financial advisors? do you use one?

[lightning]

Hi all. I know the topic of the value of financial advisors has been discussed before, but I can't seem to find all the relevant threads. Maybe, I'm thinking of the CHE fora, but I think all that content  is no longer retrievable (as if that CHE fora content was retrievable even when it existed--the old CHE suffered from an almost useless search function).

I've always done my own financial planning, just like I do my own taxes. What I remember from all the "On The Money" threads are golden, especially when managing finance for the long-term.

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?

[downer]

I meet yearly with my TIAA advisor. They are not completely objective -- they make money from what they sell. But they do have knowledge and they can make arguments which I can assess. I have also talked with an advisor from another company to compare.

A friend meets with their independent advisor quarterly and pay for it. It's tempting to pay for advice that is truly independent and objective, where the advisor has no financial incentives. But so far I've been unwilling to shell out for that.

In dealing with a parent's investments I did deal with an independent advisor. They charged about 1% of the accounts they were dealing with, and that was expensive.

[Ruralguy]

Honestly, it seems like too much money for fairly standard advice which you can find online and in various books.

However, I find that as I age, there are more rules to consider regarding retirement. Also, money starts to come in from more than one source, and that can be complicated as well.

I think if you are young, have one income source, and are both building up savings (i.e., ready cash) and a retirement account (mostly in equities, though it doesn't have to be), then probably an adviser won't get you much.  If you feel that you are navigating complicated rules, have multiple income sources (I don't mean more than 1 job, I just mean passive income), have a partner with differing concerns, then maybe it would be worth it.

Now, after a time, if you see that you shell out 1% to them, and they get you a gain that's 5% more than what you had been doing over the previous few years, then, hey, it could be worth it. But they can really only prove that after the fact. So, you really have to take the leap with someone with a proven track record. Is it really worth it? I've been concluding "no," with a possible "maybe" for the future.

[arcturus]

Short answer: No.

I met with the TIAA advisor once. They ran a monte carlo simulation and recommended I move from 4 CREF funds to something like 20 separate funds. Their analysis was that I would have a 98% probability of having sufficient $$ in retirement if I did that, compared to a 99% probability of having sufficient $$ if I stayed with my original choices. Needless to say, this did not impress.

On the taxable investment side, I looked into finding an advisor when I first started investing. All of the reputable ones required at least $200k, which I did not yet have, since I was just starting out. By the time I did have $200k, I was comfortable with my choice of mutual funds, which I hold at a low cost investment firm, so saw no reason to pay someone for advice.

The best advice I have heard - and should not be discounted just because it is free advice - is to live below your means and save some for retirement with every paycheck.

[Caracal]

We have all of our investments in a managed portfolio and meet with an advisor every so often. We could definitely do it all ourselves, but I find dealing with financial stuff pretty overwhelming and have a tendency to just put things off and never get around to them. The advantage of our financial advisor is that we just discuss something, and if we decide to set something up, she just sends us some forms, we fill them out and she just moves the money. I'm willing to pay the fees to just have somebody else deal with the details and avoid the anxiety.

[lightning]

Short answer: No.

I met with the TIAA advisor once. They ran a monte carlo simulation and recommended I move from 4 CREF funds to something like 20 separate funds. Their analysis was that I would have a 98% probability of having sufficient $$ in retirement if I did that, compared to a 99% probability of having sufficient $$ if I stayed with my original choices. Needless to say, this did not impress.

On the taxable investment side, I looked into finding an advisor when I first started investing. All of the reputable ones required at least $200k, which I did not yet have, since I was just starting out. By the time I did have $200k, I was comfortable with my choice of mutual funds, which I hold at a low cost investment firm, so saw no reason to pay someone for advice.

The best advice I have heard - and should not be discounted just because it is free advice - is to live below your means and save some for retirement with every paycheck.

Financial planning should be so simple, yet, I'm also led to believe that it's much more complicated for a non-finance person. I've always been attracted to folksy icons like Warren Buffet, who make investing seem so simple, yet, a part of me says that it's much more complicated than what Buffet says.

I think that, even though I'm in a good place financially, something is gnawing at me like I may be missing out on something. Or is that how middle class folks get roped in by the financial advisors???

OTOH, so many people are so unbelievably undisciplined in terms of their finances, I'm wondering if financial advisors play more of a role as a life coach.

[downer]

I have a friend who used to be a financial advisor mainly for academics. He said that they were often argumentative and reluctant to give up their bad investing habits.

[Mobius]

Short answer: No.

I met with the TIAA advisor once. They ran a monte carlo simulation and recommended I move from 4 CREF funds to something like 20 separate funds. Their analysis was that I would have a 98% probability of having sufficient $$ in retirement if I did that, compared to a 99% probability of having sufficient $$ if I stayed with my original choices. Needless to say, this did not impress.

On the taxable investment side, I looked into finding an advisor when I first started investing. All of the reputable ones required at least $200k, which I did not yet have, since I was just starting out. By the time I did have $200k, I was comfortable with my choice of mutual funds, which I hold at a low cost investment firm, so saw no reason to pay someone for advice.

The best advice I have heard - and should not be discounted just because it is free advice - is to live below your means and save some for retirement with every paycheck.

Of course financial advisors will say you need managed funds. In reality, most of will do fine with index funds, or you'll lose like everyone else. I've done well with low-cost funds. I split them across a few, but the returns to the high-fee funds aren't any better.

[clean]

There are a lot of pieces to a financial plan. It is not just about retirement and tax planning.  Do you have enough insurance?  Do you have the right kinds of insurance?  Are you not only saving for retirement, but Enough for retirement? 
Do you have debts?  (IF so, what kind, why, and what are you going to do about it?)

Do you have non retirement goals?  What are you doing to make those come true?

I teach a class in Personal Financial Planning.  It is modeled after the Texas Tech program.  (They presented at a conference and I contacted them about their program to incorporate their first class into our MBA program).  The class I teach is the first class that anyone in that program would take.  There are a lot of pieces that go into a financial plan. 

If you are looking to find an advisor, look for someone holding a Certified Financial Planner (CFP) (or perhaps alternatively a Chartered Financial Analyst CFA) designation that is a fee only advisor.  See what they will charge. It is not likely to be 1% of your assets, but more likely a flat fee. 

[Morden]

I tend to think of these people in two categories: financial planners who do big picture things and financial advisors who invest in particular things.

We went to a financial planner once for a review of assets. It was a flat fee. We prepared for the meeting by not only itemizing assets and liabilities, but also going back through a year's worth of expenses and sorting them into categories.

We have also tried different financial advisors over the years. It's very difficult to find competent ones. (By competent, I don't mean "beating the market" or getting spectacular returns; I just mean someone who 1) pays attention to our holdings and 2) communicates with us in a professional and timely manner.)

[lightning]

There are a lot of pieces to a financial plan. It is not just about retirement and tax planning.  Do you have enough insurance?  Do you have the right kinds of insurance?  Are you not only saving for retirement, but Enough for retirement? 
Do you have debts?  (IF so, what kind, why, and what are you going to do about it?)

Do you have non retirement goals?  What are you doing to make those come true?

I teach a class in Personal Financial Planning.  It is modeled after the Texas Tech program.  (They presented at a conference and I contacted them about their program to incorporate their first class into our MBA program).  The class I teach is the first class that anyone in that program would take.  There are a lot of pieces that go into a financial plan. 

If you are looking to find an advisor, look for someone holding a Certified Financial Planner (CFP) (or perhaps alternatively a Chartered Financial Analyst CFA) designation that is a fee only advisor.  See what they will charge. It is not likely to be 1% of your assets, but more likely a flat fee.

Yes, and this complexity is what prompted me to post in the first place. For example (bringing back another financially related previous recent thread), I spend a relatively large portion of my summers in a summer residence, and I've been paralyzed with making a decision on whether to continue renting vs buying and how each decision interplays with my other goals and my overall financial plan through retirement and estate planning. I'm starting to feel out of my element, but I'm also tepid about the ROI on hiring a financial advisor, mainly because I've done it myself for so long (and yes, when I was younger, it was easier to make decisions because I didn't have nearly as much $).

Thank you all for letting me think out loud and for all your thoughts. They are always very helpful, and that's why I keep coming back to tap the minds of all the smart people.

[arcturus]

At the recommendation of someone here, on a different finance-related thread, I have been looking at: https://www.bogleheads.org/forum/index.php There is a lot of noise (discussion of FIRE, etc), but some valuable insight into a variety financial situations, with a few genuine experts posting on some topics. As always with an internet-based discussion board, YMMV.

[secundem_artem]

I got a guy since our local TIAA folk have rapid turnover and the advice I've had from the in the past has not been helpful.

My private guy looks after our Roth IRAs as well as a modest portfolio of stocks, bonds and mutual funds.  He will also offer general advice on my TIAA funds - "you are over weighted in equities for your age.  Get that down to 65% and move some of your funds into bonds."

The deal with his financial company is that their fees are charged only as a percentage of any money I make.  If I don't make money on his products, neither does he.  Although I sincerely doubt it's quite that straightforward.

Overall, the dude makes me money and I am reasonably assured that  I should not have to eat cat food in retirement.  The other thing I've learned is that a million dollars is not nearly as much money as you think it is.

[Cheerful]

At the recommendation of someone here, on a different finance-related thread, I have been looking at: https://www.bogleheads.org/forum/index.php There is a lot of noise (discussion of FIRE, etc), but some valuable insight into a variety financial situations, with a few genuine experts posting on some topics. As always with an internet-based discussion board, YMMV.

+1  I spent a couple years reading the Bogleheads message boards (Investments, Personal Finance, Consumer) and some of their Wikis.  I don't visit as much now -- relevant topics on Investment board are often about things I now know.  I learned a great deal.  Important knowledge that has changed my life for the better and given peace of mind.  Also got valuable advice/info from trusted relatives that aligned with Bogleheads advice.

Had two meetings with TIAA advisors.  One long ago, one more recent. First was unpleasant person who pushed investing in 15 different TIAA funds -- completely against Bogleheads philosophy.  Glad I didn't do it, though I knew relatively little at that time.  Second was pleasant person who wanted access to all financial data including personal savings accounts.  No, thank you.

[Parasaurolophus]

When my partner inherited a six-figure sum, she got one (with a fiduciary responsibility). It was a total waste of time and money. So was the second one she hired.

I wouldn't generalize from that experience, save to say that if you've got a not-inconsiderable sum squirreled away, watch out for grifters. Pretty much everyone she ever hired to help with anything related to her money was a total nincompoop (seriously, it was unbelievable). At least, those who "specialized" in relatively large sums. The kinds of specialists who help ordinary people were all completely competent.