is not a bad way to get started.  Investing today is better than waiting two years while you read up on investing.  It won't cost that much and you can follow the process and watch your money with their easy to understand website.  I started a small account just to get a feel for what they are doing.  The process is transparent and there is a lot of explanation of what they are doing along the way.

While you are putting money away, you would be well served to learn more about investing.  There is a lot of good discussion of passive index investing over at the Bogleheads website.  A number of books on investing are referenced in threads here as well.  Get acquainted with your library and start with the basics.

forummm

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I'm not sure why you want an advisor. But you could let Vanguard be your advisor. Just put your funds into the Target Retirement Fund that is closest to the date you turn 65. Very low fees (0.17%). Very diversified portfolio (almost 10,000 stocks around the world). Auto rebalancing. Betterment will just put your money in Vanguard funds and charge you extra on top.

If you learn something over the next few years that you want to do instead, you can just start buying whatever that is with the new money you save.

Psychstache

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Yep, that is true. I'm now trying to teach myself some of the basics, but I don't have time to do all the detailed research I'd like to do. And sometimes a consultation at the beginning with an expert can save one from common mistakes. For my case one good consultation will probably be worth it. I found the NAPFA website that has some good guidelines.

Didn't you say you were retired? What detailed research do you think is needed?

I don't think it is too much to ask to devote 10-20 hours (which is an incredibly high estimate imo) to learn how to comfortably self-manage the money that will pay for the rest of your existence.

Another Reader

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I'm sorry, I missed the retired part and that you have the money with a life insurance company.  Is this money in retirement accounts, such as IRA's?  Or are these taxable accounts?  The type of account you have with this company affects what you should do. Is there some type of annuity attached to these accounts? 

If you have mutual funds in taxable accounts with capital gains, you would incur taxes by selling these funds and moving the money somewhere else.  A strategy to minimize taxes while maximizing the returns is needed if you decide to move the money.

To answer your question, a "financial advisor" does not have a fiduciary duty to you.  A fee-only CFP would have a fiduciary responsibility.  However, a CFP does not appear to be what you need, as you haven't mentioned a need for financial planning.

NICE!

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Most of the people on this forum manage their own finances. As a newbie, you think at least one consultation with a financial advisor is a good thing. See, that is the problem. Financial Advisors are what you do not need. No financial advisor will tell you that you should stay away from financial advisors. For that reason, nothing good can come out of meeting a financial advisor.

Disagreed - some people need education, advice, and a helping hand. This is why you need to find a well-qualified professional who works on a fee-only basis. No commissions. You should be able to find a good one.

bruce88

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I understand why you want the advice of an advisor-and the "fee only" is a good start.

HOWEVER-no one will ever care about your money as much as you.  The best advisor in the world is the one you train through reading and research and experience-(that would be you!).

If you cannot bear the thought of doing it now, begin studying finance as a hobby, and improve until you feel confident doing it yourself.  This venture will be one of the two or three most important items in your retirement, and will last the rest of your life. 

Good luck, and happy reading!

NICE!

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I understand why you want the advice of an advisor-and the "fee only" is a good start.

HOWEVER-no one will ever care about your money as much as you.  The best advisor in the world is the one you train through reading and research and experience-(that would be you!).

If you cannot bear the thought of doing it now, begin studying finance as a hobby, and improve until you feel confident doing it yourself.  This venture will be one of the two or three most important items in your retirement, and will last the rest of your life. 

Good luck, and happy reading!

Agreed, you should absolutely grab the bull by the horns. I'm just saying that some people lack the ability, temperament, or education to do so. Based on the OP's posts, I don't think this applies - I think he/she can pick up the books and get cracking. Maybe the best idea for the OP is a meeting or two with an advisor to park the assets into a safe and diversified portfolio while OP starts tearing through literature?

m3110w

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OK, I've been researching various investment options and currently the one that seems best is to move my mish-mash of various mutual funds (ave 1% fee) into some Vanguard Index and ETF funds (0.1 to 0.4% fees). I'm now starting to research this option in more depth.

The more I research (and absorb your responses) the more I feel that I don't need an advisor.

The main question I'm researching now is Index Funds vs ETFs. My initial research indicates there's not a big difference for my purposes.

I invite you to share your view on Index funds vs ETFs for a long term passive investor like me. Both OK? I plan to get a few funds that are well diversified and maybe auto-balancing. From what I've read I want to (in general) avoid mutual funds and their higher fees. Seems like that's the consensus among Mustachians. Sound right?

Thanks! Cheers

PS: The insights I've received from your responses in the past few days have been more valuable and actionable than anything my "advisor" has ever told me in 10 years.

Aphalite

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I suggest either VTSMX/VTSAX (Vanguard total market mutual fund) or VTI (Vanguard total market ETF), or RSP (equal weighted sp500 fund, slightly higher expense ratio) for your domestic exposure

For your international exposure - VTIAX should cover it (VXUS is the ETF equivalent)

Bond wise- I'd go short/intermediate term for now, and then eventually transition to total bond (when interest rates rise, existing bond prices decrease to reflect the opportunity cost of capital), funds are here: https://investor.vanguard.com/mutual-funds/vanguard-mutual-funds-list (click on bonds on the left side) and etfs are here: https://personal.vanguard.com/us/funds/etf/all?assetclass=intl&assetclass=intl (click on bonds on the left side)

Read this thread http://forum.mrmoneymustache.com/forum-information-faqs/frequently-asked-questions/ for ideas on your IPS (investing policy statement)

Mighty-Dollar

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I'm retired with part of my portfolio being managed by a Registered Representative (contract employee) of Lincoln Life group. I don't think he has a fiduciary relationship to me. Most of my funds with him are in various mutual funds with percentage fees around 1% or so. They're averaging about 7% net return per year.
You are absolutely working with a non-fiduciary (also known as a salesman). Registered representatives are nothing more than brokers who are seeking the highest commissions, all at YOUR expense.

I second the motion to go to Napfa.org to find a fiduciary adviser IF you can't do it yourself. Investing is really, really easy. Buy and hold index funds like AGG and VOO then rebalance as needed. A 3rd grader can do it.

Use this site for help in determining your stock / bond asset allocation ratio.
https://personal.vanguard.com/us/funds/tools/recommendation?reset=true
And this site for help in determining if your nest egg will last...
http://www.vanguard.com/nesteggcalculator

As of late 2014, this was Jim Cramer's general bond / stock allocation ratio recommendation:
Younger than 30 - No reason to own bonds
In your 30's - 10% - 20% bonds
In your 40's - 20% - 30% bonds
In your 50's - 30% - 40% bonds
60 to retirement - 40% - 50% bonds

Similarly Bob Brinker recommends a 50/50 bond / stock allocation for a retired 70 year old.

Scandium

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I'm not sure why you want an advisor. But you could let Vanguard be your advisor. Just put your funds into the Target Retirement Fund that is closest to the date you turn 65. Very low fees (0.17%). Very diversified portfolio (almost 10,000 stocks around the world). Auto rebalancing. Betterment will just put your money in Vanguard funds and charge you extra on top.

If you learn something over the next few years that you want to do instead, you can just start buying whatever that is with the new money you save.

This. Doesn't get much easier than a Target Retirement Fund. And would be a vast improvement over your advisor. Low fees and just set it and forget it. If you do need more advice and you have more than $100,000 with vanguard you can use their advisor service for an extra 0.30% fee. Still pretty cheap.
https://investor.vanguard.com/advice/personal-advisor

TomTX

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If you don't want a shifting stock/bond percentage,  Vanguard Lifestrategy