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Financial adviser advice (1 Viewer)

NewlyRetired said:
Gianmarco,

You may have mentioned this and I missed it.

While we all agree that the amount of funds he has you in is outrageously high, just as important is how often is he buying and selling these funds?

If he is buying a selling a lot, that is a red flag.
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No worries. I did mention it up above but no, we barely have any movement. And while the total list looks long, no one account has more than 10 funds and most are between 4-8. They were just set up at different times and he selected the best from those available at the time.

Since then, we might change 1-2 funds from that entire list every couple years. The vast majority of those were originally selected for the account they are in at the time they were picked and haven't changed. Every six months, we talk about an hour on the phone to review everything, he might point out one or two funds on that list that aren't doing as well as they should and recommend watching closely or actually moving into a similar fund or he'll just confirm all looks good and keep going with where we are.

 
Did you ever post what your returns are over the last decade?

Is there an annual or quarterly fee you are paying this guy as well?

 
eoMMan said:
Did you ever post what your returns are over the last decade?

Is there an annual or quarterly fee you are paying this guy as well?
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I did not post returns over the last decade. I can try and find that out.

I'll actually be speaking with him today and asked to get information on all fees that are paid. I can post that later today.

 
Has anybody here ever taken your spouse to a financial planner primarily as an appeal to authority?

Here's my situation -- my wife and I are both 41. In my opinion, we are way behind where we should be in terms of saving for retirement, plus we still have really substantial student loan debt and two kids that will be headed to college in like 10 years. And we have very few assets -- we rent our home and have two older cars. So our situation is not great in my estimation.

The good news is that my wife went back to school and graduated and now is earning a much higher salary, and it wouldn't surprise me at all if she switched jobs in a year or two to an even higher salary. But my wife and I are not on the same page about what to do with our new increased income.

My preference would be to live exactly the same, or even to reduce spending where we can, to try to make substantial progress in paying down loans and eventually building up some assets for retirement. She wants to use the money to do stuff we couldn't afford before -- move to a more expensive home and buy two new cars and go on vacations, etc. She will ask me questions like "how much can we afford to pay in rent?", which to me doesn't really have a simple answer. In my judgment, the answer is "as little as possible, it's more important for us to pay off loans than to live in a nicer place." Same with questions about new cars or vacations or whatever.

One problem is that I have trouble conveying to her just how far behind we are. She has no interest in looking at the numbers or anything. She sort of assumes that everything will work out OK because my parents seem to be pretty solid financially, so whenever they die we would get a big boost from the inheritance.

Anyway, I don't know how best to handle this. Our marriage isn't all that great in other areas either and she just isn't particularly inclined to get persuaded by my arguments. Part of me thinks getting a professional financial planner to talk to us for an hour might open her eyes a little bit so her priorities would be more aligned with mine. Or maybe he'll tell me we have nothing to worry about (but I highly doubt it). The whole thing seems weird, though, because we don't really have any money to invest, so I've never really felt the need for a financial planner -- I think our best "investment" is just to pay off our loans more quickly.

Any thoughts?

 
My wife is clueless as well...good luck with this one. I put my foot down years ago which led to me suggesting that we split accounts and sign a post nup.....she came around after that.

 
Wrighteous Ray said:
Has anybody here ever taken your spouse to a financial planner primarily as an appeal to authority?

Here's my situation -- my wife and I are both 41. In my opinion, we are way behind where we should be in terms of saving for retirement, plus we still have really substantial student loan debt and two kids that will be headed to college in like 10 years. And we have very few assets -- we rent our home and have two older cars. So our situation is not great in my estimation.

The good news is that my wife went back to school and graduated and now is earning a much higher salary, and it wouldn't surprise me at all if she switched jobs in a year or two to an even higher salary. But my wife and I are not on the same page about what to do with our new increased income.

My preference would be to live exactly the same, or even to reduce spending where we can, to try to make substantial progress in paying down loans and eventually building up some assets for retirement. She wants to use the money to do stuff we couldn't afford before -- move to a more expensive home and buy two new cars and go on vacations, etc. She will ask me questions like "how much can we afford to pay in rent?", which to me doesn't really have a simple answer. In my judgment, the answer is "as little as possible, it's more important for us to pay off loans than to live in a nicer place." Same with questions about new cars or vacations or whatever.

One problem is that I have trouble conveying to her just how far behind we are. She has no interest in looking at the numbers or anything. She sort of assumes that everything will work out OK because my parents seem to be pretty solid financially, so whenever they die we would get a big boost from the inheritance.

Anyway, I don't know how best to handle this. Our marriage isn't all that great in other areas either and she just isn't particularly inclined to get persuaded by my arguments. Part of me thinks getting a professional financial planner to talk to us for an hour might open her eyes a little bit so her priorities would be more aligned with mine. Or maybe he'll tell me we have nothing to worry about (but I highly doubt it). The whole thing seems weird, though, because we don't really have any money to invest, so I've never really felt the need for a financial planner -- I think our best "investment" is just to pay off our loans more quickly.

Any thoughts?
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Send her to a Ric Edelman seminar. They are cheap and they explain things at a macro level that applies to individuals. He'll also harp on saving for retirement and not buying stuff you can't afford, which should help your situation.

 
GoBirds said:
Big fan of Bogleheads website....great resource regarding low cost indexing.
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About 10 years ago, I realized that the company/broker that was managing my IRA was churning funds and eating up any gains I could have been getting. I started investing and researching retirement investing and landed on the Vanguard website and then the Boglehead website. After reading a few recommended books from the Boglehead website, I quickly moved my money to Vanguard and told my broker that he was a POS. I still hate that guy.

There are probably good financial advisors but for most folks, using cheap index funds is the way to go. As the earlier poster said, you set it and forget it. You make your asset allocation using a handful of funds and rebalance annually. When there is a big issue in the financial world such as the diving stock market or rebounding market, you can adjust accordingly with very little trouble. Rebalancing is quick and easy when you only have a total of 6 or 8 funds. Having 40 funds makes no sense and just makes understanding/managing your investment more difficult than necessary.

 
gianmarco said:
Long story short, my wife and I started with a financial planner about 12 years ago through our work. After moving a couple years later, we switched to another adviser in the same company. In that time, we've definitely been able to save and grow our money well and our performance has been fine from what I can tell. I'm not a financial guru and don't regularly follow markets but at least have a general idea of what's expected, different vehicles we have our money in, etc.

My issues are the following:

1) The adviser I work with is someone that I like and have grown to trust. He seems to adapt with changes in our lives but has never tried to "sell" us on anything but instead gives us options and pros/cons for those options.

2) Our adviser is with Ameriprise. Reviews of Ameriprise are generally awful. We did not know this when we first started but, now that we've been there for a while, it's just been something to stay with.

3) I don't have an accurate number of just how much we actually pay Ameriprise. Some fees are included in statements but others are "buried" within the funds themselves. We don't pay an actual fee to our adviser as he's compensated by Ameriprise, but we I was told a while ago that the % he makes is tied to our performance so it's in his best interest to make us more money. How true that really is I can't really say.

4) Our adviser doesn't live where we are currently so all of our business is done over the phone and through email. Not a huge sticking point, but finding someone local would be nicer.

I've just recently decided that watching our money grow isn't enough. While I like him and I've seen our money do good things in the last 10 years, I'm willing to move elsewhere. My dilemma is how do I find out if I'm truly overpaying and not doing as well as I can? I've gotten some recommendations of local financial planners through colleagues and I plan on meeting with at least one of them just for an initial consultation. But if I know they'd like to have our business, how can I trust what THEY say if they come back and say we've been overpaying for bad service all this time? Is it possible that someone else will look at our overall financials and say "hey, you're in good shape, no need to move elsewhere"? Aside from trusting a friend's recommendations and getting away from the consensus "bad Ameriprise", I wouldn't be any more sure of what was happening compared to where I am now.

Any thoughts and ideas on what to do next, if anything, would be appreciated. How much, say % wise, is an acceptable amount to pay a financial planner?
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Took a long break from the FBG boards. Decided to check in and just like that, I am drawn to the financial threads.

Here is my two cents. And please know I have not read any other responses yet.

If you are looking to move your money to a financial advisor, so many people always focus on what you should ask them. How you should ask them about their track record, how many yrs they've been doing this, what their fee structure is, etc. And that is all important.

But also important is them asking you questions. If you meet with a financial advisor and he/she does not ask you a million questions - move on. Go to someone else. They should be asking you what the money is for; what your time frame is with this money; do you need it soon or not; will you be adding to it or not; what other money do you have elsewhere; will you be living off of this money or is it just extra money you will not need; etc. They should ask you a ton of Qs.

Even once you answer a Q, they should have follow-ups to that. Consider this fake example:

A couple meets with a financial advisor. The FA asks what the money will be used for. They say they want to build up money for their kids to go to college. If we were to use today's approximate prices for college; and assume private college (if kid goes state or gets scholarship you will simply have extra money). Then we are talking about needing approximately $50k/yr x 4 yrs = $200k. If 2 kids = $400k. And that is guestimating today's prices. (Pls do not get caught up in whether I am right on today's prices. This is just a fake example.)

Well if your kids are 13 and 16 and you are investing $300k with the FA, he/she should go one route.

If your kids are 3 and 6 and you are investing $300k with the FA, he/she should go a different route.

If your kid was just born and you are starting with $100k and never adding to it, he/she needs to go a different route.

If your kid was just born and you are starting with $100k and thinking you should be able to add $10k - $20k/yr, he/she needs to go a different route.

So within just the answer, "Saving for kids college" - there are so many different ways to go.

The potential FA should ask you tons and tons of Qs. Will you need this money soon - or down the road - or due to other savings, other investments, etc perhaps never needing it and just pass it on to kids or others at some point down the road?

So many people think the idea of a FA is just to make money. But there are so many different approaches to trying to make money.

If you are giving your FA $300k and you are in your 50s, plan to retire at 60, will have no other money coming in once you retire, and still have 10 more years worth of mortgage to pay off...

...that FA should absolutely be investing differently then...

...if you are giving him/her $300k, you are in your 40s, plan to retire at 60, but you have already fully paid off your house, and you own 3 other houses (with no mortgages) that you rent out, and both you and your spouse will receive pensions for years to come - he/she should absolutely approach things differently.

So if potential FA is not asking about your income, your spouse's income, what the money will be used for, what other assets you have, what liabilities/debts you have, etc - find someone else.

By the way, I have spoken to numerous people who just want to "be with the market" or just "follow alongside the market." I will stay away from whether I agree with that or not, as that is not the topic. But what I want to say is: if you happen to be someone who just wants to be with the market - ie, if it is up 20% that year, you would like to be up 20% that yr; if it is only up 5% that yr, you are okay being up only 5%; or if it is down that yr, you don't mind because you feel that while you are losing, most others are too, plus you are in for long haul and just looking for that average 8-12% (or whatever the historic average is) - then you do not need a financial advisor.

If you literally just want to be following the market, so that instead of making less than 1% in the bank, you are up when the market is up and feel you can take it when it is down because overall your hope is that there are more up years than down years, then again, you do not need a FA. There are so many ways to go:

You can put 50% of your money in SPY, 20% in DIA, 15% in QQQ, and 15% in IWM (as just one fake example). This would mean half of your money is with the S&P 500, 20% is with the Dow Jones, 15% is with the Nasdaq, and 15% is with the Russell 2000. For the most part, you will be following the market.

Or another way, is to just taste a bit of everything. Get mutual funds or ETFs that follow overall sectors. So another fake example would be:

10% in XLB (materials)

10% in XLE (energy)

10% in XLF (financials)

10% in XLI (industrials)

10% in XLK (technology)

10% in XLP (consumer staples)

10% in XLV (health care)

And so on and so forth. Or pick others. There are so many that represent entire sectors. This way you are sort of with the market. If the market is generally up in most areas (like 2014), but gets killed in oil - you are still okay. You are up that year.

There are obviously many different ways to "follow" the market. But the point is really just that if that is what you are after, as I am realizing so many people are, then in my opinion you do not need a FA.

If you are trying to beat the market or not get killed in big bears (like 2008), then you should have a million Qs for a FA AND he/she should have many for you as well. If they don't, they are not doing their job.

This is all just my two cents. But consult your lawyer, your accountant, etc.

 
does anyone use an online advisor? i've been looking at futureadviser.com. you plug in all of your investment account information, and it calculates if you are too heavily invested in a certain asset class based on what your risk tolerance is, when you plan to retire, etc. You can then rebalance your portfolio based on suggestions it has, or you can pay a fee and they'll handle everything for you.

 
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