Anonymous
Post 06/26/2023 11:13     Subject: Why would you pay 1% to a financial advisor?
Anonymous wrote:Tax loss harvesting is probably their best argument for paying the fee. If you don't have the knowledge or time, that can be very helpful for high 7-figure portfolios.

But yeah, the fees are dumb.


Yes. This.
Anonymous
Post 06/26/2023 11:04     Subject: Why would you pay 1% to a financial advisor?
Anonymous wrote: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?


Missed opportunities. you really need about 10 million in investable assets to get the alternative asset allocation opportunities.

And have someone doing great diligence on all of it.

Anonymous
Post 06/26/2023 10:54     Subject: Why would you pay 1% to a financial advisor?
Anonymous wrote:
Anonymous wrote: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?


Honest answer? If you stay 100% on top of it; make allocation changes when you should; have the right allocation ----then no you do not need them. Most people with any kind of wealth do not do these things. They forget. Become busy in their job or something else. In fact most of the people that say they do those things do not. So if you can do it great. If you can't and try to do it yourself and do not -- that is where the 5 million pile should have been 7 million.

You may be fine. Most are not. Take a Biglaw partner with 10 million in investments. If a litigator and they go on trial -- no way they are checking investments. And trial for them is not a couple of days --- 3-4 months of barely being able to breathe. They are not thinking investments. Or another in an M&A transaction or a bunch of them. When they come up for air months have passed.

The biggest challenge to investments is not fees -- that is secondary. It is opportunity cost. If you are ever in the investment you should have been in or the allocation you should have been in -- hard to make money.

So do you need them --- no. But will you do what needs to be done or do you need to outsource it.


THis 1000%. Sure I could do it myself---I did for 10+ years. But I do not have the time to research, stay up to date, remember to do everything in our busy lives. So we "outsource" our financial management to someone we have been with for 15+ years. We started with them when we had only 6 figures to manage, totally trustworthy and not a slimy FA. We interviewed "top level wealth managers" when we hit significantly higher levels, and I just do not trust them. Ours does an excellent job of managing and coordinating with our tax firm and estate planner. Most importantly I trust them and their recommendations. I enjoy knowing that we are their top client, not their lowest client, which we might get with a "fancy wealth manager".
Anonymous
Post 06/26/2023 10:26     Subject: Why would you pay 1% to a financial advisor?
Tax loss harvesting is probably their best argument for paying the fee. If you don't have the knowledge or time, that can be very helpful for high 7-figure portfolios.

But yeah, the fees are dumb.
Anonymous
Post 06/26/2023 10:16     Subject: Why would you pay 1% to a financial advisor?
Anonymous wrote: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?


Honest answer? If you stay 100% on top of it; make allocation changes when you should; have the right allocation ----then no you do not need them. Most people with any kind of wealth do not do these things. They forget. Become busy in their job or something else. In fact most of the people that say they do those things do not. So if you can do it great. If you can't and try to do it yourself and do not -- that is where the 5 million pile should have been 7 million.

You may be fine. Most are not. Take a Biglaw partner with 10 million in investments. If a litigator and they go on trial -- no way they are checking investments. And trial for them is not a couple of days --- 3-4 months of barely being able to breathe. They are not thinking investments. Or another in an M&A transaction or a bunch of them. When they come up for air months have passed.

The biggest challenge to investments is not fees -- that is secondary. It is opportunity cost. If you are ever in the investment you should have been in or the allocation you should have been in -- hard to make money.

So do you need them --- no. But will you do what needs to be done or do you need to outsource it.
Anonymous
Post 06/26/2023 10:01     Subject: Why would you pay 1% to a financial advisor?
I'm looking into hiring a financial planner. I'm not interested at all in the investing part of things which I'm fine with by reading Bogleheads, etc. or just using a target fund (I am not trying to beat the market necessarily).

What I hope to get out of it is full financial planning. A good financial planner can help ensure estate planning is in order and makes sense, insurance products are in line, major financial decisions make sense, etc.

Finance is so much more than beating the market. I want to make sure I am not over or under insured and the products I have purchased or want to purchase make sense for me/my family. If I pick someone with fiduciary responsibility they have to serve me. But they also know a lot more about insurance brokers and products than I do. I used to think I could DIY it all but seeing how estate planning, etc. can go sideways I now would like a professional to at least review things.
Anonymous
Post 06/26/2023 09:37     Subject: Re:Why would you pay 1% to a financial advisor?
Flat/hourly fee for tax advice and general education if you can't learn it yourself.

No active management or stock picking.
Anonymous
Post 06/26/2023 09:25     Subject: Re:Why would you pay 1% to a financial advisor?
Anonymous wrote:The more money you have, the smaller percentage you have to pay or you can negotiate to do so. All of you should not be paying 1 percent if you have anything worth being managed. That is an old way of thinking in investment services. We use an investment firm and our money along with extended families money all is considered under the same umbrella. So we get investment services for far less than 1% because of the large amount total but our personal direct money is just a percentage of the larger pot. We still get the same services. It is very much worth it to us. Speak to investment firms and see what they can do for you. Or pool with extended family members like we did. They want your business but you have to make it worth it to them.


+1
By the time we were at a million, we were paying less than 0.5%. A good financial advisor is worth it. We do get better returns than the index market funds, have more diversity, and ours manages most financial issues for us. so they play the game of keeping our "cash" in CD/MM so we have FDIC insurance for all of it (there is a lot of it)---I don't have the time to be opening 20+ bank accounts and managing the 3-6 month CDs that come due (that has been the best returns in last year). My FA also gets access to CDs that are at higher rates than even I can get at most good online banks.
Anonymous
Post 06/26/2023 07:55     Subject: Re:Why would you pay 1% to a financial advisor?
The more money you have, the smaller percentage you have to pay or you can negotiate to do so. All of you should not be paying 1 percent if you have anything worth being managed. That is an old way of thinking in investment services. We use an investment firm and our money along with extended families money all is considered under the same umbrella. So we get investment services for far less than 1% because of the large amount total but our personal direct money is just a percentage of the larger pot. We still get the same services. It is very much worth it to us. Speak to investment firms and see what they can do for you. Or pool with extended family members like we did. They want your business but you have to make it worth it to them.
Anonymous
Post 06/26/2023 07:24     Subject: Why would you pay 1% to a financial advisor?
Never crossed my mind to use one. I also don't do ETfs and other funds. They are too slow and boring.
I don't have to beat the market long term. 10 year is sufficient. Then go half funds as I'm getting older.
Anonymous
Post 06/26/2023 05:39     Subject: Re:Why would you pay 1% to a financial advisor?
Anonymous wrote:
Anonymous wrote: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?


A rising tide raises all boats.


Makes no sense in this situation.
Anonymous
Post 06/26/2023 05:25     Subject: Why would you pay 1% to a financial advisor?
Even more than the 1% is the idea that I’m going to sign over financial power for f attorney to some twerp I don’t know-nfw!
Anonymous
Post 06/26/2023 04:58     Subject: Re:Why would you pay 1% to a financial advisor?
Anonymous wrote: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?


A rising tide raises all boats.
Anonymous
Post 06/26/2023 04:56     Subject: Why would you pay 1% to a financial advisor?
There is a difference BTW a fiduciary and a financial advisor who is just a sales person. The majority are not fiduciary. I'm a boglehead and built up a 7 fig portfolio from nothing using index funds, on a middle class salary range of 150 household. No fancy inheritance. S&p 500 and a minority in indexed bond funds are my mainstay. I'm a two fund portfolio person.

My advisor is jack bogle and I recommend the commonsense book of investing by bogle. Short abd sweet read. I've been doing this approach for 25 yrs.. I have flirted with the idea of using a fiduciary esp when I hit 7 figs. But I can't justify the cost.

I will be using my acct to help me with tax related planning. I also don't mind spending on an estate planner for trusts etc. Those are free standing one time type costs. But a 1% fee on a 7 fig portfolio is too significant a cost.

A couple of close family members use financial advisors and are invested in expensive funds
I shudder when I look at their fees.
Anonymous
Post 06/25/2023 23:56     Subject: Why would you pay 1% to a financial advisor?
Anonymous wrote:
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.


DP. My experience has been the opposite. My investor advised accounts (we have some investor advised, and some not) most outperform the market when the market is down. They do a good job of anticipating downturns. YMMV.