Talk to me about why we should or should not use a financial advisor

[Anonymous]

Anonymous wrote:If you want help, I'd suggest using a fee-only planner as opposed to paying someone a percentage of your assets to manage your accounts. This gets expensive and at your level probably isn't worth it. Fee-only advisor will help you create a plan and you can revisit this with them annually to rebalance/make changes. Otherwise you are likely paying 1-1.5% of your assets and have less control.

You could also do this yourself relatively easily. The general theory is:
Max 401ks
Max Roth IRAs
Max HSA
Leftover goes into taxable accounts

Easiest way to setup portfolio is the following:
vanguard US stock index
Vanguard international index
Vanguard total bond index

This is pretty vanilla but it is simple, efficient, and cost-effective.
There are more complex scenarios a planner can assist with (estate planning, tax moves,etc)

I'd probably avoid most of the big banks (bank of America, chase, etc) and look for a smaller outfit that specializes in fee-only plan services

This! You should give this PP $1500 for her advice

[Anonymous]

Anonymous wrote:

Anonymous wrote:If you want help, I'd suggest using a fee-only planner as opposed to paying someone a percentage of your assets to manage your accounts. This gets expensive and at your level probably isn't worth it. Fee-only advisor will help you create a plan and you can revisit this with them annually to rebalance/make changes. Otherwise you are likely paying 1-1.5% of your assets and have less control.

You could also do this yourself relatively easily. The general theory is:
Max 401ks
Max Roth IRAs
Max HSA
Leftover goes into taxable accounts

Easiest way to setup portfolio is the following:
vanguard US stock index
Vanguard international index
Vanguard total bond index

This is pretty vanilla but it is simple, efficient, and cost-effective.
There are more complex scenarios a planner can assist with (estate planning, tax moves,etc)

I'd probably avoid most of the big banks (bank of America, chase, etc) and look for a smaller outfit that specializes in fee-only plan services

This! You should give this PP $1500 for her advice

So they shouldn't. They cannot do Roth IRAs at their income level. They need to do a backdoor.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:If you want help, I'd suggest using a fee-only planner as opposed to paying someone a percentage of your assets to manage your accounts. This gets expensive and at your level probably isn't worth it. Fee-only advisor will help you create a plan and you can revisit this with them annually to rebalance/make changes. Otherwise you are likely paying 1-1.5% of your assets and have less control.

You could also do this yourself relatively easily. The general theory is:
Max 401ks
Max Roth IRAs
Max HSA
Leftover goes into taxable accounts

Easiest way to setup portfolio is the following:
vanguard US stock index
Vanguard international index
Vanguard total bond index

This is pretty vanilla but it is simple, efficient, and cost-effective.
There are more complex scenarios a planner can assist with (estate planning, tax moves,etc)

I'd probably avoid most of the big banks (bank of America, chase, etc) and look for a smaller outfit that specializes in fee-only plan services

This! You should give this PP $1500 for her advice

So they shouldn't. They cannot do Roth IRAs at their income level. They need to do a backdoor.

And then you have to check the tax consequences for doing that . . .

[Anonymous]

Any experience with Raymond James?

[Anonymous]

Let me play devils advocate here because I am in the same situation as the OP.

I am also an attorney with a HHI (single) of around 300k. I understand some of the replies to this thread that people can just read some books and figure this stuff out on their own, but the bottom line is that I do not have any time to read books that I wang to read, let alone books about personal finance which is a subject that doesn't interest me at all. I haven't read four books in the last seven years -- god knows it's not going to happen now.

So for people in this highly specific situation -- relatively high HHI but more money than time and interest -- does hiring a financial
Advisor make sense? I outsource just about everything else in life -- why not this too? Tonthe debatw over managing a percentage of
Assets versus a few only planner, perhaps I had a very bad experience but I met with a few only planner once. His entire professional presentation was lacking -- we met at some shared office space thing, it was obvious that he did no homework whatsoever on my situation even though I wrote him highly detailed (and time consuming) emails ahead of time. But then again -- he was going to only charge me a couple
Hundred bucks. I have been talking with another advisor at an investment house -- yes he will charge a percentage of assets and yes the percentage is high (which is why I am hesitant) but on the flip side he comes across as very professional and knowledgeable, he is part of a team that has been in business for 30 years so obviously they are doing something right, -'d he has answered many questions I have had day and night and I haven't even paid him a penny yet. It reminds me of some similarities to the law -- yes big firms (where I work) are overpriced, but we tend to have insane customer service for our clients. We know that our clients are paying a lot of money for us and part of that is our professionalism and dedication. How dedicated is someone going to be to you for $300?

I say all of this just to present a different view on this subject. I think the conventional wisdom on these boards is "do it yourself" not taking into account that a lot of people simply don't have the time to do it themselves and then the second advice is "ONLY use a fee only planner" without taking into account some of the other benefits of other advisors. But that being said, I am still on the fence.

[Anonymous]

Previous poster -- excuse the typos I was quickly typing this on my phone!

[Anonymous]

Because most of the information you need is on the Internet.

[Anonymous]

I believe the long and short of it is that people with high HHI can afford paying the 1.5% fee just because they can.

But if you know all these facts and are still on the fence, it might mean you're just not satisfied with letting that 1.5% go. In that case, why not give 50% of your investment amount to the financial planner to play with, and dump the other 50% in an index fund. Wait a year or two and you'll have a better picture

[Anonymous]

Anonymous wrote:Let me play devils advocate here because I am in the same situation as the OP.

I am also an attorney with a HHI (single) of around 300k. I understand some of the replies to this thread that people can just read some books and figure this stuff out on their own, but the bottom line is that I do not have any time to read books that I wang to read, let alone books about personal finance which is a subject that doesn't interest me at all. I haven't read four books in the last seven years -- god knows it's not going to happen now.

So for people in this highly specific situation -- relatively high HHI but more money than time and interest -- does hiring a financial
Advisor make sense? I outsource just about everything else in life -- why not this too? Tonthe debatw over managing a percentage of
Assets versus a few only planner, perhaps I had a very bad experience but I met with a few only planner once. His entire professional presentation was lacking -- we met at some shared office space thing, it was obvious that he did no homework whatsoever on my situation even though I wrote him highly detailed (and time consuming) emails ahead of time. But then again -- he was going to only charge me a couple
Hundred bucks. I have been talking with another advisor at an investment house -- yes he will charge a percentage of assets and yes the percentage is high (which is why I am hesitant) but on the flip side he comes across as very professional and knowledgeable, he is part of a team that has been in business for 30 years so obviously they are doing something right, -'d he has answered many questions I have had day and night and I haven't even paid him a penny yet. It reminds me of some similarities to the law -- yes big firms (where I work) are overpriced, but we tend to have insane customer service for our clients. We know that our clients are paying a lot of money for us and part of that is our professionalism and dedication. How dedicated is someone going to be to you for $300?

I say all of this just to present a different view on this subject. I think the conventional wisdom on these boards is "do it yourself" not taking into account that a lot of people simply don't have the time to do it themselves and then the second advice is "ONLY use a fee only planner" without taking into account some of the other benefits of other advisors. But that being said, I am still on the fence.

Invest all your taxable money in 3 Vanguard index funds. Voila, no need for an advisor.

[Anonymous]

9:28 I love you.

PP who was impressed by the salesman at Merrill Lynch -- he's a salesman. He's trained to sound smart and impress you, because his only goal is to get you to dump all your money on his desk.

[Anonymous]

Anonymous wrote:Because most of the information you need is on the Internet.

I am the 9:19 poster -- you miss my point. Of course all of the information is on the internet. But I do not have the time to figure this out when I am Billling 2500 hours a year and trying to have some sort of personal life.

[Anonymous]

Anonymous wrote:I believe the long and short of it is that people with high HHI can afford paying the 1.5% fee just because they can.

But if you know all these facts and are still on the fence, it might mean you're just not satisfied with letting that 1.5% go. In that case, why not give 50% of your investment amount to the financial planner to play with, and dump the other 50% in an index fund. Wait a year or two and you'll have a better picture

Previous poster -- that's not a bad idea. Thanks! The "not letting the 1.5" go is mainly because of boards like these - people who say you are stupid for doing this. What I don't understand is that I readily outsource lots of other parts of my life that I could do myself. If I take what the fee is that the investment place would charge on the assets -- I pay 3x that amount every year just on my housekeeping service. Of course I could clean and vacuum myself but I don't and I don't even really think twice about it. So why is it so insane to pay someone to do this part of my life too?

[Anonymous]

Anonymous wrote:

Anonymous wrote:I believe the long and short of it is that people with high HHI can afford paying the 1.5% fee just because they can.

But if you know all these facts and are still on the fence, it might mean you're just not satisfied with letting that 1.5% go. In that case, why not give 50% of your investment amount to the financial planner to play with, and dump the other 50% in an index fund. Wait a year or two and you'll have a better picture

Previous poster -- that's not a bad idea. Thanks! The "not letting the 1.5" go is mainly because of boards like these - people who say you are stupid for doing this. What I don't understand is that I readily outsource lots of other parts of my life that I could do myself. If I take what the fee is that the investment place would charge on the assets -- I pay 3x that amount every year just on my housekeeping service. Of course I could clean and vacuum myself but I don't and I don't even really think twice about it. So why is it so insane to pay someone to do this part of my life too?

Because, as many people have told you, the advisor doesn't get you better results. Netting the fees they charge, not to mention the expenses of the managed funds and other investments they'll inevitably put you in to justify their existence, the annual return would have to be exceptional to beat the 3 fund strategy a PP described (and s/he even suggested the funds!). Now, some managed funds/investment do that every year. But many don't, and your advisor most likely won't guess right every year. There are reams of research that show that over time, a buy and hold strategy index fund strategy is best for casual investors (thouse without millions and millions of assets).

To continue your housecleaning analogy, it's like paying a housekeeper every 2 weeks to make your house kinda clean, instead of spending, at most, 2 hours one time (to set up the account) and then 15 minutes each year (to rebalance it) to have your house be far cleaner. You don't have to make this a second career.

[Anonymous]

Anonymous wrote:Let me play devils advocate here because I am in the same situation as the OP.

I am also an attorney with a HHI (single) of around 300k. I understand some of the replies to this thread that people can just read some books and figure this stuff out on their own, but the bottom line is that I do not have any time to read books that I wang to read, let alone books about personal finance which is a subject that doesn't interest me at all. I haven't read four books in the last seven years -- god knows it's not going to happen now.

So for people in this highly specific situation -- relatively high HHI but more money than time and interest -- does hiring a financial
Advisor make sense? I outsource just about everything else in life -- why not this too? Tonthe debatw over managing a percentage of
Assets versus a few only planner, perhaps I had a very bad experience but I met with a few only planner once. His entire professional presentation was lacking -- we met at some shared office space thing, it was obvious that he did no homework whatsoever on my situation even though I wrote him highly detailed (and time consuming) emails ahead of time. But then again -- he was going to only charge me a couple
Hundred bucks. I have been talking with another advisor at an investment house -- yes he will charge a percentage of assets and yes the percentage is high (which is why I am hesitant) but on the flip side he comes across as very professional and knowledgeable, he is part of a team that has been in business for 30 years so obviously they are doing something right, -'d he has answered many questions I have had day and night and I haven't even paid him a penny yet. It reminds me of some similarities to the law -- yes big firms (where I work) are overpriced, but we tend to have insane customer service for our clients. We know that our clients are paying a lot of money for us and part of that is our professionalism and dedication. How dedicated is someone going to be to you for $300?

I say all of this just to present a different view on this subject. I think the conventional wisdom on these boards is "do it yourself" not taking into account that a lot of people simply don't have the time to do it themselves and then the second advice is "ONLY use a fee only planner" without taking into account some of the other benefits of other advisors. But that being said, I am still on the fence.

I can't stand paying someone to do something I can do myself. Especially since it's usually at a premium.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I believe the long and short of it is that people with high HHI can afford paying the 1.5% fee just because they can.

But if you know all these facts and are still on the fence, it might mean you're just not satisfied with letting that 1.5% go. In that case, why not give 50% of your investment amount to the financial planner to play with, and dump the other 50% in an index fund. Wait a year or two and you'll have a better picture

Previous poster -- that's not a bad idea. Thanks! The "not letting the 1.5" go is mainly because of boards like these - people who say you are stupid for doing this. What I don't understand is that I readily outsource lots of other parts of my life that I could do myself. If I take what the fee is that the investment place would charge on the assets -- I pay 3x that amount every year just on my housekeeping service. Of course I could clean and vacuum myself but I don't and I don't even really think twice about it. So why is it so insane to pay someone to do this part of my life too?

Because, as many people have told you, the advisor doesn't get you better results. Netting the fees they charge, not to mention the expenses of the managed funds and other investments they'll inevitably put you in to justify their existence, the annual return would have to be exceptional to beat the 3 fund strategy a PP described (and s/he even suggested the funds!). Now, some managed funds/investment do that every year. But many don't, and your advisor most likely won't guess right every year. There are reams of research that show that over time, a buy and hold strategy index fund strategy is best for casual investors (thouse without millions and millions of assets).

To continue your housecleaning analogy, it's like paying a housekeeper every 2 weeks to make your house kinda clean, instead of spending, at most, 2 hours one time (to set up the account) and then 15 minutes each year (to rebalance it) to have your house be far cleaner. You don't have to make this a second career.

I appreciate this. I should add -- over the past two years, based off of advice I read in various places, I have been using a target date retirement fund. Both years it trailed the market -- last year by more than 3 percent. The target date fund was explained to me as a low cost way to this, very safe, blah blah. I guess the bad performance (at least as compared to the overall market) has made me question whether it would be better to use someone else.

I understand the index fund approach but even that isn't as easy as everyone makes it sound. There are tons of index funds options -- you can easily spend hours just looking at all of this stuff. And that's the problem -- I don't have hours to spend looking at it.

I really do appreciate the different opinions on this.