NP here. I just found this thread at the top of the finances forum when I came here for the first time to ask: when, if ever, is a financial advisor NOT a ripoff?

I’m ~40, and my husband manages our accounts, but we just looked into my 65 year old parents’ accounts and there are fees everywhere you look! .75% advisor fee, plus
% fees when you buy sell, commission type fees, fees for having cash, etc etc. Not one fund performed at market or better. And it’s not because they are in conservative accounts - their accounts lost more than the market in down turns as well. They would have or 20% more if they had just invested in an index fund 5 years ago when they switched to an advisor.

I’m so furious.

I also have a 401k with John Handcock that has built in financial advisors with actively managed fund and they never beat market either. And they don’t let you pick anything other than the actively managed funds.

I’m starting to think there should be a PSA campaign on how to avoid financial advisors.

Someone told me recently that having an advisor can open the door to certain products, unavailable to the general public. He mentioned certain mortgage products.

Anything worthwhile there?

Does it make financial sense? Of course not. But people spend money on this for the same set of reasons people spend money on anything:
a) ignorance. They don’t know any better
b) self-importance/vanity. They think it makes them special.
C) laziness. They genuinely can’t be bothered with this crap, and can afford not to have to worry about it.

People spend money on worse things…

^ Got rid of them a couple of years ago.

Anonymous wrote:If you had one, you probably have 7 mil today. So, in that case, missing 2 mil.

BS! It would've been the opposite. OP would have $4 mil instead of 5.

OP - I had a financial advisor paying 1% fee for a portion of my accounts. When my company got acquired back in 2009, I was forced to cash out and ended up giving that money along with a few cats & dogs accounts for them to consolidate and manage. I also started tracking their performance against my other accounts. They never beat my other accounts, both active and passive, over the past 10+ years. They diversified unnecessarily, sold and hedged without reason (maybe their reasoning made sense at the time they did). Suffice it to say that I'd been way better off just investing in a market index.

I agree and don’t use one. I considered it and interviewed several. Then I realized: no guarantees, they pick example years to show how much they grew accounts, but it was years everyone’s account grew, and…if they were so good at it, why are they still working?

I did work for a financial advisor who admitted to me that they really only make money by churning accounts to charge commissions and transaction fees. Every month he went in and sold/bought something in every account, with more transactions charged to the clients who paid the least attention.

My money's with Vanguard. I'm good with that.

Anonymous wrote:If you had one, you probably have 7 mil today. So, in that case, missing 2 mil.

Sleazy Financial Advisor has entered the chat.

Anonymous wrote:I use one because mine always beats the market by more than fees i pay. Net gain for me.

How long have you had them? Usually those strategists mean more risk (is that beta?) — which means you trail the market when it’s down.

I use one because mine always beats the market by more than fees i pay. Net gain for me.

I use one bc I’m just not comfortable with investments. I have far less than you. I know my family has some kind of advisor and they have far more than you.

Anonymous wrote:If you had one, you probably have 7 mil today. So, in that case, missing 2 mil.

Not true.

These days you don't really need one of you get good index funds/ETFs with low fees. Back in they day these were available like they are now. Some people are just old fashioned.

We have high NW and are in our early 40s. The only "advice" I get is from books. 'You can't beat the market' is probably the best one. Oh, and we got a little luck in real estate.

Anonymous wrote:If you had one, you probably have 7 mil today. So, in that case, missing 2 mil.

How? Would they have recommended some investment that would beat a low fee index fund?

If you had one, you probably have 7 mil today. So, in that case, missing 2 mil.

I am just trying to see what we are missing. We are in our mid 50s and have a net worth of about $5 million. We have 401k’s, Roth IRAs, allocated generally on the three fund approach from Boglehead. In taxable account, we have VTI and T-Bills. We also have some I-bonds and savings in HYSA. College for kids covered by 529s and a little cash flow.

What are we missing by not having an advisor?