Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Simple question to any financial advisor/wealth management offering - show me you returns that beat the relevant market index net of fees. It usually stops the discussion and I never hear from them again. Investing has been made so easy by the likes of Vanguard and Fidelity. You can buy target date funds that rebalance over time - it doesn't get any simpler. Why would you give up 1% when you can get professional management basically for free?

I am trying a SMA account that is suppose to map the S&P with additional tax loss harvesting - it has a .9% fee but outperformed the S&P last year by 10 points. So we'll see. Professional management that outperforms is worth paying for all day long, it's just not very common, especially for the average investor.

A financial advisor putting you in an S&P 500 index fund will not beat you investing directly in that fund ,that's for sure. There would be 2 benefits to an advisor in that case:
1. If you have a different risk profile. They are going to diversify and put some in bonds, some international, etc. This means you are probably less exposed in down years, for example 2008 when the S&P was down 37% in one year, or 2018 when it was down 4% -- you'll probably do better than that.
2. If you need other financial advice -- tax planning, estate planning, etc.

If neither of those apply, then an advisor isn't worth it.

As for target funds, that's not much different from an advisor except you don't get any advice (#2 above). The funds have built-in management fees in the 0.25-0.5% range usually. It's less than a financial advisor, but you also get less service.

There's no right or wrong answer here -- it comes down to your needs and what works best for you.

“Different risk profiles” isn’t a reason to have financial advisor mange your investments— everyone needs to think hard about their risk profile and appropriate asset allocation, and yes a professional can help some people with that, but you don’t need to spend money every year just to get that and there’s no reason a target fund should have an expense ratio approaching .5%.

Likewise, it’s unlikely you need estate planning advice but if you do you should hire a lawyer for that and pay them hourly for their work, not according to how much money you have.

Things change. I can't stress this enough. People who stay busy making money and tending to other aspects of their lives aren't constantly looking at their portfolio or even thinking about it. The market itself also shifts. Is value investing passe, or is it still a good idea? Almost everyone who does DIY fund portfolios choose some sort of "total market" or S&P500 index. Does that really mesh with your risk tolerance? IMO anyone who has more than 20 years to work is leaving yields on the table if they are doing this. It is *not* an inconsequential amount of time you have to invest to learn and study current market trends. Anyone who is still pumping money into a bond fund demonstrates how out of step people can become. Individual circumstances may also significantly affect a person's investment strategy. Is there a pension, some other annuity or fixed income from past employment? Any other significant investments such as real estate? You mention estate planning as if it's something you can just get done, but how many people know what the current proposed changes are, and how it may affect them? What are the ways you can structure pass on your wealth to your child in tax-efficient manners while still exercising some control so that they don't go off and buy a Ferrari. More importantly, how does anticipated future wealth growth based on current investment strategies affect any checkpoints that may be necessary to re-examine estate planning.

I don't doubt that for someone who has only had one or two W2 incomes from normal jobs, with the one house, a couple of cars, and a bunch of money in 401k/Mutual Funds that may add up ultimately to 1-2 million, it's probably fairly simple to just set it and forget it. Those people are likely wasting their money if they are paying a financial advisor.

Disclosure: I am *NOT* a financial advisor but happily pay the fees for one on a portion of our wealth.

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).

+1. As our income has increase and assets have become more diversified, there are an increasing number of factors to consider in each of our investment decisions. Having someone else who takes what is ultimately a very small amount of money relative to our assets to save us the time and effort of researching everything is worth it to us. It’s like anything else you might outsource, like home remodeling.

Anonymous wrote:No one needs an overpaid financial advisor unless you have a hundred million dollars or more and you have to deal with trusts, charities, foreign holdings, etc etc.

Everything you need to know is written on the internet for free, or in personal investing books 101. There's literally nothing a FA knows that a source like Bogleheads doesn't know already. If you still feel the need for management, sooooooo many firms now offer roboadvisers that do the same job for a way lower cost.

FAs are a very expensive waste of money.

+1. The vast majority of UMC dcurbanmom folks who have high w2 income and save the remainder in retirement and brokerage accounts do not need a financial advisor. Bogelheads website and forum is an amazing resource for financial planning information.

Anonymous wrote:

Anonymous wrote:Early retired biglaw partner here. When I left my job almost six years ago, my net worth was $4.8 million. It's now $7.1 million. I've never had a financial advisor. You don't need one.

Do you have kids?

Yes. I retired in my early 50s after my youngest graduated college.

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Biglaw partner here. I do not have the time to do this even if I thought I could. I do not have 10 extra minutes a day. I do have a fair amount of money so it has to be allocated correctly. I also can't wait to retire early so I like the advice and the structure that is imposed. It is possible if I had time I could do it. But I doubt I would.

Yet you have ten minutes a day to dick around on DCUM. Cut me a break.

+1. quit whining about time management, I spend 30 min a year on finances to check the auto-investing and rebalance. 2K from every paycheck goes to VTSAX and 500 to VBTLX. Something similar for my 401K. My spouse has a similar setup. It isn't hard. It leaves me enough time to dick around on this website.

LOL!

Ok...

No one needs an overpaid financial advisor unless you have a hundred million dollars or more and you have to deal with trusts, charities, foreign holdings, etc etc.

Everything you need to know is written on the internet for free, or in personal investing books 101. There's literally nothing a FA knows that a source like Bogleheads doesn't know already. If you still feel the need for management, sooooooo many firms now offer roboadvisers that do the same job for a way lower cost.

FAs are a very expensive waste of money.

Anonymous wrote:

Anonymous wrote:Simple question to any financial advisor/wealth management offering - show me you returns that beat the relevant market index net of fees. It usually stops the discussion and I never hear from them again. Investing has been made so easy by the likes of Vanguard and Fidelity. You can buy target date funds that rebalance over time - it doesn't get any simpler. Why would you give up 1% when you can get professional management basically for free?

I am trying a SMA account that is suppose to map the S&P with additional tax loss harvesting - it has a .9% fee but outperformed the S&P last year by 10 points. So we'll see. Professional management that outperforms is worth paying for all day long, it's just not very common, especially for the average investor.

A financial advisor putting you in an S&P 500 index fund will not beat you investing directly in that fund ,that's for sure. There would be 2 benefits to an advisor in that case:
1. If you have a different risk profile. They are going to diversify and put some in bonds, some international, etc. This means you are probably less exposed in down years, for example 2008 when the S&P was down 37% in one year, or 2018 when it was down 4% -- you'll probably do better than that.
2. If you need other financial advice -- tax planning, estate planning, etc.

If neither of those apply, then an advisor isn't worth it.

As for target funds, that's not much different from an advisor except you don't get any advice (#2 above). The funds have built-in management fees in the 0.25-0.5% range usually. It's less than a financial advisor, but you also get less service.

There's no right or wrong answer here -- it comes down to your needs and what works best for you.

“Different risk profiles” isn’t a reason to have financial advisor mange your investments— everyone needs to think hard about their risk profile and appropriate asset allocation, and yes a professional can help some people with that, but you don’t need to spend money every year just to get that and there’s no reason a target fund should have an expense ratio approaching .5%.

Likewise, it’s unlikely you need estate planning advice but if you do you should hire a lawyer for that and pay them hourly for their work, not according to how much money you have.

Anonymous wrote:

Anonymous wrote:Biglaw partner here. I do not have the time to do this even if I thought I could. I do not have 10 extra minutes a day. I do have a fair amount of money so it has to be allocated correctly. I also can't wait to retire early so I like the advice and the structure that is imposed. It is possible if I had time I could do it. But I doubt I would.

Yet you have ten minutes a day to dick around on DCUM. Cut me a break.

+1. quit whining about time management, I spend 30 min a year on finances to check the auto-investing and rebalance. 2K from every paycheck goes to VTSAX and 500 to VBTLX. Something similar for my 401K. My spouse has a similar setup. It isn't hard. It leaves me enough time to dick around on this website.

Anonymous wrote:Early retired biglaw partner here. When I left my job almost six years ago, my net worth was $4.8 million. It's now $7.1 million. I've never had a financial advisor. You don't need one.

Do you have kids?

Early retired biglaw partner here. When I left my job almost six years ago, my net worth was $4.8 million. It's now $7.1 million. I've never had a financial advisor. You don't need one.

Anonymous wrote:Biglaw partner here. I do not have the time to do this even if I thought I could. I do not have 10 extra minutes a day. I do have a fair amount of money so it has to be allocated correctly. I also can't wait to retire early so I like the advice and the structure that is imposed. It is possible if I had time I could do it. But I doubt I would.

Yet you have ten minutes a day to dick around on DCUM. Cut me a break.

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.

I just check my Schwab account, and since 2009 I've made an average of 11.16 percent and in the last 5 years I've averaged 13.27 percent. You're not beating the market . . .

I checked our accounts for 2018, the year the S&P was down 4%. We were up a little that year -- 0.7%. Our portfolio is 70% stocks, 30% bonds.

Anonymous wrote:Simple question to any financial advisor/wealth management offering - show me you returns that beat the relevant market index net of fees. It usually stops the discussion and I never hear from them again. Investing has been made so easy by the likes of Vanguard and Fidelity. You can buy target date funds that rebalance over time - it doesn't get any simpler. Why would you give up 1% when you can get professional management basically for free?

I am trying a SMA account that is suppose to map the S&P with additional tax loss harvesting - it has a .9% fee but outperformed the S&P last year by 10 points. So we'll see. Professional management that outperforms is worth paying for all day long, it's just not very common, especially for the average investor.

A financial advisor putting you in an S&P 500 index fund will not beat you investing directly in that fund ,that's for sure. There would be 2 benefits to an advisor in that case:
1. If you have a different risk profile. They are going to diversify and put some in bonds, some international, etc. This means you are probably less exposed in down years, for example 2008 when the S&P was down 37% in one year, or 2018 when it was down 4% -- you'll probably do better than that.
2. If you need other financial advice -- tax planning, estate planning, etc.

If neither of those apply, then an advisor isn't worth it.

As for target funds, that's not much different from an advisor except you don't get any advice (#2 above). The funds have built-in management fees in the 0.25-0.5% range usually. It's less than a financial advisor, but you also get less service.

There's no right or wrong answer here -- it comes down to your needs and what works best for you.

Anonymous wrote:Biglaw partner here. I do not have the time to do this even if I thought I could. I do not have 10 extra minutes a day. I do have a fair amount of money so it has to be allocated correctly. I also can't wait to retire early so I like the advice and the structure that is imposed. It is possible if I had time I could do it. But I doubt I would.

That’s fine— we get that you have more money than you know what to do with and you have to spend it somewhere but it’s not 10 minutes a day it’s one hour a year, or less.