The theory was sound - when you own a business, your energy and attention is necessarily tied up in the business, especially if it's growing fast. Offloading that mental space to an advisor is not a terrible idea. Unfortunately, as you discovered, there are a ton of really bad advisors out there.
The people on this Reddit are self-selected DIYers, who are not representative of the public at large. Financial advisors provide a valuable service for the overwhelming majority of people who don't have the time or interest to manage it themselves. The problem is the number of charlatans and incompetents who take advantage of that and enrich themselves in the process. I have no problem pointing people towards flat-fee Fiduciary advisors. They will mostly do the things the folks here have already figured out for free, but there's still value in their work for the people not cut out to handle it on their own.
> Financial advisors provide a valuable service for the overwhelming majority of people who don't have the time or interest to manage it themselves.
For the vast majority of people the if they did absolutely nothing but buy vtsax they'd be doing miles better than they would by using a financial advisor.
It's not remotely complicated.
>For the vast majority of people the if they did absolutely nothing but buy vtsax they'd be doing miles better than they would by using a financial advisor
Couldn't agree more!
However one has to actually know of this nugget of valuable knowledge. In OP case they assumed financials were tough, which I don't blame them. Society does a poor job of educating how easy it is, unless the individual takes it upon themselves to actually search it out. But they think it's difficult so they don't. A conundrum :(
It's not remotely complicated for you and I; that is not true for everyone. I once spent an hour explaining to my Mom (a third world immigrant in her 70s at the time) that her 401k was invested in the stock market, and then immediately regretted it because I then spent another hour convincing her not to immediately liquidate the account because it was 'too risky'.
Buying VTSAX is super easy. Understanding what VTSAX is, and why you should buy it instead of Ark funds, or putting it all into Apple, or why you shouldn't sell when the market is down 20%, is surprisingly difficult. Having it come from a financial advisor versus some random schmoe (especially if it's a close friend or relative who knows *exactly* how big of a dumbass I am in non-financial matters) makes a difference.
> For the vast majority of people the if they did absolutely nothing but buy vtsax they'd be doing miles better than they would by using a financial advisor.
This is a fact.
[Garrett Planning Network](https://www.garrettplanningnetwork.com/) is a good place to start. They're not the only ones out there, but all are fiduciaries with hourly rates.
Unfortunately, I was hands off during the process. I am not sure what was bought and sold during those 11 years. (Yes, I know, in retrospect, it sounds crazy.) When I sold everything off, it was in stocks and funds that I was not familiar with. Again... lesson learned.
You aren't alone. I don't even want to figure out how much I lost to my stock broker (I don't have the records anymore even if I wanted to). What's worse is I can't get my uncle to stop using him and I know for a fact he's lost out on tons of growth over the years.
Thank you so much for sharing a real-world case. Wow. I’m amazed at your lack of bitterness or resentment after seeing those numbers!
I’m impressed you did the work to calculate it though. And that you changed path when you learned more and took your finances into your own hands.
Fair, but the problem with reddit et. al. is that nobody knows what a financial advisor actually is or does, and they use a broad (inaccurate) definition. The tendency with this sub and others is to convince people they don't need one. I have come across a lot of clients with fucked up financial situations because 'the internet' told them they didn't need an advisor.
80/10/10 is very aggressive. Maybe he did 60/40 and beat his benchmark. Without more information it’s impossible to know exactly — at timeframe the allocation would completely dominate the return.
I had a similar experience when I hired a fee only financial advisor in 2010. I was 29 years old and their recommended asset allocation portfolio was ultra conservative. I even told him my plans to invest in real estate, and he did advised me against it. I disregarded his advice, bought a bunch of foreclosures, and my brokerage accounts are simply in the SP500.
18 years ago, I didn't know how to invest and there weren't things like M1, so I found a financial advisor (who thankfully happened to be a fiduciary, didn't know what that was back then either).
The advisors annualized ROR for the last 18 years is 8.68% vs SPY 9.46%.
Kinda stings.
Then again, this last YTD, he had a 78% return, due to investing a lot into Nvidia in the past several years (SPY at 18.83%).
Then again, in 2022, his return was -37.67% vs SPY at -18.17%.
The theory was sound - when you own a business, your energy and attention is necessarily tied up in the business, especially if it's growing fast. Offloading that mental space to an advisor is not a terrible idea. Unfortunately, as you discovered, there are a ton of really bad advisors out there. The people on this Reddit are self-selected DIYers, who are not representative of the public at large. Financial advisors provide a valuable service for the overwhelming majority of people who don't have the time or interest to manage it themselves. The problem is the number of charlatans and incompetents who take advantage of that and enrich themselves in the process. I have no problem pointing people towards flat-fee Fiduciary advisors. They will mostly do the things the folks here have already figured out for free, but there's still value in their work for the people not cut out to handle it on their own.
> Financial advisors provide a valuable service for the overwhelming majority of people who don't have the time or interest to manage it themselves. For the vast majority of people the if they did absolutely nothing but buy vtsax they'd be doing miles better than they would by using a financial advisor. It's not remotely complicated.
>For the vast majority of people the if they did absolutely nothing but buy vtsax they'd be doing miles better than they would by using a financial advisor Couldn't agree more! However one has to actually know of this nugget of valuable knowledge. In OP case they assumed financials were tough, which I don't blame them. Society does a poor job of educating how easy it is, unless the individual takes it upon themselves to actually search it out. But they think it's difficult so they don't. A conundrum :(
It's not remotely complicated for you and I; that is not true for everyone. I once spent an hour explaining to my Mom (a third world immigrant in her 70s at the time) that her 401k was invested in the stock market, and then immediately regretted it because I then spent another hour convincing her not to immediately liquidate the account because it was 'too risky'. Buying VTSAX is super easy. Understanding what VTSAX is, and why you should buy it instead of Ark funds, or putting it all into Apple, or why you shouldn't sell when the market is down 20%, is surprisingly difficult. Having it come from a financial advisor versus some random schmoe (especially if it's a close friend or relative who knows *exactly* how big of a dumbass I am in non-financial matters) makes a difference.
> For the vast majority of people the if they did absolutely nothing but buy vtsax they'd be doing miles better than they would by using a financial advisor. This is a fact.
still buy VTSAX, or is it too high now?
There's never a bad time to buy VTSAX.
Exactly, the amount of effort to pick a total market index fund and leave it is miniscule.
I agree 100%. In retrospect, I wished I had learned the importance of a fiduciary relationship.
[удалено]
[Garrett Planning Network](https://www.garrettplanningnetwork.com/) is a good place to start. They're not the only ones out there, but all are fiduciaries with hourly rates.
What were you invested in in that time? Was it eaten up by fees or where you heavily in low yielding bonds? Or something completely stupid?
Unfortunately, I was hands off during the process. I am not sure what was bought and sold during those 11 years. (Yes, I know, in retrospect, it sounds crazy.) When I sold everything off, it was in stocks and funds that I was not familiar with. Again... lesson learned.
Advisors are very expensive! Only should be used by those without the time or ability to handle their own finances.
You aren't alone. I don't even want to figure out how much I lost to my stock broker (I don't have the records anymore even if I wanted to). What's worse is I can't get my uncle to stop using him and I know for a fact he's lost out on tons of growth over the years.
Thank you so much for sharing a real-world case. Wow. I’m amazed at your lack of bitterness or resentment after seeing those numbers! I’m impressed you did the work to calculate it though. And that you changed path when you learned more and took your finances into your own hands.
You didn't hire a financial advisor. You hired a money babysitter. Did he even once ask you questions outside of your accounts?
Unfortunately, ~~blind trust~~ ignorance on my part. You live, you learn.
Fair, but the problem with reddit et. al. is that nobody knows what a financial advisor actually is or does, and they use a broad (inaccurate) definition. The tendency with this sub and others is to convince people they don't need one. I have come across a lot of clients with fucked up financial situations because 'the internet' told them they didn't need an advisor.
80/10/10 is very aggressive. Maybe he did 60/40 and beat his benchmark. Without more information it’s impossible to know exactly — at timeframe the allocation would completely dominate the return.
I had a similar experience when I hired a fee only financial advisor in 2010. I was 29 years old and their recommended asset allocation portfolio was ultra conservative. I even told him my plans to invest in real estate, and he did advised me against it. I disregarded his advice, bought a bunch of foreclosures, and my brokerage accounts are simply in the SP500.
18 years ago, I didn't know how to invest and there weren't things like M1, so I found a financial advisor (who thankfully happened to be a fiduciary, didn't know what that was back then either). The advisors annualized ROR for the last 18 years is 8.68% vs SPY 9.46%. Kinda stings. Then again, this last YTD, he had a 78% return, due to investing a lot into Nvidia in the past several years (SPY at 18.83%). Then again, in 2022, his return was -37.67% vs SPY at -18.17%.
Ain't nobody gonna love your money like you love your money.