Do you have a financial advisor?

[Anonymous]

How did you find him/her? Do they help you with your overall financial outlook (i.e. mortgage, 529, etc) or just specific investment-type things like IRA, 401K?

[Anonymous]

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.

[Anonymous]

No. I've occasionally done one off check-ins to a different perspective and some advice but I don't pay someone regularly since I buy into the benefits of low cost index investing.

[Anonymous]

No, I've worked at a couple of financial advisory firms / local brokerages (think Legg Mason and the like). Most financial advisors are former athletes that are good at sales.

[Anonymous]

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]

yes, she's great. She manages all of our investments, ran the numbers of whether we can retire early, etc..

She works with a firm that has a relationship with the 401k company. That's how we found her.

[Anonymous]

I think most people have the intelligence and common sense to manage their own money. It's just that they may not have the discipline or will power to keep to a goal/strategy, that's where a financial advisor may be worth the fee.

[Anonymous]

Anonymous wrote:I think most people have the intelligence and common sense to manage their own money. It's just that they may not have the discipline or will power to keep to a goal/strategy, that's where a financial advisor may be worth the fee.

While this may be true, I'm the person who wrote the longer post above and that's not why I have a financial advisor. It's for the same reason I have a cleaning person - to save time. Yes, I could do my own research and choose my own investments, but I prefer to spend my time with my family and have a professional do it. I don't actually have any issues with discipline/will power as far as finances (eating cookies, that's another story).

[Anonymous]

Anonymous wrote:

Anonymous wrote:I think most people have the intelligence and common sense to manage their own money. It's just that they may not have the discipline or will power to keep to a goal/strategy, that's where a financial advisor may be worth the fee.

While this may be true, I'm the person who wrote the longer post above and that's not why I have a financial advisor. It's for the same reason I have a cleaning person - to save time. Yes, I could do my own research and choose my own investments, but I prefer to spend my time with my family and have a professional do it. I don't actually have any issues with discipline/will power as far as finances (eating cookies, that's another story).

Same here. We have a financial advisor, even though we understand finance well. Before we had one, "rebalance portfolio" and "do tax loss harvesting" ended up about #100 on the to-do list = it never got done. Now that we have someone doing it, that's worth it in better returns compared to our previous strategy of doing nothing because there was no time.

Also we use them for advice on retirement, estate planning, tax minimization strategies, and the best way for grandparents to give $$ to our kids for education.

Once we retire, I would consider dropping them as you have fewer life changes (kids going to college, etc.) taking place, and more time to actively manage your investments.

[Anonymous]

Yes, he's a former colleague of DHs. He manages our personal investments and some retirement accounts but we also share other account info with him (company 401ks, etc.) so he can balance our portfolio appropriately. He didn't advise on 529s because we already had those set up and well funded, but he otherwise could have. He runs the overall numbers every couple of years on expected retirement income and advises on where we need to make changes. He's also advised on life insurance and a few other things. What we haven't asked about, and I think isn't in his wheelhouse, is estate planning, so we will need to think about getting some advice on that front if there are changes to the estate limits.

[Anonymous]

My company uses Fidelity for our 401k, and there's a financial advisor assigned to our company that we can use. It's great. He helped explain the 401K and stock option stuff that's specific to my company, but he also looked through my other savings and debt documents and made recommendations (e.g., consolidate 401ks from previous companies, leave the TSP as is, setting up a 529, paying off student loans, etc.). It's great because he has specialized knowledge on the specifics of my companies stock benefits and profit sharing, but enough generalized knowledge about retirement and other savings that it's exactly what I need.

[Anonymous]

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."

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I think most people have the intelligence and common sense to manage their own money. It's just that they may not have the discipline or will power to keep to a goal/strategy, that's where a financial advisor may be worth the fee.

While this may be true, I'm the person who wrote the longer post above and that's not why I have a financial advisor. It's for the same reason I have a cleaning person - to save time. Yes, I could do my own research and choose my own investments, but I prefer to spend my time with my family and have a professional do it. I don't actually have any issues with discipline/will power as far as finances (eating cookies, that's another story).

Same here. We have a financial advisor, even though we understand finance well. Before we had one, "rebalance portfolio" and "do tax loss harvesting" ended up about #100 on the to-do list = it never got done. Now that we have someone doing it, that's worth it in better returns compared to our previous strategy of doing nothing because there was no time.

Also we use them for advice on retirement, estate planning, tax minimization strategies, and the best way for grandparents to give $$ to our kids for education.

Once we retire, I would consider dropping them as you have fewer life changes (kids going to college, etc.) taking place, and more time to actively manage your investments.

This is all true for us. I have an MBA and do a finance-adjacent job, so I'm pretty literate in these topics, but with two small kids we just don't have the time to research all of the relevant factors and issues. It's been nice to hand off and our returns have been very good. I found ours through my school alumni lists.

[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.

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.

[Anonymous]

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.