Meeting with financial adviser at work

[anotherAlias]

This week they had a financial adviser from Principal, our 401k provider, come into the office to offer 1 on 1 consultations.  Normally I ignore these things but I've been bored at work lately so thought I'd sign up and see what a 'professional' thought of my plan.  I told him I was looking to retire at 50 and wanted to have him double check my numbers.  His reaction was pretty funny.  At first you could tell he was getting ready to give me a reality check until he pulled up my account and saw my balance.  Then when I told him that my 401k is only about half of my stash, he looked a little startled but started taking me more seriously.  He started entering my numbers into the online calculator which of course doesn't let you retire before 55 and makes you take SS at 62 when you retire early.  Then he started grilling me about my budget and the things that I may have forgotten.  I kept telling him, this is what I actually spend, I record every penny.  Certainly a single person must be leaving something out if their budget is only 1800/mo.  I didn't have the heart to tell him that most years I spend less than that and I was using a bigger spend year as a bit of a buffer in the calculations.  So the summary analysis that I got was that I'm doing good but I will probably want to get a part time job if I retire at 55 because my budget will be much larger in retirement.  When I plug the same numbers into cFiresim, I get like 95% success at 47yo.  I think I like that plan better :) 

[prognastat]

This week they had a financial adviser from Principal, our 401k provider, come into the office to offer 1 on 1 consultations.  Normally I ignore these things but I've been bored at work lately so thought I'd sign up and see what a 'professional' thought of my plan.  I told him I was looking to retire at 50 and wanted to have him double check my numbers.  His reaction was pretty funny.  At first you could tell he was getting ready to give me a reality check until he pulled up my account and saw my balance.  Then when I told him that my 401k is only about half of my stash, he looked a little startled but started taking me more seriously.  He started entering my numbers into the online calculator which of course doesn't let you retire before 55 and makes you take SS at 62 when you retire early.  Then he started grilling me about my budget and the things that I may have forgotten.  I kept telling him, this is what I actually spend, I record every penny.  Certainly a single person must be leaving something out if their budget is only 1800/mo.  I didn't have the heart to tell him that most years I spend less than that and I was using a bigger spend year as a bit of a buffer in the calculations.  So the summary analysis that I got was that I'm doing good but I will probably want to get a part time job if I retire at 55 because my budget will be much larger in retirement.  When I plug the same numbers into cFiresim, I get like 95% success at 47yo.  I think I like that plan better :)

Even if the numbers tell him that you will be able to execute on your plan since this is so far out of his normal he is expecting that you will be behaving like a non-mustachian when you retire and start spending more than you currently are. If he instead looked at how you are already bucking the norm with your current spending and planning financially he could have assumed this wasn't the case.

[Travis]

Was it a hard sell "this will never work" or was he just making sure you thought of everything?

[anotherAlias]

Was it a hard sell "this will never work" or was he just making sure you thought of everything?

Somewhere in between.  I got the feeling he has a script of sorts that he goes through and my answers to his questions were throwing him off.  He was really flustered.  He was impressed with how much I have saved but really seemed to doubt that my current spending was as low as it is.  Duh, how else am I able to save so much.

[clarkfan1979]

I met with some reps from TIAA-CREF a few times at work. They ask you if you have any other investments. I told them that I have two rental houses and I hope to have 5-10 rentals by the time I retire, each cash flowing about $1500/month each.

In their computer model, they have to plug in a number that says when the investment money will reach zero. I told them that it will never reach zero because it will continue to produce rental income. They said that they understood, but they still had to put a number in the computer. We settled on age 90 (when the rental money runs out). Any idea on why they have to do this?

I told them that I contribute enough to my 401K to avoid the 25% tax bracket and the rest goes into a rental real estate fund for house #3. They tried to make the argument that my portfolio is unbalanced (too much real estate) and I need to increase my 401K contribution. I told them that I was good and thanked them for their time.

A TIAA-CREF rep on the phone put me in 50 stocks/50 bonds portfolio based on her questions. This was in 2011 and I was 31. The next day I changed it to 75% stock and 25% bonds. I'm glad that I changed it.

Based on my limited knowledge of finance they consider me to be a novice. They actually ask you to pick a category based on their criteria. Based on their criteria, I am a novice.

[Linea_Norway]

This is so funny. The man in your office has never had to do with your kind of people and therefore hasn't practiced this scenario. You are perhaps a bigger financial expert in this field (having a big stash and saving well) then he is. He probably is a better expert on how to refinance debts.

Normal (official) pension calculators are not made for people like us at all. We are dividing from the norm and the system designers never thought of that. Therefore there are irrelevant fields to fill in in their calculators.

[MoonLiteNite]

I have done a few phone "free meetings" with financial advisers, looking to have a small chat with one as a fee based service, but after 5mins in and they ask what services i am wanting they get all weird, some defensive, some like ready to just hang up, and others are full of questions, but end up saying it is out of their scope....

Still looking for a good adviser.... as much as   a trust MMM forums and most things online and my little understanding of the BS IRS documents, i really would like to make sure of all the tax planning and IRA ladder, and everything in between.
 

[eyePod]

This reminds me of the person who was excited that I had actual questions about our 401k plan since usually, no one reads it.

[Roots&Wings]

This is a free benefit at my work too, I now meet with the guy annually, it's fun :)

Did yours have any useful input on estimating future health care costs? Or have thoughts on Social Security?

Incredibly, I didn't have a budget item for umbrella insurance in my FIRE budget, so that was one useful thing that came out of the meeting. It can be really useful to get outsider input.

[TomTX]

I met with some reps from TIAA-CREF a few times at work. They ask you if you have any other investments. I told them that I have two rental houses and I hope to have 5-10 rentals by the time I retire, each cash flowing about $1500/month each.

In their computer model, they have to plug in a number that says when the investment money will reach zero. I told them that it will never reach zero because it will continue to produce rental income. They said that they understood, but they still had to put a number in the computer. We settled on age 90 (when the rental money runs out). Any idea on why they have to do this?

I told them that I contribute enough to my 401K to avoid the 25% tax bracket and the rest goes into a rental real estate fund for house #3. They tried to make the argument that my portfolio is unbalanced (too much real estate) and I need to increase my 401K contribution. I told them that I was good and thanked them for their time.

A TIAA-CREF rep on the phone put me in 50 stocks/50 bonds portfolio based on her questions. This was in 2011 and I was 31. The next day I changed it to 75% stock and 25% bonds. I'm glad that I changed it.

Based on my limited knowledge of finance they consider me to be a novice. They actually ask you to pick a category based on their criteria. Based on their criteria, I am a novice.

Isn't TIAA-CREF fairly high fee? Not EJ high, but fairly high.

[rockstache]

Incredibly, I didn't have a budget item for umbrella insurance in my FIRE budget, so that was one useful thing that came out of the meeting. It can be really useful to get outsider input.

Around what point did you start feeling this was necessary?

[DeskJockey2028]

I did this late last year, through our in-house Fidelity rep as a sanity check on my own plan. It was a lot of fun! We started off with the typical "So to retire by 65..." speech. I politely stopped him and then told him my plans - retire by 57. I showed him the numbers and we used the Fidelity RIP tool to verify everything. He was pretty impressed and clearly doesn't see many people come through who are planning on getting out before 65.

I think the reason for this though is that many of the FIRE-minded folk who may work here probably don't feel the need to meet 1 on 1 with a Fidelity rep.

It was good to get my plan verified by someone with a good, working knowledge of saving and investing. He suggested a few things (my health care plan, for instance, forgot to include purchasing supplemental insurance once I hit Medicare) and then we BSed about our kids and jobs for the rest of the appointment.

He got his salary regardless of what happened in the meeting (as did I, comet to think of it) so he wasn't actually trying to hard sell me on anything. I'll probably go back in another 3-4 years just to have someone else take a look at my numbers again who (no offense) isn't a random, online forum member. :)

[Schaefer Light]

I asked the guy who came in at my company about the Mega Backdoor Roth IRA last year.  He looked at me like I was from another planet.

[anotherAlias]

This is a free benefit at my work too, I now meet with the guy annually, it's fun :)

Did yours have any useful input on estimating future health care costs? Or have thoughts on Social Security?

Incredibly, I didn't have a budget item for umbrella insurance in my FIRE budget, so that was one useful thing that came out of the meeting. It can be really useful to get outsider input.

He was saying to budget $1000/mo for health care but that may go down in several years if the Republican plan goes through.  Personally, I don't think premiums will be going down anytime soon but I didn't feel like arguing because he was trying to be helpful.  He seemed clueless about SS.  He plugged in the estimated amount from my SS statement without discounting it any for the trust fund being depleted or my early retirement date.  I think the only thing that I really got out of this is I probably need to think more about the activities I might want to do in retirement and maybe create some alternate budgets for various scenarios.  He was really pushing that I make a bucket list and budget for those things and come back to discuss it with him.

[prognastat]

This is a free benefit at my work too, I now meet with the guy annually, it's fun :)

Did yours have any useful input on estimating future health care costs? Or have thoughts on Social Security?

Incredibly, I didn't have a budget item for umbrella insurance in my FIRE budget, so that was one useful thing that came out of the meeting. It can be really useful to get outsider input.

He was saying to budget $1000/mo for health care but that may go down in several years if the Republican plan goes through.  Personally, I don't think premiums will be going down anytime soon but I didn't feel like arguing because he was trying to be helpful.  He seemed clueless about SS.  He plugged in the estimated amount from my SS statement without discounting it any for the trust fund being depleted or my early retirement date.  I think the only thing that I really got out of this is I probably need to think more about the activities I might want to do in retirement and maybe create some alternate budgets for various scenarios.  He was really pushing that I make a bucket list and budget for those things and come back to discuss it with him.

That cracks me up, a bucket list? Is he a financial advisor or a self styled lifestyle guru?

[spokey doke]

Isn't TIAA-CREF fairly high fee? Not EJ high, but fairly high.

I have a number of TIAA-CREF funds in my 401/403's nearly all have ER's of .05 or .06

[spokey doke]

I did this late last year, through our in-house Fidelity rep as a sanity check on my own plan. It was a lot of fun! We started off with the typical "So to retire by 65..." speech. I politely stopped him and then told him my plans - retire by 57. I showed him the numbers and we used the Fidelity RIP tool to verify everything. He was pretty impressed and clearly doesn't see many people come through who are planning on getting out before 65.

I think the reason for this though is that many of the FIRE-minded folk who may work here probably don't feel the need to meet 1 on 1 with a Fidelity rep.

It was good to get my plan verified by someone with a good, working knowledge of saving and investing. He suggested a few things (my health care plan, for instance, forgot to include purchasing supplemental insurance once I hit Medicare) and then we BSed about our kids and jobs for the rest of the appointment.

He got his salary regardless of what happened in the meeting (as did I, comet to think of it) so he wasn't actually trying to hard sell me on anything. I'll probably go back in another 3-4 years just to have someone else take a look at my numbers again who (no offense) isn't a random, online forum member. :)

I stopped talking to my Fidelity rep, unless I need a specific piece of information or task completed (despite regular attempts to "reach out" and "let me know" that he is there for me).  I do use their online retirement tool on occasion, as another check on my cfiresim modeling.  Unfortunately, they have dumbed it down a bit...giving you a global rating and number (and color!) based on whether you are "on tack."

[Roots&Wings]

Incredibly, I didn't have a budget item for umbrella insurance in my FIRE budget, so that was one useful thing that came out of the meeting. It can be really useful to get outsider input.

Around what point did you start feeling this was necessary?

Once my assets in unshielded accounts exceeded the liability limits on my car insurance and homeowner's ins.

[Roots&Wings]

This is a free benefit at my work too, I now meet with the guy annually, it's fun :)

Did yours have any useful input on estimating future health care costs? Or have thoughts on Social Security?

Incredibly, I didn't have a budget item for umbrella insurance in my FIRE budget, so that was one useful thing that came out of the meeting. It can be really useful to get outsider input.

He was saying to budget $1000/mo for health care but that may go down in several years if the Republican plan goes through.  Personally, I don't think premiums will be going down anytime soon but I didn't feel like arguing because he was trying to be helpful.  He seemed clueless about SS.  He plugged in the estimated amount from my SS statement without discounting it any for the trust fund being depleted or my early retirement date.  I think the only thing that I really got out of this is I probably need to think more about the activities I might want to do in retirement and maybe create some alternate budgets for various scenarios.  He was really pushing that I make a bucket list and budget for those things and come back to discuss it with him.

Interesting thanks! I wasn't sure if there were standard answers. The answers I got last year was they plan for about 1/3 of current SS projections (I'm 30's though) and healthcare costs he had me price out a plan and then project 8%/yr for health care price inflation. Curious what he'll say this year!

[honeybbq]

Isn't TIAA-CREF fairly high fee? Not EJ high, but fairly high.

No, it's pretty low. It's for teachers/universities/etc. I have one account with them. I could check specifics but I decided it was equivalent to my vanguard portfolio ER and I just left it there.

[Travis]

This is a free benefit at my work too, I now meet with the guy annually, it's fun :)

Did yours have any useful input on estimating future health care costs? Or have thoughts on Social Security?

Incredibly, I didn't have a budget item for umbrella insurance in my FIRE budget, so that was one useful thing that came out of the meeting. It can be really useful to get outsider input.

He was saying to budget $1000/mo for health care but that may go down in several years if the Republican plan goes through.  Personally, I don't think premiums will be going down anytime soon but I didn't feel like arguing because he was trying to be helpful.  He seemed clueless about SS.  He plugged in the estimated amount from my SS statement without discounting it any for the trust fund being depleted or my early retirement date.  I think the only thing that I really got out of this is I probably need to think more about the activities I might want to do in retirement and maybe create some alternate budgets for various scenarios.  He was really pushing that I make a bucket list and budget for those things and come back to discuss it with him.

That cracks me up, a bucket list? Is he a financial advisor or a self styled lifestyle guru?

Or he's come across a lot of retirees who think they've budgeted for the out-years and end up going vacation crazy.

[NoStacheOhio]

I have done a few phone "free meetings" with financial advisers, looking to have a small chat with one as a fee based service, but after 5mins in and they ask what services i am wanting they get all weird, some defensive, some like ready to just hang up, and others are full of questions, but end up saying it is out of their scope....

Still looking for a good adviser.... as much as   a trust MMM forums and most things online and my little understanding of the BS IRS documents, i really would like to make sure of all the tax planning and IRA ladder, and everything in between.

Wouldn't a CPA be a better fit for that?

[TomTX]

Isn't TIAA-CREF fairly high fee? Not EJ high, but fairly high.

No, it's pretty low. It's for teachers/universities/etc. I have one account with them. I could check specifics but I decided it was equivalent to my vanguard portfolio ER and I just left it there.

Great, thanks. I had heard that they put hefty wrap/advisor fees for running 401/403 plans, but apparently not.

[Brother Esau]

Incredibly, I didn't have a budget item for umbrella insurance in my FIRE budget, so that was one useful thing that came out of the meeting. It can be really useful to get outsider input.

Around what point did you start feeling this was necessary?

Once my assets in unshielded accounts exceeded the liability limits on my car insurance and homeowner's ins.

We did the same thing once our assets reached that level. Umbrella insurance is a great thing at a reasonable cost.

[Chris22]

Incredibly, I didn't have a budget item for umbrella insurance in my FIRE budget, so that was one useful thing that came out of the meeting. It can be really useful to get outsider input.

Around what point did you start feeling this was necessary?

Once my assets in unshielded accounts exceeded the liability limits on my car insurance and homeowner's ins.

We did the same thing once our assets reached that level. Umbrella insurance is a great thing at a reasonable cost.

I did it once I had a rental house.  I was afraid about liability there. My insurance co suggested umbrella instead of jacking up the homeowners insurance just at that house. Cost a little more but applies to everything not just the rental home.

[rockstache]

I periodically wonder if I should be getting into umbrella insurance. We have no property, but our assets have been approaching levels that make me a little nervous.

[Gronnie]

Incredibly, I didn't have a budget item for umbrella insurance in my FIRE budget, so that was one useful thing that came out of the meeting. It can be really useful to get outsider input.

Around what point did you start feeling this was necessary?

Once my assets in unshielded accounts exceeded the liability limits on my car insurance and homeowner's ins.

I don't  see why the amount of assets would be all that important, at least for your entry level 1 million or so policy. Even if you don't have that much in assets, you are still shielding future earnings.

[ysette9]

I just upped our umbrella policy from $1M to $2M. I don't remember how much more it cost us but it was insignificant. I like having the peace of mind, especially as assets grow. Eventually you will be able to drop life insurance once you have enough and that is more expensive than umbrellla.