financial advisors? do you use one?

[Volhiker78]

Has anyone had any positive experiences with hiring a financial advisor (and I mean a real advisor--not a salesperson that calls themselves a financial advisor)? Did their recommendations really help you get a better return on your investments in the long-term?

I use a financial advisor for about 50% of my portfolio - mostly IRA.  I started using him when companies had to open up their 401k outside of their limited offerings (this was >20 years ago).  At that time,  I moved all of my 401k outside of the company offerings to much wider potential outside of the company.  My advisor was working for Merrill Lynch but has since moved to UBS.

Things are different now.  Everyone has virtually unlimited options for their 403b or 401k plans.  No need to move outside of your employer.  It is a legitimate question whether I should continue to use my advisor.  But, he has provided a nice return over the 20 year period I've used him (>7%) and I'm not sure I could have matched that myself.  He doesn't make many trades anymore and my IRA is pretty conservative now.  I guess I continue to use him because I trust that he won't do anything stupid and also because if something should happen to me,  he would take care of things for my spouse who really doesn't have much interest in financial planning.

If you are reasonably literate about financial stuff, and don't mind keeping up to date on things,  i don't think a FA is necessary. 

[financeguy]

I agree with clean to get a CFP. I've taught in a couple programs leading to this designation and would not work with anyone without it. Anyone can call themselves a Financial Advisor, Investment Consultant or other general title and many have only recently passed very basic investment and insurance licenses. The CFP is a comprehensive designation involving 7 courses, a bachelors degree, a two day exam, a background check, and minimum experience requirements.

Prior to selling a practice and teaching, I worked in planning for many years. To be honest, an academic grilling me over what they read on a website would be advised in a pleasant manor to keep doing what they're doing, have their parking validated and be shown out the door in about 15 minutes. DIY clients are often in search of someone to "sign off on" (i.e., be liable for when things go south) one or another hair brained scheme they learned on a reddit forum. Those who do not actually want advice are not generally a candidate for someone in the advice business.

A planner will deal with the following areas:
-General Topics (Budget, Debt management, etc.)
-Investments
-Insurance
-Retirement
-Tax
-Estate Planning

The goal is not to get or beat a particular return but to deal with all of the above areas, not just individually but also handling the implications of how they relate to one another. If you convert your assets to Roth this year, what will the implications be now and in the future, for example? How will social security taxation/provisional income be affected by that decision in future years, or the Medicare parts B and D premiums, or the degree to which dividends in taxable accounts will fall into brackets other than 0% vs escaping tax entirely? Are these assets held in such a way that they will be considered for Medicaid eligibility (including potential long term care) in your state and if so can you arrange that this isn't the case by changing titling or type of asset?

Those very simple hypos are small examples of issues having nothing to do with investment management, which many planners delegate anyway.

I'd avoid choosing on price since what you'll likely get is a concealed price such as a product sale. If you really want an inexpensive way to see if a planner has a value add in your situation, consider attending Financial Planning Days which the CFP Board puts on in many major cities. In this event  you can attend presentations but also have one on one meetings with one or more than one CFP professionals who are not allowed to hand out business cards or solicit business. If you want to reach out at a later point, that's your call, but the event is free/pro bono info only.

[Anselm]

I can't imagine any need for one other than moving money around and avoiding taxes.   I don't see how any advisor will do better than the folks who pick stocks for TIAA.  These guys have too strong a faith in the American economy and assume that we will never have a Japanese style decades long malaise.  I picked some funds based on gut feeling and here is what happened:

2002  $0
2010   $40k
2013   $100k
2021   $400k

Not bad, IMHO but I have no illusions.  I am expecting a few more crashes along the way.   I did not add any extra money in beyond the normal contributions.   Be aware that some of these guys with gray hair do not have 30 years of experience.  They made a late in life career change.

J.L. Collins gives his advice here, spliced in with scenes from The Gambler movie.
https://www.youtube.com/watch?v=eikbQPldhPY

Use headphones at work.