Do you have a financial advisor?

[Anonymous]

We used to and found no benefit to it. I can't speak for everyone, but the returns were far too close to what we were getting just by parking money into a Vanguard investment account.

There are basic financial principles that you can figure out by reading some blogs. It wasn't worth giving 1% to an advisor who is doing essentially what we are able to do ourselves (and no, it isn't time consuming once you have the accounts all set up). For us those are:

-Maximize all pre-tax accounts (401K, 403B, and SEP IRA for us)
-Set amount into kids' 529s per month
-Keep about 50K in cash in an emergency fund
-Put anything over that amount into our Vanguard investment account

We also own an investment real estate property that we use a few times a year and otherwise rent out when we are not there. We pay an extra $500 a month to that property and to our primary residence mortgage.

I think if you have a NW over 10M or are really not well versed in finances at all, then FA can be a good resource. But most of the folks educated enough to read this board could self manage.

[Anonymous]

Anonymous wrote:Yes. He is also my dad's financial advisor, and has been for years and years, and he came to my dad very highly recommended by someone he trusted as well. He's been my advisor for about 10 years now, and my dad's for probably 20. He takes 1% of total investments per year (that goes down to 0.5% when your assets reach a certain level, so my dad only pays a half a percent), with NO other fees or anything, so it's very transparent, which I like. I've averaged returns of around 8-9% returns during those 10 years, so he is significantly beating the market, and the 1% fee is worth it. My husband was skeptical (I've been with the FA since before I met him) and was very "there are no fee accounts" to which I say - everyone is getting paid. If there are no fee accounts, the fees are just hidden, like with kick backs from various funds. Having eased into it, he's now completely on board.

He manages our retirement accounts completely. He also managed our house savings account when we were saving for a downpayment, but we've now bought. He will likely at some point manage our kids 529s. He is also available for advice. He's reviewed our monthly budgets, given general financial advice, recommended insurance options, and helped us decide on a budget for our house. Basically, he'll do a call with us anytime if we have a question, but we're fairly low touch.

I love this arrangement, but finding someone you trust would be really scary for me. Getting a recommendation from my dad, who I trust completely, made it easy, but obviously that's not replicable.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Yes. He is also my dad's financial advisor, and has been for years and years, and he came to my dad very highly recommended by someone he trusted as well. He's been my advisor for about 10 years now, and my dad's for probably 20. He takes 1% of total investments per year (that goes down to 0.5% when your assets reach a certain level, so my dad only pays a half a percent), with NO other fees or anything, so it's very transparent, which I like. I've averaged returns of around 8-9% returns during those 10 years, so he is significantly beating the market, and the 1% fee is worth it. My husband was skeptical (I've been with the FA since before I met him) and was very "there are no fee accounts" to which I say - everyone is getting paid. If there are no fee accounts, the fees are just hidden, like with kick backs from various funds. Having eased into it, he's now completely on board.

He manages our retirement accounts completely. He also managed our house savings account when we were saving for a downpayment, but we've now bought. He will likely at some point manage our kids 529s. He is also available for advice. He's reviewed our monthly budgets, given general financial advice, recommended insurance options, and helped us decide on a budget for our house. Basically, he'll do a call with us anytime if we have a question, but we're fairly low touch.

I love this arrangement, but finding someone you trust would be really scary for me. Getting a recommendation from my dad, who I trust completely, made it easy, but obviously that's not replicable.

It's obviously your choice whether to hire a financial advisor-- I pay someone to mow my lawn because that's how I want to spend my money. However, it's very unlikely that your advisor can beat the market long term (and certainly not on a risk-adjusted return basis). For example, if you just invested in the S&P500 index, you would have seen annual returns of almost 14% a year over the last 10 years. Also, if you are paying 1% of assets and getting 8-9% returns, you are paying over 10% of your annual returns, which will probably reduce your ultimate retirement "nest egg" by a pretty big chunk.

There's more to factor in than that, like tax loss harvesting, portfolio rebalancing, and your actual risk profile. For example, for our risk profile we are in a 70/30 equities vs bonds, then within those there are other categories for diversification purpose, like a mix of US and international equities; and on the bond side a mix of short and medium term bonds, emerging market bonds, and tax-efficient bonds specific to our state.

If your investing goal is to put all your money into a single S&P 500 index fund, then you don't need an advisor for that, but you're also not diversifying, and that's a high risk strategy.

That’s fine but 8-9% is not outperforming the market for a 70/30 mix, which was your original claim, and you can get those asset classes and portfolio rebalancing for free in any lifecycle fund. Tax loss harvesting might, under the right circumstances, be worth .3% or so, but you could find that cheaper elsewhere if you wanted.

[Anonymous]

We have a financial advisor from workplace recommendation. This advisor has helped us with retirement planning and manages a good portion of our available monies (not in 401K). I'm still waiting to see how they perform vs. indices and if their costs are worth it. I'm not sure at this point and will evaluate over time. One good thing that came out of this is that discussion with a financial planner led us to consolidate our investments a bit and so we now have accounts with fewer companies than we did.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Yes. He is also my dad's financial advisor, and has been for years and years, and he came to my dad very highly recommended by someone he trusted as well. He's been my advisor for about 10 years now, and my dad's for probably 20. He takes 1% of total investments per year (that goes down to 0.5% when your assets reach a certain level, so my dad only pays a half a percent), with NO other fees or anything, so it's very transparent, which I like. I've averaged returns of around 8-9% returns during those 10 years, so he is significantly beating the market, and the 1% fee is worth it. My husband was skeptical (I've been with the FA since before I met him) and was very "there are no fee accounts" to which I say - everyone is getting paid. If there are no fee accounts, the fees are just hidden, like with kick backs from various funds. Having eased into it, he's now completely on board.

He manages our retirement accounts completely. He also managed our house savings account when we were saving for a downpayment, but we've now bought. He will likely at some point manage our kids 529s. He is also available for advice. He's reviewed our monthly budgets, given general financial advice, recommended insurance options, and helped us decide on a budget for our house. Basically, he'll do a call with us anytime if we have a question, but we're fairly low touch.

I love this arrangement, but finding someone you trust would be really scary for me. Getting a recommendation from my dad, who I trust completely, made it easy, but obviously that's not replicable.

It's obviously your choice whether to hire a financial advisor-- I pay someone to mow my lawn because that's how I want to spend my money. However, it's very unlikely that your advisor can beat the market long term (and certainly not on a risk-adjusted return basis). For example, if you just invested in the S&P500 index, you would have seen annual returns of almost 14% a year over the last 10 years. Also, if you are paying 1% of assets and getting 8-9% returns, you are paying over 10% of your annual returns, which will probably reduce your ultimate retirement "nest egg" by a pretty big chunk.

There's more to factor in than that, like tax loss harvesting, portfolio rebalancing, and your actual risk profile. For example, for our risk profile we are in a 70/30 equities vs bonds, then within those there are other categories for diversification purpose, like a mix of US and international equities; and on the bond side a mix of short and medium term bonds, emerging market bonds, and tax-efficient bonds specific to our state.

If your investing goal is to put all your money into a single S&P 500 index fund, then you don't need an advisor for that, but you're also not diversifying, and that's a high risk strategy.

SP 500 has over 500 companies. VSTAX has over 3000. Add a total international and total bond fund and I would call that highly diversified.

[Anonymous]

Anonymous wrote:We have a financial advisor from workplace recommendation. This advisor has helped us with retirement planning and manages a good portion of our available monies (not in 401K). I'm still waiting to see how they perform vs. indices and if their costs are worth it. I'm not sure at this point and will evaluate over time. One good thing that came out of this is that discussion with a financial planner led us to consolidate our investments a bit and so we now have accounts with fewer companies than we did.

This is a really good point. DH and I have accounts all over the place. We each had our own when we married and have kept them. We would probably be better off if we consolidated.

[Anonymous]

No one on this thread has defined what type of financial advisor we are talking about. If someone who charges a percent of your assets to manage them, no way. Study after study shows most managers cannot beat the market. Also there is little reason to be changing things in your portfolio. Invest in broad market index funds/ETFs and stick with them. If we're talking about the type of financial advisor who develops a financial plan and provides investment advice for a fixed fee, maybe. Those services can be very expensive, and are akin to what can be found on online calculators and are based on all kinds of assumptions anyway. We have a guy who truly provides hourly advice as needed for an hourly fee. He reviewed our index fund portfolio and provided advice. Mostly you have to develop a plan and stick to it no matter what the news is saying or the market is doing.

[Anonymous]

Anonymous wrote:

Anonymous wrote:No. I'm smarter than most people and I like learning about financial matters, so it doesn't make sense for me to pay someone else.

That's great - how did you handle the covid decline? did you sell stocks? Any good FA will be honest with you about returns, the most important component is keeping you on track and working to reduce the emotional aspect of investing. The biggest, and most costly mistakes, occur during "scary times."

DP. Bought more.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Yes. He is also my dad's financial advisor, and has been for years and years, and he came to my dad very highly recommended by someone he trusted as well. He's been my advisor for about 10 years now, and my dad's for probably 20. He takes 1% of total investments per year (that goes down to 0.5% when your assets reach a certain level, so my dad only pays a half a percent), with NO other fees or anything, so it's very transparent, which I like. I've averaged returns of around 8-9% returns during those 10 years, so he is significantly beating the market, and the 1% fee is worth it. My husband was skeptical (I've been with the FA since before I met him) and was very "there are no fee accounts" to which I say - everyone is getting paid. If there are no fee accounts, the fees are just hidden, like with kick backs from various funds. Having eased into it, he's now completely on board.

He manages our retirement accounts completely. He also managed our house savings account when we were saving for a downpayment, but we've now bought. He will likely at some point manage our kids 529s. He is also available for advice. He's reviewed our monthly budgets, given general financial advice, recommended insurance options, and helped us decide on a budget for our house. Basically, he'll do a call with us anytime if we have a question, but we're fairly low touch.

I love this arrangement, but finding someone you trust would be really scary for me. Getting a recommendation from my dad, who I trust completely, made it easy, but obviously that's not replicable.

It's obviously your choice whether to hire a financial advisor-- I pay someone to mow my lawn because that's how I want to spend my money. However, it's very unlikely that your advisor can beat the market long term (and certainly not on a risk-adjusted return basis). For example, if you just invested in the S&P500 index, you would have seen annual returns of almost 14% a year over the last 10 years. Also, if you are paying 1% of assets and getting 8-9% returns, you are paying over 10% of your annual returns, which will probably reduce your ultimate retirement "nest egg" by a pretty big chunk.

There's more to factor in than that, like tax loss harvesting, portfolio rebalancing, and your actual risk profile. For example, for our risk profile we are in a 70/30 equities vs bonds, then within those there are other categories for diversification purpose, like a mix of US and international equities; and on the bond side a mix of short and medium term bonds, emerging market bonds, and tax-efficient bonds specific to our state.

If your investing goal is to put all your money into a single S&P 500 index fund, then you don't need an advisor for that, but you're also not diversifying, and that's a high risk strategy.

SP 500 has over 500 companies. VSTAX has over 3000. Add a total international and total bond fund and I would call that highly diversified.

That's good diversification. What % do you put into each? How often do you need to rebalance it?

[Anonymous]

If you are paying 1% AUM to a financial advisor to help you with asset allocation and rebalancing you are shooting yourself in the knee.

Pay some $500-1000 once to talk to you about it.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Yes. He is also my dad's financial advisor, and has been for years and years, and he came to my dad very highly recommended by someone he trusted as well. He's been my advisor for about 10 years now, and my dad's for probably 20. He takes 1% of total investments per year (that goes down to 0.5% when your assets reach a certain level, so my dad only pays a half a percent), with NO other fees or anything, so it's very transparent, which I like. I've averaged returns of around 8-9% returns during those 10 years, so he is significantly beating the market, and the 1% fee is worth it. My husband was skeptical (I've been with the FA since before I met him) and was very "there are no fee accounts" to which I say - everyone is getting paid. If there are no fee accounts, the fees are just hidden, like with kick backs from various funds. Having eased into it, he's now completely on board.

He manages our retirement accounts completely. He also managed our house savings account when we were saving for a downpayment, but we've now bought. He will likely at some point manage our kids 529s. He is also available for advice. He's reviewed our monthly budgets, given general financial advice, recommended insurance options, and helped us decide on a budget for our house. Basically, he'll do a call with us anytime if we have a question, but we're fairly low touch.

I love this arrangement, but finding someone you trust would be really scary for me. Getting a recommendation from my dad, who I trust completely, made it easy, but obviously that's not replicable.

It's obviously your choice whether to hire a financial advisor-- I pay someone to mow my lawn because that's how I want to spend my money. However, it's very unlikely that your advisor can beat the market long term (and certainly not on a risk-adjusted return basis). For example, if you just invested in the S&P500 index, you would have seen annual returns of almost 14% a year over the last 10 years. Also, if you are paying 1% of assets and getting 8-9% returns, you are paying over 10% of your annual returns, which will probably reduce your ultimate retirement "nest egg" by a pretty big chunk.

There's more to factor in than that, like tax loss harvesting, portfolio rebalancing, and your actual risk profile. For example, for our risk profile we are in a 70/30 equities vs bonds, then within those there are other categories for diversification purpose, like a mix of US and international equities; and on the bond side a mix of short and medium term bonds, emerging market bonds, and tax-efficient bonds specific to our state.

If your investing goal is to put all your money into a single S&P 500 index fund, then you don't need an advisor for that, but you're also not diversifying, and that's a high risk strategy.

SP 500 has over 500 companies. VSTAX has over 3000. Add a total international and total bond fund and I would call that highly diversified.

That's good diversification. What % do you put into each? How often do you need to rebalance it?

Our portfolio essentially consists of three funds: total US stock market index (55%), total international stock market index (25%), and total bond market index (20%). Our 401ks do not have total stock market so we use the sp 500 in those accounts in place of total stock market. Typically I rebalance once a year on my birthday or if the percentages get off by more than 5%. Last year I had to rebalance twice--once selling bonds to buy stocks in March and again selling stocks to buy bonds later in the year when the market recovered. But that is unusual. It is a very easy portfolio to maintain, and very inexpensive.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Yes. He is also my dad's financial advisor, and has been for years and years, and he came to my dad very highly recommended by someone he trusted as well. He's been my advisor for about 10 years now, and my dad's for probably 20. He takes 1% of total investments per year (that goes down to 0.5% when your assets reach a certain level, so my dad only pays a half a percent), with NO other fees or anything, so it's very transparent, which I like. I've averaged returns of around 8-9% returns during those 10 years, so he is significantly beating the market, and the 1% fee is worth it. My husband was skeptical (I've been with the FA since before I met him) and was very "there are no fee accounts" to which I say - everyone is getting paid. If there are no fee accounts, the fees are just hidden, like with kick backs from various funds. Having eased into it, he's now completely on board.

He manages our retirement accounts completely. He also managed our house savings account when we were saving for a downpayment, but we've now bought. He will likely at some point manage our kids 529s. He is also available for advice. He's reviewed our monthly budgets, given general financial advice, recommended insurance options, and helped us decide on a budget for our house. Basically, he'll do a call with us anytime if we have a question, but we're fairly low touch.

I love this arrangement, but finding someone you trust would be really scary for me. Getting a recommendation from my dad, who I trust completely, made it easy, but obviously that's not replicable.

It's obviously your choice whether to hire a financial advisor-- I pay someone to mow my lawn because that's how I want to spend my money. However, it's very unlikely that your advisor can beat the market long term (and certainly not on a risk-adjusted return basis). For example, if you just invested in the S&P500 index, you would have seen annual returns of almost 14% a year over the last 10 years. Also, if you are paying 1% of assets and getting 8-9% returns, you are paying over 10% of your annual returns, which will probably reduce your ultimate retirement "nest egg" by a pretty big chunk.

There's more to factor in than that, like tax loss harvesting, portfolio rebalancing, and your actual risk profile. For example, for our risk profile we are in a 70/30 equities vs bonds, then within those there are other categories for diversification purpose, like a mix of US and international equities; and on the bond side a mix of short and medium term bonds, emerging market bonds, and tax-efficient bonds specific to our state.

If your investing goal is to put all your money into a single S&P 500 index fund, then you don't need an advisor for that, but you're also not diversifying, and that's a high risk strategy.

SP 500 has over 500 companies. VSTAX has over 3000. Add a total international and total bond fund and I would call that highly diversified.

There are a very small subset of companies that drive the 500. You are betting your savings on Amazon, Apple and Microsoft.

[Anonymous]

Anonymous wrote:If you are paying 1% AUM to a financial advisor to help you with asset allocation and rebalancing you are shooting yourself in the knee.

Pay some $500-1000 once to talk to you about it.

Ours does more than just rebalance the portfolio. Worth every penny, IMO. They have to the tools to crunch the numbers on whether we can retire early or not. Plus, I don't like to spend my time looking at this stuff. I work enough. I don't need more work.

[Anonymous]

No. I was taught to manage my own from a very early age by my dad, who was a financial advisor.

I don't think the tools for determining whether you can retire early or not are particularly arcane. It's all in Firecalc, which is free.

I would pay for one-time advice for some specific limited topics, but that's not one of them.

[Anonymous]

Anonymous wrote:

Anonymous wrote:If you are paying 1% AUM to a financial advisor to help you with asset allocation and rebalancing you are shooting yourself in the knee.

Pay some $500-1000 once to talk to you about it.

Ours does more than just rebalance the portfolio. Worth every penny, IMO. They have to the tools to crunch the numbers on whether we can retire early or not. Plus, I don't like to spend my time looking at this stuff. I work enough. I don't need more work.

NP. I don't think you realize -- or maybe you do -- that 1% of AUM, for someone in my situation, = $35,000 per year. No, I don't need more work. At the same time, I don't need to essentially give a financial advisor a brand new car ever year (and a nice car, at that) in order for him to "crunch the numbers" and tell me whether I can retire. I'm 40. I'm not retiring yet. I'm accumulating investments for a while longer. When it's time to retire, I'll know that I have enough money.

In 10 years time, keeping the same arrangement, it would be like giving a financial advisor a $70k car every year. N.O. If I need someone to run some numbers for me, I'll do like PP said and work with Vanguard and one of their advisors. It's included anyway when you're above a certain level.