Do you have a financial advisor?

[jenn_jenn]

And if so, do you find it worthwhile?

We’ve met with a couple in the past through Fidelity and the like but it felt very sales pitchy to me.

I do okay managing our investments on my own but I don’t get fancy or anything. My husband has recently been pushing for us to get a financial advisor.

Wondering if those here (who presumably have a higher than average grasp on personal finance) have found it useful.

[Jluke]

Think about the losses you experience for investments in 2022.

now realize that if you have an advisor who charges AUM, you still have to pay them so you lose even more money.

maybe consider a fee only advisor for feedback but simpler is better.

but ultimately if you are disciplined enough not to sell in a down market then you don’t need someone to protect you.

the only thing that will happen if you get a stereotypical advisor is a transfer of wealth - your money into their pockets.

they will set you up with a complicated portfolio with high fees and a pain to manage or eventuality unwind.

they will also push proprietary investment products that bring big commissions to them and the firm

be careful

[disneysteve]

Kinda sorta.

I manage all of our financial affairs myself. Always have. That said, about a year ago we did have a couple of meetings with an advisor (who happens to be a relative who we respect and trust). We made it clear that we were not looking for him to manage our money but rather just look over our plan and portfolio and give us his thoughts as I prepared to cut back at work. He gathered all the data from us and prepared a bunch of projections based on me reducing my hours or retiring completely, modeling different SS starting ages, etc. In the end, he was impressed with everything I've done and felt we were well on track for me to retire early.

We had the added benefit, which I didn't know going into it, that he didn't charge us for his services. I was expecting some sort of discount but not for it to be totally free. We did later take him and his husband out for a nice dinner to thank him.

Since then, I have touched base with him a couple of times with questions and he's answered them for me. We don't plan to tap SS for quite a while but before we do, I'll probably sit down with him again to hammer out the details of that. Also before I retire completely and we have to start drawing from our retirement accounts. The projections he already did for us include different draw down plans but before we actually start doing it, I'd probably have him run the numbers again.

Other than that, I'm fine doing it myself.

Another reason I wanted to get him involved was so that my wife had someone to turn to for help if anything were to happen to me. At least he is now familiar with our portfolio and how we handle things.

[srblanco7]

I worked with a financial advisor many years ago and after years of sub par returns (and fees), moved everything to self-managed. Since then it's been all on our own.

Perhaps my only concern with our self-managed approach would be if I passed prior to DW, as I've managed our investments for the past few decades. She has an awareness of what and how we're doing, but likely would not want the responsibility of continued self-management. Considered engaging Vanguard FA at one point, but ultimately chose not to, noting their imitation of only creating a financial plan for those assets that are at Vanguard. This lack of a comprehensive view made their engagement less worthwhile.

Hard for me to rationally justify a FA's fees (presuming something around 1% of AUM) when we're considering ER with approximately a 3.5% withdrawal rate.

[jenn_jenn]

Kinda sorta.

I manage all of our financial affairs myself. Always have. That said, about a year ago we did have a couple of meetings with an advisor (who happens to be a relative who we respect and trust). We made it clear that we were not looking for him to manage our money but rather just look over our plan and portfolio and give us his thoughts as I prepared to cut back at work. He gathered all the data from us and prepared a bunch of projections based on me reducing my hours or retiring completely, modeling different SS starting ages, etc. In the end, he was impressed with everything I've done and felt we were well on track for me to retire early.

We had the added benefit, which I didn't know going into it, that he didn't charge us for his services. I was expecting some sort of discount but not for it to be totally free. We did later take him and his husband out for a nice dinner to thank him.

Since then, I have touched base with him a couple of times with questions and he's answered them for me. We don't plan to tap SS for quite a while but before we do, I'll probably sit down with him again to hammer out the details of that. Also before I retire completely and we have to start drawing from our retirement accounts. The projections he already did for us include different draw down plans but before we actually start doing it, I'd probably have him run the numbers again.

Other than that, I'm fine doing it myself.

Another reason I wanted to get him involved was so that my wife had someone to turn to for help if anything were to happen to me. At least he is now familiar with our portfolio and how we handle things.

This sounds like the perfect scenario. I’d love to be able to talk to someone about what we’re doing and get their advice but not have them actually manage our investments.

The responses thus far have confirmed my initial suspicion and impression.

[disneysteve]

This sounds like the perfect scenario. I’d love to be able to talk to someone about what we’re doing and get their advice but not have them actually manage our investments.

You want to find a fee-only CFP. They may charge by the hour or they may have a flat rate to do a review and prepare projections for you like ours did. Had we been paying his normal fee, it would have been a flat amount (I want to say $1,500 but I'm not positive about that and it varies based on the complexity of your situation and exactly what you want them to do).

[kork13]

I think many here likely have a similar mindset as Steve. Most of us manage our own money (including investments), and if we were to use a financial advisor, it would only be for one-off consultations to run scenarios, build a long-term plan, or check our own planning work. You can get those services for a one-time fee, generally between $300-$1000+ (depending on the extent of what's requested).

That said, I won't entirely poo-poo the financial advice industry. There are ALOT of people who know nothing remotely about managing investments or building a competent plan for themselves/their family. As others have stated, financial advisors can also be valuable as a check against impulsive (typically harmful) investment practices like panic selling or bandwagon investing. So advisors serve as a voice of reason, and can provide sound advice for folks who don't know what they're doing. But such services can be costly. Most common is the 1% AUM, or the dreaded 5.75% (upfront) loaded fund fees ... but different fee structures also exist -- fee-only for defined services, or indirect flat-rate "membership" style ($X/mo), through a company that maintains salaried advisors and you have access to them.

Honestly, becoming a financial advisor is definitely one of the options I often consider as a second career for myself (after the military), just because I enjoy helping folks. However, I would likely have to either hang my own shingle, or find a place that aligns with my philosophy -- fee-only with affordable rates, honest/authentic fiduciary, and not beholden to selling/advocating for specific products or services. I just want to help people... which may be impossible in a commercial business, which would likely lead me toward a non-profit type of outfit. And presuming that I won't be reliant on the income, doing so would be entirely viable. But of course, that's just one of many thoughts -- I'm 36y/o & still don't know what I want to do when I grow up.

[disneysteve]

I just want to help people... which may be impossible in a commercial business

presuming that I won't be reliant on the income, doing so would be entirely viable.

I think you could definitely create a business that helps people without ripping them off in the process, especially if you aren't dependent on the income. You could charge a modest hourly rate and also have some flat rate options for a set batch of basic services maybe with an a la carte menu for advanced services.

I certainly wouldn't mind paying a few hundred a year for some professional oversight (just as we do with our CPA) but with a $3 million portfolio, 1% AUM would mean shelling out $30,000/year and that's never happening.

[jenn_jenn]

I'm 36y/o & still don't know what I want to do when I grow up.

Haha! I’m 31 and I say the same thing!

I think the consultation route is the way for us to go. I’m going to propose this to him. Thanks ya’ll!

I also don’t think CFAs and wealth advisors are inherently bad. Some people don’t know and don’t want to spend the energy to learn how to invest and manage their money. I just don’t necessarily see the value add for us specifically to pay for actively managed accounts but occasional consultations could be beneficial.

Ironically, my husband works in finance as a trader. He should know how to manage our finances better than anyone but he doesn’t want to put the energy into it so I do it.

[Fishindude77]

I have a no charge sit down with the guy that handles our IRA 1-2X per year to hear him out.
Rarely do we change anything, and IRA is about 1/3 or our wealth so there are 2/3 he knows very little about.

[LivingAlmostLarge]

Absolutely not. I already hate the fact my mom is charged 1.89% AUM by her advisor at Raymond James. They cost her $10k last year to lose money. She's paid $200k probably over the last decade to NOT make money. The financial advisor literally left her in 0.25% Money Market account NOT even CDs or BONDS for the majority of their $1 million dollar portfolio or anything because my mom kept telling the person "I don't want to lose money." So their portfolio didn't grow at all during the bull market really. They made last year in dividends $1k on $1 million dollars. If that isn't sad I don't know what is. It's really hard to right the ship.

They had SEVERE churn prior to this financial advisor. How severe? They had 1 share of Home Depot. They had 1 share of Target. They had 1 share of Walmart. They own a lot of Verizon, ATT, Phillip Morris. Terrible companies that have not made money in the past decade. They OWNED no ETFs or MF. They have a blackrock municipal bond fund in their Roth IRA. They owned in my dad's IRA a whole life insurance policy. I managed to get out of that incredibly with more money last year thankfully. That was the luckiest break.

So I do financial planning for my clients. But I charge hourly because it turns my stomach the idea of taking fees from people who can't afford it. I don't know how that woman sleeps at night. My mom keeps telling me when my dad dies she will turn everything over to me and I'll be leaving Raymond James and the fees. But until then my parents are paying for the privilege of seeming like the "rich jones". My mom said well we went with the financial advisor because they told some of her friends they had "too little" money to invest for them. Everyday I wish that were my parents hadn't been taken for a ride all these years. But it wasn't until a few years ago my mom asked me questions before the pandemic.

I am unsure what to do about their portfolio. The saving grace is that they don't need the money. But I also know my mom has this awful bank she needs to see money in Hawaii and it pays 0.01% on savings account. I kid you not. Central pacific bank. This is also the better bank than she had when I lost it last year because her normal bank doesn't even exist on more than one island in Hawaii and she was on another island and didn't have her checkbook and it didn't matter because she didn't have branch to go to. So I just leave her with $100k in her central pacific bank today. I moved out $200k earning 0.01% My parents earned $30 last year on $300k?

[Jluke]

Here is a discussion about potential advisors and who to choose.

https://www.bogleheads.org/forum/viewtopic.php?t=360823

[jenn_jenn]

Here is a discussion about potential advisors and who to choose.

https://www.bogleheads.org/forum/viewtopic.php?t=360823

This is so helpful! Thank you!!

[scfr]

I think many here likely have a similar mindset as Steve. Most of us manage our own money (including investments), and if we were to use a financial advisor, it would only be for one-off consultations to run scenarios, build a long-term plan, or check our own planning work. You can get those services for a one-time fee, generally between $300-$1000+ (depending on the extent of what's requested).

That said, I won't entirely poo-poo the financial advice industry. There are ALOT of people who know nothing remotely about managing investments or building a competent plan for themselves/their family. As others have stated, financial advisors can also be valuable as a check against impulsive (typically harmful) investment practices like panic selling or bandwagon investing. So advisors serve as a voice of reason, and can provide sound advice for folks who don't know what they're doing. But such services can be costly. Most common is the 1% AUM, or the dreaded 5.75% (upfront) loaded fund fees ... but different fee structures also exist -- fee-only for defined services, or indirect flat-rate "membership" style ($X/mo), through a company that maintains salaried advisors and you have access to them.

Honestly, becoming a financial advisor is definitely one of the options I often consider as a second career for myself (after the military), just because I enjoy helping folks. However, I would likely have to either hang my own shingle, or find a place that aligns with my philosophy -- fee-only with affordable rates, honest/authentic fiduciary, and not beholden to selling/advocating for specific products or services. I just want to help people... which may be impossible in a commercial business, which would likely lead me toward a non-profit type of outfit. And presuming that I won't be reliant on the income, doing so would be entirely viable. But of course, that's just one of many thoughts -- I'm 36y/o & still don't know what I want to do when I grow up.

You could be the next Rick Ferri!

[jenn_jenn]

Update: We met with an FA today so I went searching for this thread to see when I had posted this. My husband won and we’re going with an FA after all.

I still don’t love it but it really comes down to the fact that I can’t do ANYTHING without approval from my husband’s company due to compliance / regulations. (As in, they even have to “approve” the equity I receive as part of my annual compensation. ) And now I get to bug the FA instead of my husband.

I wouldn’t advise it for most people with financial literacy, but I’m starting to understand why all of his co-workers have FAs themselves despite working in finance. Saves marriages.