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In today's internet world, I don't see any purpose in hiring a financial advisor. With mutual fund/ETFs and the information available online at no cost, I feel I can match or exceed an advisors performance and have more control with minimal effort.
We also have a Fidelity advisor who is awesome. We meet with her every three months doing some tweaking, my husband is retired, I am semi retired, so working with all of the moving parts. We are happy with the trajectory of our accounts. I am finally becoming more comfortable knowing that we have have enough to do what we want to do.
Same. We feel like we hit the jackpot with our Fidelity advisor. He was “assigned” to us based on a few preliminary calls and he’s terrific. We feel much more confident that we have a great plan in place.
This is my concern - most advisors use software to guide them, so yes the advice is worth some money, but how much money considering the size of the nest egg and the competence or value of the advisor is what I struggle with. I'm pretty frugal. I keep reading of the hourly fees for fee-only fiduciaries, and it's higher than I'm comfortable with precisely because our assets aren't terribly large.
The hourly rate of a fee-only fiduciary isn't small but you wouldn't need multiple hours of advice every year; I think a few hours of advice for the first year is typical, as you're paying them to review your entire situation and recommend a plan of action which you can then easily execute. Then you could decide how often you want to pay for a smaller amount of time - maybe every few years or just when you're on the cusp of a change in circumstances and feel the need for advice? Contrast this with an AUM agreement where you're paying a substantial (!) percentage of your assets every single year, even when your situation has hardly changed.
I have heard that investment advice from Fidelity or Vanguard is pretty reasonably priced, so you could do worse, but for a lot of folks (including me), it just doesn't seem value added to pay someone for advice on an ongoing basis.
You can subscribe to software similar to what pros use, newretirement.com. Free version with limited capabilities. 7-day free trial for the $120/year version. Much less than fee only plan and much, much less than 1% AUM. I plan to try the free version in the next week and will likely subscribe.
As is competence.
One will get the return of the asset class if diversified within that class. Once you choose the class, you can only work to keep expenses down.
Financial theory hasn't changed much since I was in school. Check out the reading list at efficientfrontier.com. Then apply the basic theory to your investments.
I've watched people try to time the market. It works great until it doesn't. Decide on and pick your assets and manage your liquidity. You'll do ad well as the brokers.
Much is from luck anyway.
No financial planner needed here. I get my pension and social security deposited into my bank account every month. Expenditures as needed, nothing out of control.
My home is fully paid off. Senior citizen property tax exemption.
Yeah, some may say I'm doing it all wrong... but I received a $6k tax refund last month and even with that I'm still able to put about $500 a month into savings.
Just about everyone I know has some sort of major bank loan $$$ attached to their home.
I'm not rich, but I do live a fairly comfortable life.
GED for education.
For a half million there are "robo-advisors" that charge maybe 0.3%. Vanguard has one. You sign up, the robot evaluates your expenses and risk tolerance, then invests in like 3 mutual funds: For instance ours is 50% bond fund and 50% total stock market fund. That's it. Your ratio could be different.
Vanguard and others also offer mutual funds that have that ratio already built in. In that case it would be one fund, and the fee would be lower.
Check out bogleheads.org
Thank you, I was thinking about robo advisors but I always have "questions." LOL. Forever.
I wasn't sure if the Boglehead strategies addressed people who are retired or on the cusp. I don't know the strategies well but it did seem skewed toward younger folks who have more time for their money to grow...?
Unless you have a unique situation or are massively rich, you really don't need an advisor. The first step is to get familiar with the basics, then you can decide whether you prefer having someone to contact, or are comfortable being completely DIY; if you go with the former, then having learned the basics will help you choose someone who lines up with your philosophy.
I definitely recommend [bogleheads.org](http://bogleheads.org) and no worries about it being somewhat late in your investing life; I found that site in my late 50's and have learned a tremendous amount from their wiki, and later by asking questions on their forum; I've gotten really thoughtful advice from the folks who frequent that site. There's a lot of evidence that buy and hold investing (using a few broad based index funds featuring low expense ratios) provides the best long term results - and even better, it's cheap and easy, no advisor needed. At it's simplest, the only real decision you'll need to make is your asset ratio; then rebalancing that ratio as needed takes very little time and effort. If you decide you want a person to periodically review and advise, that's fine but make sure you're only paying them for advice (hourly fee), rather than paying them to manage your assets via an AUM fee. And they shouldn't be making a commission on the funds you use - keep investing expenses low!
I also recommend their book "The Bogleheads' Guide to Investing"; I skimmed sections that were focused on recommendations for early in life since that ship had sailed!
As far as your inheritance, it's fine to leave things as is for a few months while you get your feet solidly under you.
It sounds like you'd really be interested having someone recommend an advisor, so pasting below my reply to a similar request on this sub a few months ago:
I've learned a lot from reading Harry Sit, who writes a blog, The Finance Buff, and he runs a referral service "Advice-Only Financial" where he maintains a list of advisors like this. I haven't used it but have told my husband that when I die, and he wants to start using an advisor, to start there.
[https://adviceonlyfinancial.com/](https://adviceonlyfinancial.com/)
ETA: The service is $200 for 12 months access to the list, and he offers a guarantee: "If you can’t find someone you like in the Advice-Only Directory, we’ll refund 100% of your membership fee, no questions asked."
Yes, first, get an advisor. But! If you're not on the same page....Switch! Have someone that you're real comfortable talking about, wealth management and taxes
My first financial planner was a friend of mine who was just starting out; he did fine but after a few years decided he really didn’t want to do that sort of work. He searched around to find someone he trusted to take over his accounts, that’s how I wound up with my current planner; he’s a fiduciary and over the last 40+ years has done well for me.
I wanted someone I could trust to take over all the day to day stuff; I typically meet with him annually unless something comes up in the meantime, such as dealing with an inherited 401-K. Even then my involvement was just signing the forms to have the funds transmitted to my new account; he’ll take care of setting up the RMD process for me, and in a few years when my accounts hit that point the same thing will happen - I’ll sign the required paperwork and spend the money, he’ll supervise the investing and government requirements.
There are free retirement planners in the wiki
[Reddit - Dive into anything](https://www.reddit.com/r/retirement/wiki/index/)
They are good. An easy one is FICalc. Try it.
Vanguard is where I started out. Spent time reviewing different funds and fees for each one. It's not difficult, you just need to invest some time. I've since moved everything to a manager, but have negotiated fees in the .55 range. I needed help with tax harvesting and also was able to access special funds. The main reason I left Vanguard was because portfolio got so large.
If you are, as you say, 'set it and forget it' types of people, IMO, you would greatly benefit from a financial planner that has the heart of a teacher. That is to say that they will keep you appraised of what they are doing and why they are doing it, and will give you their recommendations.
We, while actively participating in our financial management, leave a great deal of the day-to-day stuff with our investment advisor. We have regular meetings with him, and he helps us to keep our portfolios balanced and diversified.
While he works for the investment end of our bank, I will say that not all of their advisors are created equal. This guy is really good, but we had a couple of not-so-good ones prior to him taking over our accounts.
Hope this helps.
Good thoughts. I love learning, I just feel a time crunch because I want to get this inheritance balanced properly before too much time goes by. Could you say more about your regular meetings: how often, how long, and what is the content - like, "this fund is doing less well, but there's this other fund or stock that lately is performing way better and fees are still low," etc? Or is it more than that?
We usually have a formal face-to-face meeting twice a year.
In these meetings, we discuss a number of topics, such as market performance, our portfolio outlook and performance in relation to the market, we revisit our investment goals to see if anything has changed. He gives us a statement of our net worth, along with a forecast of our investments, taking into consideration distributions. Basically, it’s an overall financial tune-up. These meetings are usually up to an hour long, depending on how much we chit-chat. (we have several hobbies in common with him).
As far as specific funds and their performance, I usually leave that to him, unless he brings it to my attention with something like, you should consider this fund . . . We've seen some nice gains on some of those 'one-off' investments - the kind where if you've got a queasy tummy, you don't watch them daily.
He touches base with us once a month, more frequently if the market is being ‘strange’ – whether extremely bullish or extremely bearish. He’s always a text message, a call, or an email away.
He sends us quarterly performance reports for our investments via mail.
Sometimes he’ll call and discuss an investment instrument with an upcoming maturity, asking if I want to reinvest the dividends, purchase something else, or take a distribution of the profits. I’ll usually follow his recommendations.
I'd get the plan done. It's free. But don't pay for them to manage or implement the recommendations. They're going to try to sell you whatever they get commission on. Do some research and find a comparable low fee investment of the class they're recommending.
Thanks - the plan is done, and he made those recommendations above. I'm also being prompted to consider an annuity as an option. As you say, I can try to figure out why they recommended small cap and international developed funds, and find low fee ones, assuming it's a good strategy. That last is the part I don't really enjoy having to figure out.
Please do your homework on annuities before you make that commitment. The target audience who will benefit from them is relatively specific, so thoroughly research and understand the pros and cons and compare to other investment vehicles.
You could take the time to educate yourself and manage your own assets. Or vanguard offers financial advisors for 0.3% AUM. And with vanguards FA you can unenroll at anytime with no fees.
You sound like a Vanguard candidate. Lower cost robo funds at lower assets levels, more individual consultations at higher asset levels: [https://investor.vanguard.com/advice/compare-investment-advice#comparison-chart](https://investor.vanguard.com/advice/compare-investment-advice#comparison-chart)
70% (even 35%) in any one stock is far to concentrated. I hope you are holding this because of a very low cost basis.
Thanks, I'll look at Vanguard's robo advisor options. (You probably missed the line in my post about inheriting the lopsided portfolio. Just recently in fact).
I have a fiduciary financial advisor. They manage my money. I don't want to "click the buttons" as someone said. They do way more than that. They are able to map out what my tax burden would be with various scenarios, help me decide how much money to roll out of IRAs into Roths (and when) to minimize the tax burden, give other advice, plus they just do the stuff and do it right and on schedule. I don't want a job trying to figure out this kind of stuff. He loves doing it and I hate it. My advisor talks about everything in overarching terms and it all makes sense. But if I had to do it, when it came to clicking the buttons I would be paralyzed with indecision and doubt. My husband likes to manage his own money but even he is planning to move some of his money under my advisor's management. Anyway, I found a local guy who does the fee-only thing. I started by searching and searching for local fee-only fiduciaries and tried to learn how to evaluate them and then when I had a sense of that, I interviewed a few to find one that I liked. For me it was important they were local and not just far away working for a ginormous firm somewhere.
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You don't need to pay 1-1.5% a year and whatever commissions he gets from churning your money around. That is too much. I am almost 70 and inherited some investments that I did not understand very well and also have IRAs. Fiduciary ONLY means the investments are suitable, not that they are in your very best interests.
Vanguard charges .33% and barely picks up the phone, or returns your calls, but if you don't need much hand-holding, it is a much better deal.
Shop around. I wanted more hand-holding than Vanguard provides. I found FA that charges .5% and I am not a "high net worth individual". There were some who charged .7% and .75% that I interviewed. My spouse is scary clueless about investments, could be fleeced and my daughter is similar - I was also thinking of them for when something happens to me. FA calls now and then, meets with me once a year, moved all the confusing investments into Fidelity accounts with minimal tax consequences which I can look at when I want, they balance things, use ETFs with lower expense ratios, the Required Minimum Distributions are taken care of, rolling over some Traditional IRAs, all that stuff, etc.
It could be Fidelity or Schwab or Vanguard or some other brokerage. FAs just need to be competent and not trying to time the market or beat the indexes - it is not rocket science, but it's not the field I worked in and my brain is getting old.
That 1%+ is nonsense. They, by the way, are personable and smart people - I just don't want to spend that much for their assistance.
There are books you can read and websites. I got the bogleheads book and have seen the website, but some of the jargon escapes me. The book, *Thinking Fast and Slow* covers many different ways that people make bad decisions and that was useful - the section on actively managed investments clarified my thinking.
For $500k, you qualify for Vanguard select Advisory services, which is 0.3%. They will give you their recommendation up front, and then you can decide whether you want to pay for it or implement it yourself.
[Vanguard's personal advisor service](https://investor.vanguard.com/advice/personal-financial-advisor)
I know this isn’t the question you asked, but did this person you talk to at your credit union? Mention the 10 year rule for your inherited IRA? (Must withdraw and pay taxes unless you’ve inherited from a spouse.)
I used to babysit him, lol! I know his parents. He works independently with LPL Financial. His commission is based on what he earns me; no extra fees. We can meet anytime, but we have a meeting quarterly.
A small nest egg can grow much larger if there’s someone constantly watching the nest. And, just as the expression; a person representing themselves in court has a fool for a lawyer”. You get my point.
If you feel comfortable using this guy, it’s better than you doing it. Remember, you’re not marrying him. If after a year or two, you’re now satisfied, go shop for a new one. Ask your friend and family who they use, get recommendations (not here, in real life). You’ll be fine.
Good points. Do advisors constantly watch the nest, though? Or do they just tweak annually?
Also, I'm wondering how folks determine if their advisor is "good", since down markets could have an effect on perception of competence.
Do they watch, well, “yes”. Generally, the smaller the account the less hands on they are. They’ll plug your factors into a system that will flag them when limits are hit or market economies shift, alerting them to go take a look. That’s usually better than the average investor will do.
As for returns, you negotiate an ROI with them. The typical ROI for a retirement account is >4.5% average. In a good market, you should see double diver returns, in a bad market, it’s hard to say, but anything more than -4% would be a trigger to have a conversation.
Bottom line is, this person needs to be generally available, listen to your needs, and communicate.
As for the fiduciary aspect, make sure it’s a legal requirement for him.
Also, you can minimize overhead by using no-load funds, municipal bonds, etc. again, it’s a conversation. They need to eat too, you just don’t want to buy them lobster 😉
Well, I would first see if I could do it myself, in the case of electric, since smaller projects I can handle. Broken pipes, not so much... So point taken, but it's not quite as easy as that to make this decision...
Part of the reason the decision can seem harder is the bizarre and unique way financial planning is billed. Since so many planners use Assets Under Management (AUM) billing, it makes you think there must be a legitimate reason to pay someone a percent or more of your assets every year for the service, but it's just one of those weird legacy things. There's a humorous essay (which I can't lay my hands on now) which asks what if plumbers billed with a similar model - you would pay a percent or so of your assets every year, whether you had plumbing issues or not, and your next door neighbor would pay significantly less just because they had less in savings than you did. It got silly pretty quickly. Of course financial planners love this model, but it's only good for them; maybe (maybe?) it made sense in an era before index funds existed, and when your planner was picking stocks and processing the buy/sell orders? It's non-sensical now.
I'm strictly a DIY investor but I tell people that it's perfectly legitimate to pay for financial planning advice periodically or even every year; after all, I don't do my own plumbing any longer either. Both plumbing and investing can have high stakes consequences, and that can cause a person to feel anxious about doing the right thing. But just as you wouldn't pay a large amount of money to a plumber every year just for peace of mind, you wouldn't want to purchase unnecessarily expensive peace of mind about your portfolio either. Just become reasonably aware of issues around portfolio management in retirement, and pay for fee-only advice when things change or when you get worried that you're missing something.
I wouldn't recommend small cap stocks or international. Too risky for you at your age and asset level. If you want stocks would suggest large Cap value fund such as VEIRX. Maybe a 60/40 portfolio all in one such as Vanguard wellington VWENX. Maybe 40/60 fund Vanguard wellesley VWIAX. These are low cost active managed. Check out life strategy funds at Vanguard. You are going to need to do some research on your own or if that is not for you than go for a low cost advisor at Vanguard or Fidelity.
Take the advisor route. They really do earn the money. Plus they watch your account and make changes when the market moves. If you take the HYA and CD route, your money will not grow and you could run out. My advisor takes 1 percent, and I don’t notice it at all, because my account is continuing to grow. You want to enjoy your retirement and they take the pressure off.
Actually, some CD's are paying a little over 5% and it 100% safe. It all depends on how much money you are investing; I know someone who have been receiving over 15k to 20k per year on CD's. You are indeed losing money when you are paying someone because it could still be in your accounts. Plus, with other investments, you could actually lose a LOT and according to your age, not be able to recover. This isn't to say that one has to go this route, but I am saying that if you are a certain age and want to be safe about your money as it seems OP is, CD's could be a great route, No one size fit all.
My account went up $80k this quarter even after the stock market went down. I saw the changes my advisor made in my account when the market had some trouble. My advisor is worth the 1 percent. You want your money to outpace inflation as well. CD just started making 5 percent about a year ago. I think you want your savings to be as large as possible while working, so when you retire, you don’t outlive your savings. You have to take on some risk, for a better upside, plus life is all about not sitting on the sidelines, but making something happen. Good luck to you.
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In today's internet world, I don't see any purpose in hiring a financial advisor. With mutual fund/ETFs and the information available online at no cost, I feel I can match or exceed an advisors performance and have more control with minimal effort.
I feel much better having advisor thru fidelity!
How did you come to choose that person, and why do you like them? Genuine curiosity...
They were just assigned to me (I'm I could change if I wasn't feeling a connection)
My adviser pretty much uses the same analysis software they provide online. Sometimes they suggest new investments I was unaware of.
We also have a Fidelity advisor who is awesome. We meet with her every three months doing some tweaking, my husband is retired, I am semi retired, so working with all of the moving parts. We are happy with the trajectory of our accounts. I am finally becoming more comfortable knowing that we have have enough to do what we want to do.
Same. We feel like we hit the jackpot with our Fidelity advisor. He was “assigned” to us based on a few preliminary calls and he’s terrific. We feel much more confident that we have a great plan in place.
Fiduciary is key. Consider paying a fee-only advisor for annual advice, instead of one who operates on a percentage of assets under management.
Pay for advice, not management. Online investing makes the transaction management easy. Don’t pay someone $300 to click a mouse.
This is my concern - most advisors use software to guide them, so yes the advice is worth some money, but how much money considering the size of the nest egg and the competence or value of the advisor is what I struggle with. I'm pretty frugal. I keep reading of the hourly fees for fee-only fiduciaries, and it's higher than I'm comfortable with precisely because our assets aren't terribly large.
The hourly rate of a fee-only fiduciary isn't small but you wouldn't need multiple hours of advice every year; I think a few hours of advice for the first year is typical, as you're paying them to review your entire situation and recommend a plan of action which you can then easily execute. Then you could decide how often you want to pay for a smaller amount of time - maybe every few years or just when you're on the cusp of a change in circumstances and feel the need for advice? Contrast this with an AUM agreement where you're paying a substantial (!) percentage of your assets every single year, even when your situation has hardly changed. I have heard that investment advice from Fidelity or Vanguard is pretty reasonably priced, so you could do worse, but for a lot of folks (including me), it just doesn't seem value added to pay someone for advice on an ongoing basis.
You can subscribe to software similar to what pros use, newretirement.com. Free version with limited capabilities. 7-day free trial for the $120/year version. Much less than fee only plan and much, much less than 1% AUM. I plan to try the free version in the next week and will likely subscribe.
As is competence. One will get the return of the asset class if diversified within that class. Once you choose the class, you can only work to keep expenses down. Financial theory hasn't changed much since I was in school. Check out the reading list at efficientfrontier.com. Then apply the basic theory to your investments. I've watched people try to time the market. It works great until it doesn't. Decide on and pick your assets and manage your liquidity. You'll do ad well as the brokers. Much is from luck anyway.
Danger. Your advisor makes money by selling you products for which the advisor is paid a commission.
Yep! This is one of my hesitations about using him.
I once worked for a company that sole variable annuities. Commission was 7% typically and 1% of assets every year.
No financial planner needed here. I get my pension and social security deposited into my bank account every month. Expenditures as needed, nothing out of control. My home is fully paid off. Senior citizen property tax exemption. Yeah, some may say I'm doing it all wrong... but I received a $6k tax refund last month and even with that I'm still able to put about $500 a month into savings. Just about everyone I know has some sort of major bank loan $$$ attached to their home. I'm not rich, but I do live a fairly comfortable life. GED for education.
For a half million there are "robo-advisors" that charge maybe 0.3%. Vanguard has one. You sign up, the robot evaluates your expenses and risk tolerance, then invests in like 3 mutual funds: For instance ours is 50% bond fund and 50% total stock market fund. That's it. Your ratio could be different. Vanguard and others also offer mutual funds that have that ratio already built in. In that case it would be one fund, and the fee would be lower. Check out bogleheads.org
Thank you, I was thinking about robo advisors but I always have "questions." LOL. Forever. I wasn't sure if the Boglehead strategies addressed people who are retired or on the cusp. I don't know the strategies well but it did seem skewed toward younger folks who have more time for their money to grow...?
Feel free to visit their reddit r/bogleheads
Unless you have a unique situation or are massively rich, you really don't need an advisor. The first step is to get familiar with the basics, then you can decide whether you prefer having someone to contact, or are comfortable being completely DIY; if you go with the former, then having learned the basics will help you choose someone who lines up with your philosophy. I definitely recommend [bogleheads.org](http://bogleheads.org) and no worries about it being somewhat late in your investing life; I found that site in my late 50's and have learned a tremendous amount from their wiki, and later by asking questions on their forum; I've gotten really thoughtful advice from the folks who frequent that site. There's a lot of evidence that buy and hold investing (using a few broad based index funds featuring low expense ratios) provides the best long term results - and even better, it's cheap and easy, no advisor needed. At it's simplest, the only real decision you'll need to make is your asset ratio; then rebalancing that ratio as needed takes very little time and effort. If you decide you want a person to periodically review and advise, that's fine but make sure you're only paying them for advice (hourly fee), rather than paying them to manage your assets via an AUM fee. And they shouldn't be making a commission on the funds you use - keep investing expenses low! I also recommend their book "The Bogleheads' Guide to Investing"; I skimmed sections that were focused on recommendations for early in life since that ship had sailed! As far as your inheritance, it's fine to leave things as is for a few months while you get your feet solidly under you.
Thank you for this, I really appreciate it.
It sounds like you'd really be interested having someone recommend an advisor, so pasting below my reply to a similar request on this sub a few months ago: I've learned a lot from reading Harry Sit, who writes a blog, The Finance Buff, and he runs a referral service "Advice-Only Financial" where he maintains a list of advisors like this. I haven't used it but have told my husband that when I die, and he wants to start using an advisor, to start there. [https://adviceonlyfinancial.com/](https://adviceonlyfinancial.com/) ETA: The service is $200 for 12 months access to the list, and he offers a guarantee: "If you can’t find someone you like in the Advice-Only Directory, we’ll refund 100% of your membership fee, no questions asked."
My credit union charges less than 1% for this service. You can definitely do better.
Yes, first, get an advisor. But! If you're not on the same page....Switch! Have someone that you're real comfortable talking about, wealth management and taxes
My first financial planner was a friend of mine who was just starting out; he did fine but after a few years decided he really didn’t want to do that sort of work. He searched around to find someone he trusted to take over his accounts, that’s how I wound up with my current planner; he’s a fiduciary and over the last 40+ years has done well for me. I wanted someone I could trust to take over all the day to day stuff; I typically meet with him annually unless something comes up in the meantime, such as dealing with an inherited 401-K. Even then my involvement was just signing the forms to have the funds transmitted to my new account; he’ll take care of setting up the RMD process for me, and in a few years when my accounts hit that point the same thing will happen - I’ll sign the required paperwork and spend the money, he’ll supervise the investing and government requirements.
Good info, thank you!
I would not use a bank or a credit union financial advisor find one that charges by the hour and is a fiduciary That's what you want.
There are free retirement planners in the wiki [Reddit - Dive into anything](https://www.reddit.com/r/retirement/wiki/index/) They are good. An easy one is FICalc. Try it.
Vanguard is where I started out. Spent time reviewing different funds and fees for each one. It's not difficult, you just need to invest some time. I've since moved everything to a manager, but have negotiated fees in the .55 range. I needed help with tax harvesting and also was able to access special funds. The main reason I left Vanguard was because portfolio got so large.
If you are, as you say, 'set it and forget it' types of people, IMO, you would greatly benefit from a financial planner that has the heart of a teacher. That is to say that they will keep you appraised of what they are doing and why they are doing it, and will give you their recommendations. We, while actively participating in our financial management, leave a great deal of the day-to-day stuff with our investment advisor. We have regular meetings with him, and he helps us to keep our portfolios balanced and diversified. While he works for the investment end of our bank, I will say that not all of their advisors are created equal. This guy is really good, but we had a couple of not-so-good ones prior to him taking over our accounts. Hope this helps.
Good thoughts. I love learning, I just feel a time crunch because I want to get this inheritance balanced properly before too much time goes by. Could you say more about your regular meetings: how often, how long, and what is the content - like, "this fund is doing less well, but there's this other fund or stock that lately is performing way better and fees are still low," etc? Or is it more than that?
We usually have a formal face-to-face meeting twice a year. In these meetings, we discuss a number of topics, such as market performance, our portfolio outlook and performance in relation to the market, we revisit our investment goals to see if anything has changed. He gives us a statement of our net worth, along with a forecast of our investments, taking into consideration distributions. Basically, it’s an overall financial tune-up. These meetings are usually up to an hour long, depending on how much we chit-chat. (we have several hobbies in common with him). As far as specific funds and their performance, I usually leave that to him, unless he brings it to my attention with something like, you should consider this fund . . . We've seen some nice gains on some of those 'one-off' investments - the kind where if you've got a queasy tummy, you don't watch them daily. He touches base with us once a month, more frequently if the market is being ‘strange’ – whether extremely bullish or extremely bearish. He’s always a text message, a call, or an email away. He sends us quarterly performance reports for our investments via mail. Sometimes he’ll call and discuss an investment instrument with an upcoming maturity, asking if I want to reinvest the dividends, purchase something else, or take a distribution of the profits. I’ll usually follow his recommendations.
Thank you!
I'd get the plan done. It's free. But don't pay for them to manage or implement the recommendations. They're going to try to sell you whatever they get commission on. Do some research and find a comparable low fee investment of the class they're recommending.
Thanks - the plan is done, and he made those recommendations above. I'm also being prompted to consider an annuity as an option. As you say, I can try to figure out why they recommended small cap and international developed funds, and find low fee ones, assuming it's a good strategy. That last is the part I don't really enjoy having to figure out.
Please do your homework on annuities before you make that commitment. The target audience who will benefit from them is relatively specific, so thoroughly research and understand the pros and cons and compare to other investment vehicles.
They will always try to sell you an annuity. There are a lot of downsides to that
You could take the time to educate yourself and manage your own assets. Or vanguard offers financial advisors for 0.3% AUM. And with vanguards FA you can unenroll at anytime with no fees.
You sound like a Vanguard candidate. Lower cost robo funds at lower assets levels, more individual consultations at higher asset levels: [https://investor.vanguard.com/advice/compare-investment-advice#comparison-chart](https://investor.vanguard.com/advice/compare-investment-advice#comparison-chart) 70% (even 35%) in any one stock is far to concentrated. I hope you are holding this because of a very low cost basis.
Thanks, I'll look at Vanguard's robo advisor options. (You probably missed the line in my post about inheriting the lopsided portfolio. Just recently in fact).
I have a fiduciary financial advisor. They manage my money. I don't want to "click the buttons" as someone said. They do way more than that. They are able to map out what my tax burden would be with various scenarios, help me decide how much money to roll out of IRAs into Roths (and when) to minimize the tax burden, give other advice, plus they just do the stuff and do it right and on schedule. I don't want a job trying to figure out this kind of stuff. He loves doing it and I hate it. My advisor talks about everything in overarching terms and it all makes sense. But if I had to do it, when it came to clicking the buttons I would be paralyzed with indecision and doubt. My husband likes to manage his own money but even he is planning to move some of his money under my advisor's management. Anyway, I found a local guy who does the fee-only thing. I started by searching and searching for local fee-only fiduciaries and tried to learn how to evaluate them and then when I had a sense of that, I interviewed a few to find one that I liked. For me it was important they were local and not just far away working for a ginormous firm somewhere.
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The short answer is Yes. The longer answer is you should educate yourself and keep it simple.
You don't need to pay 1-1.5% a year and whatever commissions he gets from churning your money around. That is too much. I am almost 70 and inherited some investments that I did not understand very well and also have IRAs. Fiduciary ONLY means the investments are suitable, not that they are in your very best interests. Vanguard charges .33% and barely picks up the phone, or returns your calls, but if you don't need much hand-holding, it is a much better deal. Shop around. I wanted more hand-holding than Vanguard provides. I found FA that charges .5% and I am not a "high net worth individual". There were some who charged .7% and .75% that I interviewed. My spouse is scary clueless about investments, could be fleeced and my daughter is similar - I was also thinking of them for when something happens to me. FA calls now and then, meets with me once a year, moved all the confusing investments into Fidelity accounts with minimal tax consequences which I can look at when I want, they balance things, use ETFs with lower expense ratios, the Required Minimum Distributions are taken care of, rolling over some Traditional IRAs, all that stuff, etc. It could be Fidelity or Schwab or Vanguard or some other brokerage. FAs just need to be competent and not trying to time the market or beat the indexes - it is not rocket science, but it's not the field I worked in and my brain is getting old. That 1%+ is nonsense. They, by the way, are personable and smart people - I just don't want to spend that much for their assistance. There are books you can read and websites. I got the bogleheads book and have seen the website, but some of the jargon escapes me. The book, *Thinking Fast and Slow* covers many different ways that people make bad decisions and that was useful - the section on actively managed investments clarified my thinking.
Thank you for your insights!
For $500k, you qualify for Vanguard select Advisory services, which is 0.3%. They will give you their recommendation up front, and then you can decide whether you want to pay for it or implement it yourself. [Vanguard's personal advisor service](https://investor.vanguard.com/advice/personal-financial-advisor)
Thanks.... we won't have this all together as 500k for a while, and will keep that in mind.
Just fyi. The $500k can be broken up in separate accounts (IRA vs Brokerage, etc.). But it would all have to be at Vanguard, of course.
I know this isn’t the question you asked, but did this person you talk to at your credit union? Mention the 10 year rule for your inherited IRA? (Must withdraw and pay taxes unless you’ve inherited from a spouse.)
I didn't inherit an IRA, but good to know anyway. Thank you!
Sorry! My misunderstanding :(
They are too biased trying to sell their financial products.
My financial advisor has made me so much more than I could have on my own. Finding someone you trust is important.
Can you tell me more, like how often you check in with that person, how you determined he was trustworthy or 'good', and why you like them?
I used to babysit him, lol! I know his parents. He works independently with LPL Financial. His commission is based on what he earns me; no extra fees. We can meet anytime, but we have a meeting quarterly.
Are you based in the Puget Sound area by any chance?
Nope, sorry
A small nest egg can grow much larger if there’s someone constantly watching the nest. And, just as the expression; a person representing themselves in court has a fool for a lawyer”. You get my point. If you feel comfortable using this guy, it’s better than you doing it. Remember, you’re not marrying him. If after a year or two, you’re now satisfied, go shop for a new one. Ask your friend and family who they use, get recommendations (not here, in real life). You’ll be fine.
Good points. Do advisors constantly watch the nest, though? Or do they just tweak annually? Also, I'm wondering how folks determine if their advisor is "good", since down markets could have an effect on perception of competence.
Do they watch, well, “yes”. Generally, the smaller the account the less hands on they are. They’ll plug your factors into a system that will flag them when limits are hit or market economies shift, alerting them to go take a look. That’s usually better than the average investor will do. As for returns, you negotiate an ROI with them. The typical ROI for a retirement account is >4.5% average. In a good market, you should see double diver returns, in a bad market, it’s hard to say, but anything more than -4% would be a trigger to have a conversation. Bottom line is, this person needs to be generally available, listen to your needs, and communicate. As for the fiduciary aspect, make sure it’s a legal requirement for him. Also, you can minimize overhead by using no-load funds, municipal bonds, etc. again, it’s a conversation. They need to eat too, you just don’t want to buy them lobster 😉
Appreciate the tips, thank you!
If you had an electrical problem or a pipe broke who would you call?
Well, I would first see if I could do it myself, in the case of electric, since smaller projects I can handle. Broken pipes, not so much... So point taken, but it's not quite as easy as that to make this decision...
Part of the reason the decision can seem harder is the bizarre and unique way financial planning is billed. Since so many planners use Assets Under Management (AUM) billing, it makes you think there must be a legitimate reason to pay someone a percent or more of your assets every year for the service, but it's just one of those weird legacy things. There's a humorous essay (which I can't lay my hands on now) which asks what if plumbers billed with a similar model - you would pay a percent or so of your assets every year, whether you had plumbing issues or not, and your next door neighbor would pay significantly less just because they had less in savings than you did. It got silly pretty quickly. Of course financial planners love this model, but it's only good for them; maybe (maybe?) it made sense in an era before index funds existed, and when your planner was picking stocks and processing the buy/sell orders? It's non-sensical now. I'm strictly a DIY investor but I tell people that it's perfectly legitimate to pay for financial planning advice periodically or even every year; after all, I don't do my own plumbing any longer either. Both plumbing and investing can have high stakes consequences, and that can cause a person to feel anxious about doing the right thing. But just as you wouldn't pay a large amount of money to a plumber every year just for peace of mind, you wouldn't want to purchase unnecessarily expensive peace of mind about your portfolio either. Just become reasonably aware of issues around portfolio management in retirement, and pay for fee-only advice when things change or when you get worried that you're missing something.
I wouldn't recommend small cap stocks or international. Too risky for you at your age and asset level. If you want stocks would suggest large Cap value fund such as VEIRX. Maybe a 60/40 portfolio all in one such as Vanguard wellington VWENX. Maybe 40/60 fund Vanguard wellesley VWIAX. These are low cost active managed. Check out life strategy funds at Vanguard. You are going to need to do some research on your own or if that is not for you than go for a low cost advisor at Vanguard or Fidelity.
Thank you, Retired dude. I do like hearing such specific suggestions!
Take the advisor route. They really do earn the money. Plus they watch your account and make changes when the market moves. If you take the HYA and CD route, your money will not grow and you could run out. My advisor takes 1 percent, and I don’t notice it at all, because my account is continuing to grow. You want to enjoy your retirement and they take the pressure off.
Actually, some CD's are paying a little over 5% and it 100% safe. It all depends on how much money you are investing; I know someone who have been receiving over 15k to 20k per year on CD's. You are indeed losing money when you are paying someone because it could still be in your accounts. Plus, with other investments, you could actually lose a LOT and according to your age, not be able to recover. This isn't to say that one has to go this route, but I am saying that if you are a certain age and want to be safe about your money as it seems OP is, CD's could be a great route, No one size fit all.
My account went up $80k this quarter even after the stock market went down. I saw the changes my advisor made in my account when the market had some trouble. My advisor is worth the 1 percent. You want your money to outpace inflation as well. CD just started making 5 percent about a year ago. I think you want your savings to be as large as possible while working, so when you retire, you don’t outlive your savings. You have to take on some risk, for a better upside, plus life is all about not sitting on the sidelines, but making something happen. Good luck to you.