Do you have a financial advisor?

[susana1954]

I had one at Merrill Lynch years ago.  I won't rehash the awful details, but I ended up transferring everything to a Vanguard Target Date fund several years later.  This was years ago.

Lately, I have been wondering if I need more targeted (no pun intended) advice now that I am retired.  I am 3 years away from RMDs and don't need to withdraw yet.  But the time will come.

So Vanguard has been reading my mind and keeps sending me info about their advisors.  I finally called today and talked with someone who said she is a senior advisor who just happened to answer my call since they were really busy.  We talked awhile (maybe 30 minutes), and I have a phone call scheduled with the person who will be my advisor on Friday.  She is a CFP, which does matter to me.  And there is no obligation to continue past the Friday phone call.  If I do use them, it is .3% of assets.

Anyone else using an advisor--them or anyone else?  Questions I should ask.

[Deleted]

We have used a series of advisors through the years. At first, early 90's we were with a small private firm and really liked our advisor. Sadly, he died from cancer and the remaining partners took the firm in a different direction, more cookie cutter. At that point we moved to another private firm on the recommendation of friends and they performed well for some years. Then the senior partner got early onset dementia, and everyone stood around watching business circle the drain. At that point we migrated again to Merrill Lynch on the recommendation of the same friends and have been there since 2010. Our advisor is also a CFP, of course, and we really like him. At some point he will retire, and we'll have to see what the new team looks like. We're pretty low maintenance folks with 2 joint accounts and one IRA each. Our directive is to make us lots of $$, transfer the RMD's to the joint account to make more $$ and keep $40,000 cash sitting around in case we get a wild hair.

I don't remember what life stage you are in - saving for retirement, already retired? Off the top of my head, I would ask how they plan to address YOUR specific investment goals and needs, your personal risk tolerance, how actively are your funds managed, will they work with you to integrate your investments into an overall financial plan, how often and how much have they changed their fee structure? If you are still working, will they assist you in transitioning any workplace stuff like 401-K or IRA when you retire? Will they work with you and/or your tax professional to consider the tax implication of various investment decisions? If you are retired, will they help you develop tax-effective withdrawal strategies?

[Deleted]

Yes, I have one. You can get flamed for that on the Early Retirement Board, but whatever. I bought my first stock at age 19 and I LOVE compound interest calculations but I like having a second set of eyes and insight into the "macro" view of what's going on in the market and what the future might look like. I'm paying 0.6% of assets under management and have a dedicated advisor at UBS. They run a Monte Carlo simulation that includes all of my assets, including those at Fidelity, and calculates the likelihood of my not outliving my assets, which I find very reassuring.

He called me last July and suggested we reduce holdings of of tech and growth stocks. Very good timing and well worth his fees. I have to admit that the Fidelity account is doing better than the UBS, even when I adjust for the higher allocation of fixed income in the UBS account, but I still like having the advice.

A word on taxes: that's a specialized area and I've never expected him to give me any but the most rudimentary advice on tax strategies. Not his area of expertise. My brother, a retired tax accountant, says the type of advice I want is expensive and hard to find. I've been picking it up as I go. Example: investments with high growth potential should be in after-tax accounts since in pre-tax accounts the gains are taxed as ordinary income when withdrawn. The tamer stuff such as bonds and preferred stocks should be in the pre-tax accounts. And next time I update my will I plan to leave my HSA to a charity rather than cash because if the HSA goes to DS and DDIL they need to liquidate it and pay the taxes.

[justme]

I would definitely ask a lot of questions of the advisor. I was calling because fidelity is my 401k plan and I had a question about a goof I made (postv tax is not roth 🤦🏻‍♀️) and he talked me into getting his financial advise since it's included in the plan. He just asked me pretty much the same questions their website does, maybe a couple extra, and it just spit out the answer. Plus it somehow decided a 36 year old should have 60% of their money in bonds. Which was a bummer because I was open to suggestions.

So I would ask HOW they come up with their plan and whether it's tailored specifically towards you. I would expect it to at .3% fee, but after that advice that's included in my plan making it seem like it was something I couldn't get for free... I'm suspect.

[Deleted]

Dec 6, 2022 16:27:00 GMT -5 justme said:

<snip>Plus it somehow decided a 36 year old should have 60% of their money in bonds. Which was a bummer because I was open to suggestions.

So I would ask HOW they come up with their plan and whether it's tailored specifically towards you. I would expect it to at .3% fee, but after that advice that's included in my plan making it seem like it was something I couldn't get for free... I'm suspect.

Wow.  Definitely cookie-cutter.  I'm 30 years older and I'm over 65% in EQUITIES now and just fine with it.  I may be repeating myself or I may have posted this on the Early Retirement Board but when I wanted tax strategy advice, one friend I consulted who has his own CPA firm that provides financial advice wanted to start with a Monte Carlo model similar to what my brokerage provides- for $1,000.     Nope.  Not what I was looking for.  Just because you bought that fancy software doesn't mean I have to help pay for it.

[The Walk of the Penguin Mich]

We did, but it was a monthly charge to deal with foreign income.  We had several meetings with him, with suggestions as to how to go about converting Canadian income, along with a few Monte Carlo simulations under different circumstances. TD was pretty sure that all was good with his investments (they were), but the meetings were more a strategy as to how to minimize taxes on foreign income, and when to start drawing it.  

Like @athena53, it was nice having a second set of eyes to see if there was anything we missed and if things were cool.  

[susana1954]

Dec 6, 2022 15:38:37 GMT -5 soupandstew said:

I don't remember what life stage you are in - saving for retirement, already retired? Off the top of my head, I would ask how they plan to address YOUR specific investment goals and needs, your personal risk tolerance, how actively are your funds managed, will they work with you to integrate your investments into an overall financial plan, how often and how much have they changed their fee structure? If you are still working, will they assist you in transitioning any workplace stuff like 401-K or IRA when you retire? Will they work with you and/or your tax professional to consider the tax implication of various investment decisions? If you are retired, will they help you develop tax-effective withdrawal strategies?

Yes, I am retired, living modestly but comfortably on a teacher's pension + DH's SS.  I am about 3 years away from RMDs.  I don't need the retirement money now.

The person I was talking with on the phone was not the advisor, but rather a senior-level advisor trying to help me understand what was involved and then assigning someone to talk with me.  The appointment is Friday, and she said to expect the phone call to last about 45 minutes.

Anyway, the woman on the phone asked me an interesting question that I had not thought about.  In three years, when I do start RMDs, what do I want to do with the money?  Do I anticipate a more comfortable lifestyle?  Do I want to start investing outside the IRAs?  Interestingly enough, that is also the year that my house pays off. I guess I assumed I would start buying CDs or savings bonds (LOL) so that my kids would have ready cash to move me into the nursing home.  

She might have earned my trust right there.  It is a question I should be asking myself.

[schildi]

I have an advisor that has been assigned to me by Fidelity.
His contact shows up on top of the pages when I log into my account.

We met several times going through my goal, retirement dates, etc. Got some suggestions that I implemented, some others I didn't.
I don't think there is any cost to me for this, but he is also not actively managing any of my sub-accounts or positions within.

I do like this approach.

[MN-Investor]

If I could find a fee based advisor I trusted, I might like him to review my portfolio once, but I would never sign up with someone who wants a percentage of my assets under management on a yearly basis.

The numbers don't make sense to me.

If I have $1,000,000 being managed and their fee is .3% of assets, I'm paying the advisor $3,000/year. If I'm supposed to limit my distribution to 4% per year, I should be taking out $40,000 from that account. But $3,000 is going to the advisor, or 7.5% of my distribution. Ouch.

My husband and I accumulated our portfolio on our own and I pretty much follow the Bogleheads way of investing at this point. I turn 70 this month, and I'm doing fine. But that's me.

[bookkeeper]

I have a couple.  DH and I have two retirement pots of money.  One he manages, similar to how he managed it while he was working.  The other pot of money is managed by DH's brother in law, who is a NY Life agent and CFP. He has been on the job for 35 years and I am fairly satisfied with his performance.  The fund he has suggested to us is actually managed by a national company.  He does have some good insights and what he told us would happen post-covid, has actually come to pass.  I have some investment accounts with the advisor my parents used.  He has too much flash for me, however, he does what I need to have done, when I ask.  I doubt I will use him for very long after my mother passes. He is just not someone I enjoy being around. 

[laterbloomer]

How much do fee based advisors generally charge?

[justme]

Dec 6, 2022 16:38:58 GMT -5 @athena53 said:

Dec 6, 2022 16:27:00 GMT -5 justme said:

<snip>Plus it somehow decided a 36 year old should have 60% of their money in bonds. Which was a bummer because I was open to suggestions.

So I would ask HOW they come up with their plan and whether it's tailored specifically towards you. I would expect it to at .3% fee, but after that advice that's included in my plan making it seem like it was something I couldn't get for free... I'm suspect.

Wow.  Definitely cookie-cutter.  I'm 30 years older and I'm over 65% in EQUITIES now and just fine with it.  I may be repeating myself or I may have posted this on the Early Retirement Board but when I wanted tax strategy advice, one friend I consulted who has his own CPA firm that provides financial advice wanted to start with a Monte Carlo model similar to what my brokerage provides- for $1,000.     Nope.  Not what I was looking for.  Just because you bought that fancy software doesn't mean I have to help pay for it.

It might have been 40 but I legit burst out laughing on the phone so I'm pretty sure bonds were 60. He was confused too.

Seems high for Monte Carlo. My work bought a simple software version of it years ago and I want to say we paid 2000 at most for it.

[justme]

Dec 6, 2022 20:59:55 GMT -5 laterbloomer said:

How much do fee based advisors generally charge?

My understanding is it'll depend on how much you're wanting them to advise on. Something like 100k in a 401k and a savings account wouldn't be much, but if you're talking millions of assets across several types and buckets it'll be more.

I've heard several hundred for most people, but if you have a complicated situation it can be over $1000.

[susana1954]

Dec 6, 2022 19:50:59 GMT -5 MN-Investor said:

If I could find a fee based advisor I trusted, I might like him to review my portfolio once, but I would never sign up with someone who wants a percentage of my assets under management on a yearly basis.

The numbers don't make sense to me.

If I have $1,000,000 being managed and their fee is .3% of assets, I'm paying the advisor $3,000/year. If I'm supposed to limit my distribution to 4% per year, I should be taking out $40,000 from that account. But $3,000 is going to the advisor, or 7.5% of my distribution. Ouch.

My husband and I accumulated our portfolio on our own and I pretty much follow the Bogleheads way of investing at this point. I turn 70 this month, and I'm doing fine. But that's me.

You only have to look at your name to see the difference between us.  I have made almost every mistake possible from investments with loads to an annuity inside an IRA and so on.  I have learned from my mistakes, but what I have learned is that I am good at saving and lousy at investing.  My IRAs are in Target funds so that I don't have to invest them myself.

In my case, it will cost me $1500 for the year.  If she can add that much value, I break even.  I don't know that she can.  But I do know that as I get older, I will need help.  So I am willing to talk about it.  That is why I asked for questions I should ask.

[TheOtherMe]

I worked as a tax preparer at a firm that specialty was financial advising.

He wouldn't even make an appointment with people who didn't have $1 million in assets.  He was a CPA and CFP and had his MBA in taxation.  

He charged a % of the assets but I don't remember the amount.

[minnesotapaintlady]

We had access to one from Prudential through work.  I went and talked with him once and decided it wasn't worth my time.  It was obvious he specialized in those with higher incomes than I had and I knew following his advice would not have been prudent for me at all.  (ex, the cookie cutter advice of doing all Roth 401K when you're lower income).  For the most part he thought my investment allocations looked good but he wanted me to really up the bonds.  That was probably a decade ago and I still haven't and still not feeling like I need to (I'm about 90/10)

[tallguy]

I have one assigned to me, but we mostly just chat.  He used to give me some thoughts and suggestions but I always make my own decisions on investments.  I also have him or his assistant handle paperwork for me on things like Roth conversions.  When your advisor tells your son that you could be doing his job if you really wanted to, it's a pretty good sign that you don't need to pay an advisor.    

I would also suggest that MOST people don't need a financial advisor at all.  I have said it many times before, but I am going to repeat two things that really stuck with me from a financial guy during a PBS pledge week special about forty years ago:
1.  90% of financial planning is to spend less than you make.
2.  Good financial planning is very simple stuff.  It's the stuff that DOESN'T work that's complicated.

Read a little bit.  Learn a little bit.  Ask what you need to.  Avoid many thousands of dollars in asset management fees.  
Seems like a good deal to me.  

Plus it somehow decided a 36 year old should have 60% of their money in bonds.

I find that shockingly inappropriate for ANYBODY.  The old "rule" used to be that one should keep 100 minus their age in equities and the rest in fixed income/bonds.  That was too conservative, so got changed to 110 minus age.  Even that is probably overly conservative, so some use 120 minus their age as the recommended stock allocation.  A 36-year-old would thus have 16% of their money in bonds using that guideline.  I am over 60 and have been retired for several years.  I remain 100% equities and will likely still be so until the day I die.  I am simply not psychologically suited to own bonds.  I do not suggest that such an allocation is right for anyone else, but it is for me.  The point, though, is that once you learn about money and investing, and assuming you know yourself and your situation, you can make decisions that best serve you and your situation regardless of what any advisor or "expert" might say.  

[Regis]

We have a financial advisor who is a friend of a friend.  We paid $2.5k for the initial visit where she went through everything and gave us advice on where we stand, changes to make to current contributions, between retirement and non-retirement and between tax-advantaged and taxable, suggestions on other funds for our investments, allocation, tax strategy, and how we're going to take distributions when the time comes.  She does not manage any of our money, we have total control over that.  We also pay her $250/quarter and we can email her unlimited questions at any time.  We have an in-person meeting at the end of November/first of December every year to go over where we are, any end-of-year and following year adjustments to make, etc.  Hiring her was one of the best decisions we've made - and it took us a good amount of time to find someone who would help us without controlling our investments.

[azucena]

Dec 6, 2022 20:59:55 GMT -5 laterbloomer said:

How much do fee based advisors generally charge?

I'm pretty sure we paid $600 - this included a pre-mtg to talk thru what help we wanted and our goals, a full review of our invsts and situation, and a 3rd mtg for us to ask f/u questions.  This was thru Ameriprise.  It was exactly what we needed to cement parts of what we were doing were good, tweak a few things, update our invst mix, scenarios run to show us meeting early retirement goals, some college savings plans.  I was firm that we were going to remain fee based.  I listened to a shortened version of their mngmt pitch but then politely said it wasn't for us.  No real hard sell after that.  It's up to us to figure out when we want to meet again.  I feel like 3-5 yrs or if something significant changes.

[jerseygirl]

Yes first advisor was a neighbor who had CFP and small business. Hired him when my company had a new 401k with maybe 30 choices. He picked good funds for me. Met 4x/yr and $600
He retired then went with Morgan Stanley who consolidated my funds. Charged 1% year but left them after my ‘advisor’ sold large number of stocks without notifying me. Had to pay big capital gains
Now I’m with a small firm also 1%/yr. My advisor helped me set up a pension plan for my small business and saved me large amount of taxes. He works with CPAs and attorneys. Always available . Set up an annuity with about third of my funds. This amount previously was in individual bonds that then were paying less and less. Annuity pays me monthly checks (around 8.4%] snd principle guaranteed to go to my heirs. Like very much having guaranteed income at our ages. Still have maybe 80% of rest in the market that advisor watches(in Fidelity). Both of us were previously nervous about depending on market for our income. Also have some corporate bonds paying about 5%.
Advisor takes care of RMDs, QCDs etc. Like this small company cause it just doesn’t just look at investments but also tax implications and strategies

[susana1954]

I did the initial meeting with the woman who would be my advisor this morning.  Although I did have a few questions, she mostly asked me questions.  I'm not a chatty person, particularly on the phone, so I had to work not to be impatient when we talked about Christmas, for example.  But I was good.  I did like her and felt like she knew her stuff.

We will talk again on Dec. 27 so that she can present her plan.

One thing I hadn't realized was that I had been at Vanguard for 13 years.    It seems like yesterday that I was at ML.

[minnesotapaintlady]

My Dad and Stepmom have a guy with Edward Jones, and while I always knew they were spendy and to stay away, this past few years with my kid's UTMA accounts that they have for him there have made me just hate that place.  I really, really wish they would have just handed over the control of the account when DS turned 18 so we could have moved it to something at least more tax efficient.  It sucks enough getting a huge tax bill when the account value goes up, but this year it's DOWN...a lot... about 45% and they STILL declared a big LTCG distribution.  Not like last year ($30/share!), only $12 this time, but that's still probably 8 or 9K of income for DS.

I'm doing much better with his 529, that for one has barely fluctuated in value this past year because I knew to adjust the asset allocation, and two I never have to pay any taxes on or worry about random income screwing us all up at the end of the year like this stupid UTMA.

Between my experience with the Prudential advisor and Ed Jones I don't see myself going out and hiring any help anytime soon.

[happyhoix]

For a while after I left my previous job I put my old IRa into a fidelity account based on advice from a co-worker. Felt like he was always trying to sell me something, and found out he wasn’t a CFP. After a few years I moved my old IRA into the program with my new job and it’s done pretty well. (Mass Mutual).

I’m thinking I would like to talk to someone as we move into retirement. Is it better to hire a fiduciary who charges a percent of earnings rather than someone who makes money selling me stuff.

[teen persuasion]

Dec 9, 2022 21:03:10 GMT -5 happyhoix said:

For a while after I left my previous job I put my old IRa into a fidelity account based on advice from a co-worker. Felt like he was always trying to sell me something, and found out he wasn’t a CFP. After a few years I moved my old IRA into the program with my new job and it’s done pretty well. (Mass Mutual).

I’m thinking I would like to talk to someone as we move into retirement. Is it better to hire a fiduciary who charges a percent of earnings rather than someone who makes money selling me stuff.

Neither - you want to pay a flat fee.

I don't want a financial advisor, but I'm tied to one for my SIMPLE IRA.  He's worse than useless for me, I told him I wanted access to index funds (I only need one fund, a total stock market one) and he still selected a fund company that only does managed funds.    With outrageous 12b-1 fees (that go to him, of course).  Then he hung out his own shingle (was at Wells Fargo), and suddenly he switched to a different class of funds - the 12b-1 fee goes away, but now we have a slightly lower AUM fee based on account value (umm, why should you profit off my high savings rate?).  And the switch/sale from one class to another triggered early redemption fees!  I called them out on that one, and they blamed someone else, and had the sale reversed for the funds under a year in age (so still somewhat in the high-fee class, gee thanks).  Plus an annual fee from the third party company handling our accounts.  I've never paid any fees with Vanguard, and expense ratios are minimal in comparison.