A good fee based financial planner is of value when they are assisting you in terms of things like estate planning and tax planning. Ours has been very helpful on thinking through irrevocable trusts, charitable remainder unit trusts and gifting strategies. Our investments have done pretty well when you compare the returns to relevant benchmarks be they equity or bonds. They are also providing advice to our adult children even when their investments are self directed. Finally, I’m at a point in my life where I’m not willing to invest a lot of time managing our portfolio thus there is a peace of mind component. If I was 40 with $2 million in investable assets I’d do it myself with just a few index funds.

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:We did this. We said "we think your fees are too high and we are not getting the returns that we want. We are going to move our funds to Charles Schwab and go it ourselves." and then we had Charles Schwab move the money for us, we didn't have to do anything except sign something.

How much did you have and how much do you pay CS?

We have about $5M invested with him and he charges 0.5%.
He meets with us about 2-3 times a year to go over the investments, switch some things around … but our returns haven’t been better than the market for the past few years so I’m not sure what we are paying $25K a year for.

Wow...you got ripped off. Something like 99.5% of financial advisors can't beat the indexes. And the ones that do can't do it consistently. Manage the money yourself.

Anonymous wrote:Ours charges a percentage of assets under management and really isn’t getting us better than standard market returns.
How to we terminate him? Do we just open an account with a company like Schwab and move assets so we can manage them ourselves? Right now, we log into his company’s online platform to view our investments ( which are a mix of ETFs, mutual funds …)

Ok, pay attention here, this is tricky.....You call the advisor up and say "You're Fired!". Done. Next question.

A new account manager can do an ACH wire transfer from your old account into your new account once its set up.

What’s the risk adjusted return of your portfolio? It’s ridiculous that people are expecting the market return when they can’t take on the 100% market risk. You need to understand that a 60% stocks/40% bonds portfolio is never going to give you the market return. A good financial planner is going to be upfront with you that they are not here to beat the market. Actually very very few fund managers can beat the market consistently.

Anonymous wrote:

Similarly, once people reach retirement age, many don’t know which accounts to use first, when to take social security, when and if to transfer money from a traditional URA to a Roth, etc.

A big - and sometimes overlooked - part of a CFP’s role is just educating people on investments and giving them emotional support when the market tanks. So many people mess-up their financial futures by investing aggressively and then selling at the bottom of a market drop. A CFP will ensure that you’re appropriately invested to meet your goals and keep you on track when the market barfs.

These are very good points. My mother is a good example of the first kind of person- she has well over $1 million in various accounts I think as well as SS and a pension, but very much not savvy on these details nor able to execute it well. She has a financial planner and it's totally worth it for her.

And I have a family member who used to be a CFP, and he would stress the second point as his main benefit for the majority of his clients. A lot of people are generally smart, understand the basics, good at their personal job, etc, but not emotionally prepared to think long term about money, understandably.

Personally I have comfort in this stuff and more than willing to sit through a down market, and the idea of sitting down with someone once a year for an hour to go over it seems like a chore. But there are definitely a good number of people for whom it makes sense.

A CFP’s value isn’t in beating the market. It’s in financial planning and helping to coordinate other advisors - like tax and estate planning - that go with it.

People have lots of financial goals, like saving for a house downpayment, a kid’s college, or retirement. Many people do not know how to plan and invest for these events. The goal of a financial planner is to get you to your goal with MINIMUM financial risk.

Similarly, once people reach retirement age, many don’t know which accounts to use first, when to take social security, when and if to transfer money from a traditional URA to a Roth, etc.

A big - and sometimes overlooked - part of a CFP’s role is just educating people on investments and giving them emotional support when the market tanks. So many people mess-up their financial futures by investing aggressively and then selling at the bottom of a market drop. A CFP will ensure that you’re appropriately invested to meet your goals and keep you on track when the market barfs.

If you know lots about investments, can plan for your financial goals, and have good emotional control during market downturns, you may not need a planner. That said, many don’t have these knowledge and skills, have no interest in acquiring them, but do want a secure financial future. For those folks, a planner is better than no planning at all.

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:We did this. We said "we think your fees are too high and we are not getting the returns that we want. We are going to move our funds to Charles Schwab and go it ourselves." and then we had Charles Schwab move the money for us, we didn't have to do anything except sign something.

How much did you have and how much do you pay CS?

Like I said, we decided to go it alone with CS, but we are using their intelligent portfolio, so we pay $350/year and meet with an advisor 2-3 times a year. We meet with the same advisor every time but you don't have to.

To be clear, we're using IP for SOME of our assets, not all.