Do you have a financial planner?

[dmdunca44]

We signed up with an FP in 2004 when DH began seriously planning to retire. We did not have a clue about dealing with investments and planning how to live in retirement (I wish I'd know about this forum then).

He did a decent job of advising us, but did steer us into the high fees of American Funds and put our taxable investments into loaded funds (which were not particularly tax efficient).

Last year, I moved our accounts to Vanguard and we are saving over 1% in advisor fees as well as enjoying lower ER in the VG funds I moved to. We now have 5 funds instead of 13 and I am planning to decrease the number of funds as we get into our 70's.

In hindsight, I don't regret using him when we did (transitioning to retirement), but I do wish I'd made the move sooner.

[MooreBonds]

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Originally Posted by David1961 I'm sure she gets some sort of commission, but it's not a load, where then money is taken out of my investments right away.

Ah yes, the age-old "but I'm not paying anything for this service" (frequent reply of wage slaves getting royally screwed by 401k funds charging 2% annual fees for basic stock index funds).

It is true that paying "just" 1.5%/year for basic stock funds that will, on average, underperform their index bretheren is much better than losing 5.75% right off the bat to sales charges, and THEN paying 1.5%/year....but in the end, it's like saying your deck chair on the deck of the Titantic is better than someone else's deck chair.

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Originally Posted by brewer12345 Quote: What's the difference between a planner and an advisor? Thread title asks about planner but some have responded about advisor. Thanks. Its like the difference between a whore and a 'ho.

I would like to formally nominate Brewer's quote to the ER Forum Hall of Fame of quotes. Or even the FAQs. Or both!

[Nords]

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Originally Posted by gerntz What's the difference between a planner and an advisor?

If you have to ask then you should avoid both of them...

[heyyou]

I pay a fixed annual fee that amounts to .2% of my portfolio. I get a cookie cutter equity allocation using DFA funds with a stock/bond ratio that suits me. I chose the adviser for that equity allocation, the fund family, and the low fee.

When the markets periodically dive, I sleep better knowing there is someone else besides me, saying when I should rebalance. When I was working, I would just continue to buy. In retirement, I am just stunned when my equity funds are down 40%.

As I wrote this, I can now see that I should rebalance more often while the market is dropping, not waiting until it is so low to start. That would split my dreaded rebalancing into increments that I might learn to cope with.

[samclem]

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Originally Posted by heyyou As I wrote this, I can now see that I should rebalance more often while the market is dropping, not waiting until it is so low to start. That would split my dreaded rebalancing into increments that I might learn to cope with.

So, if you have to remember to do this yourself and continue to watch the markets, what is that .2% fee buying you? That fee amounts to 5% of the annual amount most retirees will be retirees will be withdrawing, or about 2 1/2 week's worth of living expenses. It's not a lot by the standards of these FAs, but it's still a chunk of change, especially since you appear to already know how to do what is required.

[urn2bfree]

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Originally Posted by samclem So, if you have to remember to do this yourself and continue to watch the markets, what is that .2% fee buying you? That fee amounts to 5% of the annual amount most retirees will be retirees will be withdrawing, or about 2 1/2 week's worth of living expenses. It's not a lot by the standards of these FAs, but it's still a chunk of change, especially since you appear to already know how to do what is required.

I would assume it is for access to DFA funds. I, too, feel that the DFA family of funds is superior in returns and philosophy that it can be worth paying small fees to an advisor to get access to them. Others may have a different opinion of DFA.

[ERD50]

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Originally Posted by heyyou When the markets periodically dive, I sleep better knowing there is someone else besides me, saying when I should rebalance.

For me, the 'sleep factor' would just be transferred to wondering if that 'someone' is going to do the right thing. I don't see how it helps, it just removes you one step from the decision. I'm not sure that's a good thing

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In retirement, I am just stunned when my equity funds are down 40%.

Well, it happens, better get accustomed to it. But a 50-50 AA would be down ~ 20% - is that 'stunning'? Or save up almost double so you can go all fixed income (how many more years of work would that take)? That would have stunned me! It's tough enough to take a more conservative 3%-3.5% average WR, rather than the 4% 'default'.

-ERD50

[travelover]

My old boss was a DFA. Well maybe not dumb...........

[Rustward]

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Originally Posted by ERD50 For me, the 'sleep factor' would just be transferred to wondering if that 'someone' is going to do the right thing. I don't see how it helps, it just removes you one step from the decision. I'm not sure that's a good thing. -ERD50

No financial professional can (legally) make a trade on your behalf without your explicit permission or instruction. Sometimes a blanket permission is granted, as it is with discretionary accounts (i.e. wrap accounts and the like, with which most here have little experience). BTW, I would never do a discretionary account with a broker or advisor. In other cases the broker-dealer, advisor, or planner must have your consent. Consent can be verbal or written. Many will not accept instruction or consent by email or voice mail.

Unless you have lost most of your senses, it should be pretty easy to spot churning and commission generating transactions before they happen. As usual, it will pay to understand how things work, and know what questions to ask, and when you should terminate a relationship with a broker, advisor, of planner.

Bernstein addresses brokers in Four Pillars (Your Broker Is Not Your Buddy), but he makes no mention of planners, and the more generic advisors.

[teejayevans]

To put fees in perspective, take the fees and divide by $/hr you think they are worth.
So if fees total $10000 and you think a FP deserves $100/hr, that means they should be working for you for a 100 hours/year. Do you think/feel they are working that much? If I was just using a FP for rebalancing advice, I think that would be no.
TJ

[travelover]

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Originally Posted by Rustward ....... Unless you have lost most of your senses, it should be pretty easy to spot churning and commission generating transactions before they happen. As usual, it will pay to understand how things work, and know what questions to ask, and when you should terminate a relationship with a broker, advisor, of planner. .........

When my MIL was in her 80's her "advisor" would call her regularly to get "her permission" to make trades. She had no idea what he was doing and just always said "if you think I should, go ahead". It was clearly churning, but she was unsophisticated and getting a little senile.

[obgyn65]

I have been thinking about this and would like to give it a try. Where can I find a trustworthy fee only advisor ?

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Originally Posted by urn2bfree And this is exactly the sort of portfolio that perhaps you might want a professional to assess. NOT ONE WHO IS SELLING ANYTHING, a Fee only advisor. ?

[obgyn65]

I have not shared this information. When I joined this website I was advised to 1) not give my exact location 2) avoid providing absolute numbers about my portfolio 3) not give my actual professional title (take your pick among MD, DO, PA or NP as all four titles allow you to provide obgyn services). I have tried to stick with these rules. However, I can confirm my CD and muni portfolio is far below 15 M

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Originally Posted by Rustward We don't know how much Obgyn has in CDs and munis, do we?

[teejayevans]

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Originally Posted by obgyn65 I have been thinking about this and would like to give it a try. Where can I find a trustworthy fee only advisor ?

There is plenty of fee-only advisors who charge a percentage of your portfolio (usually ~1%), then there is advisors who charge by the hour (~$250/hr), but they are rare.
If you have 1M, the fee only will pocket 10K/yr, not bad. There are nationwide advisors (Ric Edelman, Bob Brinker, Ray Lucia is probably the most well known), and then if you live in a city, local ones, you kind of need to hear about them via word of mouth.
TJ

[SumDay]

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I have been thinking about this and would like to give it a try. Where can I find a trustworthy fee only advisor ?

The kind folks on this board advised me to find one either through Garrett Network or NAPFA: Fee-Only Financial Advisors Home - NAPFA - The National Association of Personal Financial Advisors

Google is your friend.

[brewer12345]

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Originally Posted by MelBay The kind folks on this board advised me to find one either through Garrett Network or NAPFA: Fee-Only Financial Advisors Home - NAPFA - The National Association of Personal Financial Advisors Google is your friend.

I would second the suggestion for NAPFA. Find a few advisors in your area and interview them. Pick one you can work with and seems competent and try them out.

[Sarah in SC]

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Originally Posted by brewer12345 I would second the suggestion for NAPFA. Find a few advisors in your area and interview them. Pick one you can work with and seems competent and try them out.

+3 on this.

[REWahoo]

William Bernstein has some interesting advice when it comes to selecting a FA:

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Interview one and say, "Look, this is my portfolio now," and you show him or her a simple, cheap index-fund portfolio. And if he says, "You know, this is really good, you've got the right idea, I think we can diversify you a little more by using some more cheap index funds," that's the answer you want to hear. You've probably found an honest adviser. And someone who adheres to an index-fund portfolio will probably be more likely to adhere to the policy because you've got someone who has some humility and realizes he doesn't know how to time the market.

The worst retirement investing mistake - Sep. 4, 2012

[FinanceDude]

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Originally Posted by REWahoo William Bernstein has some interesting advice when it comes to selecting a FA: The worst retirement investing mistake - Sep. 4, 2012

Easy for him to say, he doesn't believe in advisors anyways.

[urn2bfree]

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Originally Posted by teejayevans There is plenty of fee-only advisors who charge a percentage of your portfolio (usually ~1%), then there is advisors who charge by the hour (~$250/hr), but they are rare. If you have 1M, the fee only will pocket 10K/yr, not bad. There are nationwide advisors (Ric Edelman, Bob Brinker, Ray Lucia is probably the most well known), and then if you live in a city, local ones, you kind of need to hear about them via word of mouth. TJ

As suggested, in the era of google you do not have to rely on word of mouth. NAPFA is a great place to start. There are many who will,advise-as they should-on a per hour NOT a percent of assets basis. As others have suggested you want someone who understands and believes in a passive not active investment strategy. Such a strategy is entirely time dependent not asset dependent. It takes no more effort to advise on a portfolio of $5million than it does $1million. So anyone charging you more as in by % of assets instead by time - is really somewhat taking you. Do not pay by percent of assets under management unless it is for active investing like picking out individual investment vehicles, not index funds. Better yet do not try to do active investment- it works,for very few and not consistently for the same few over the long run.
There is some good advice for free on the Evanson Asset Management site. www.evansonasset.com