financial planner....how to choose one

[Bestwifeever]

....
I went to a fee only financial planner last year. This woman was an attorney and had passed the CFP exam on the first try. ... After two letters I received a full refund of $2,300.

Wow, I'm glad you got your money back for that useless "plan"!

So how did you find this planner?

 

[Helen]

Wow, I'm glad you got your money back for that useless "plan"!

So how did you find this planner?

She was listed in a local papers and had the right credentials. My partner and I both liked her as a person and felt we could work with her. I wonder if she had been on some kind of medication when she wrote that plan up.

 

[wolf]

Sorry FinanceDude, but your suggestions to find a CFP/advisor are practically useless.

Attorneys knowing "top advisors"? What's a "top advisor"? By whose definition? Most assets under management? Biggest stable of Mercedes? Just because big guns are using an advisor means little (I'm sure you are thinking of Madoff, here).

FINRA? C'mon. For example, I just looked you up. I like that amusing little bit about your fraternity friends. There is nothing in this report about the quality of advice that the person gives nor the fees, so as a screening tool, I think it has little value.

And there is a difference between a financial planner and financial advisor. I think advisors are mostly in the business of selling investments and annuities, while planners are perhaps giving advice on wills, estates, insurance, investments, retirement, social security, etc.

I agree with you. A good FP is great. Real world, How do you find that person. I think Nord's comment really sums it up.

To the OP, all of the post are correct. Just based on different life experiences. Hope your experience is a good one.

One suggestion. After you meet with your FP, please post your FP suggestions on this site before you take action.

 

[brett]

We changed advisors last year. It took us about 4 months to narrow it down. We only considered fee only advisors. So far, we have been pleased with our decision.

 

[nun]

Where's the OP in this discussion?

 

[REWahoo]

Where's the OP in this discussion?

Hasn't been back online since this post (#15):

+1, I'd ask here, at Bogleheads and Vanguard.

Maybe took the last 2/3 of that advice and ran?

 

[jIMOh]

She was listed in a local papers and had the right credentials. My partner and I both liked her as a person and felt we could work with her. I wonder if she had been on some kind of medication when she wrote that plan up.

Always check a Lawyer's math, didn't someone ever tell you that Lawyer's don't do math?

 

[devans0]

After saving enough money to be of interest to financial planners, I thought of retirement. Like the original poster, I wanted reassurances that I wasn't missing any hidden shoals before making the big, irrevocable sail.

I asked around and was soon deluged with offers that worked hard to redistribute funds, mainly to their bottom line, but only two that had any genuine interest in my financial security and well being and only one (Vanguard) that knew about tax laws in my circumstances. My test questions involved 'dumb beginners' annuity questions to see whether they would look at my circumstances, or take the dangling candy and run. Other questions involved asset allocation and fees for mutual funds. "Yum, candy!!!" was the result, even to smirking to my face while offering me the worst possible combination, in one case.

I am now taking the time to educate myself (with much help from knowledgeable, helpful, and sharing people posting here and at bogleheads). It also put me into the one-more-year club.

 

[Gatordoc50]

I've never paid for financial advice but wish I knew then what I know know. Now I am actually considering hiring a fee only advisor for 199/mo. Having someone rebalance my investments, access to funds in niche markets, continuity if I should pass before my wife, and just not having to deal with it for a while or for the long haul. It seems like a pretty good trade off. Flat Fee Advisors is the firm. Anyone dealt with them?

 

[wolf]

After saving enough money to be of interest to financial planners, I thought of retirement. Like the original poster, I wanted reassurances that I wasn't missing any hidden shoals before making the big, irrevocable sail.

I asked around and was soon deluged with offers that worked hard to redistribute funds, mainly to their bottom line, but only two that had any genuine interest in my financial security and well being and only one (Vanguard) that knew about tax laws in my circumstances. My test questions involved 'dumb beginners' annuity questions to see whether they would look at my circumstances, or take the dangling candy and run. Other questions involved asset allocation and fees for mutual funds. "Yum, candy!!!" was the result, even to smirking to my face while offering me the worst possible combination, in one case.

I am now taking the time to educate myself (with much help from knowledgeable, helpful, and sharing people posting here and at bogleheads). It also put me into the one-more-year club.

Another person I can agree with. Your "wording" is better than mine.

I to, do the "test". Guess OP is gone. Shame. If they cannot handle differing views, on this site, I wonder how they will be able to handle a FP.

 

[FinanceDude]

My test questions involved 'dumb beginners' annuity questions to see whether they would look at my circumstances, or take the dangling candy and run. Other questions involved asset allocation and fees for mutual funds. "Yum, candy!!!" was the result, even to smirking to my face while offering me the worst possible combination, in one case.

What kind of "dumb beginners annuity questions" did you ask? Was it kind of like putting your title and checkbook in your shirt pocket and walking into a car dealership and saying you are there to buy a car?

 

[Chuckanut]

Today's Dilbert offers another perspective on financial advisors:

Dilbert comic strip for 01/20/2012 from the official Dilbert comic strips archive.

What are the odds that Wally will be swindled out of his one billion dollars?

 

[panacea]

My husband and I are a few months away from his retirement. We have decided to consult with a financial planner to make sure we have all our ducks in a row. We have limited financial planning knowledge and have a short window to accept or decline my husbands early retirement offer. We chose this planner on recommendation from a retired couple that have been working with and are pleased with him. This first meeting is at no charge to us. My questions for this forum are: what should we ask him to help us decide if he is the planner that will do a good job? What credentials should he have? What fees should we expect for his advice and potentially management of our assets? How do we know if he has our best interests at mind? Anything else that we need to find out?

thanks for any insight, advice

Infoseeker: I would suggest the following:
1) Who is your typical client? (you're looking to be part of a client base that is similar to your situation)
2) How many clients do you have? (You want enough to indicate experience but perhaps not so many that service may suffer)
3) What is your educational background and credentials? (look for finance or similar degree and CFP)
4) How do you get paid? (fee-only is the only right choice- not fee-based, commission, or other. If any compensation is paid to the advisor by anyone other than you, the client, then run. If they want to sell you something, run.)
5) Are you "fee-only" in the form of an hourly rate or do I have to turn over my portfolio for you to manage? (both can be fee-only. Hourly can be anywhere from $125 to $400 and for portfolio management fees can be as high as 2%. You shouldn't have to pay anyone more than 1% and less is better assuming they are well-qualified, especially if you have over $1 million).
6) If you are hourly, how do I implement my plan? Can you help me buy the investments? (if they say they can sell you some funds, they are not really fee-only. they should be able to give you specific advice regarding what low cost funds and how to go about buying them at a place with Schwab or Vanguard)
7) Can I speak to some of your clients? (for privacy reasons they can't hand out names without permission- if they do, run. However, they should be willing to contact a few of their clients and get back to you)
8) Are you a "comprehensive" planner or do you have a specific area of expertise? (a good planner should be at a minimum well-versed in areas of cash management, tax, retirement, investments, insurance and understand the basics of estate planning- being an "expert" in investments isn't sufficient.)
9) What is your philosophy regarding investment strategies and management? (a good answer would focus on using low-cost investments, managing risk in the portfolio, maintaining an allocation consistent with your risk profile and need for retirement income. Any promises of high returns or guaranteed results are unrealistic)
10) What are some ways we can ensure that we don't outlive our money? (An experience planner will talk about safe withdrawal rates, managing risk and the like. An inexperienced planner will talk about big investment returns or stare at you like you have two heads)

I'm sure there are many more, but those were the first 10 I could come up with. Good luck!

 

[Midpack]

FWIW [-]Elvis[/-] infoseeker hasn't checked in since last Sunday...we must have scared her away.

 

[panacea]

FWIW [-]Elvis[/-] infoseeker hasn't checked in since last Sunday...we must have scared her away.

All that typing for nothing?? I had to ice my fingers after that last post!

 

[MichaelB]

All that typing for nothing?? I had to ice my fingers after that last post!

That question will be asked again. Just bookmark it and then link to it when it comes up. Better yet, next time someone asks, cut & paste and take credit for a thoroughly original response.

 

[Nords]

That question will be asked again. Just bookmark it and then link to it when it comes up. Better yet, next time someone asks, cut & paste and take credit for a thoroughly original response.

We call that a "wiki"...

 

[LOL!]

This discussion is a good one and similar ones are occurring as I type over at the bogleheads forum.

However, the 2 frequent financial pros at bogleheads are simply saying (at least from my perspective) "You want to pick a financial planner like me."

Finally, something on the forum for the folks who do not want to do-it-themselves might be written up in a wiki, such as the one maintained at the BH site.

 

[nun]

5) Are you "fee-only" in the form of an hourly rate or do I have to turn over my portfolio for you to manage? (both can be fee-only. Hourly can be anywhere from $125 to $400 and for portfolio management fees can be as high as 2%. You shouldn't have to pay anyone more than 1% and less is better assuming they are well-qualified, especially if you have over $1 million).

This is where I rebel against the whole idea of a financial planner. My plan is based on a 4% annual return, I'm not going to give 25% of that up to pay a planner who probably can't do any better than a sensible individual who takes the time to read a few Boglehead wikis.

 

[Bestwifeever]

Today's Dilbert offers another perspective on financial advisors:

Dilbert comic strip for 01/20/2012 from the official Dilbert comic strips archive.

What are the odds that Wally will be swindled out of his one billion dollars?

I saw this Dilbert this morning and wondered if anyone else had!

 

[panacea]

This is where I rebel against the whole idea of a financial planner. My plan is based on a 4% annual return, I'm not going to give 25% of that up to pay a planner who probably can't do any better than a sensible individual who takes the time to read a few Boglehead wikis.

Agreed, assuming we're talking about a person who is really willing and able to put in the time. Clearly, for you and most others on this forum, financial planners are unnecessary but there are those that are better off paying some fees to help ensure that their long-term financial security doesn't blow up. Also, it doesn't have to cost has 25% of one's annual return to get this guidance for those that are more self-directed and wish to simply buy a few hours of a planner's time each year. It's usually pretty easy to recover $1,000 of added expense through tax planning, investment rebalancing and overall risk management.

 

[Rustward]

This is where I rebel against the whole idea of a financial planner. My plan is based on a 4% annual return, I'm not going to give 25% of that up to pay a planner who probably can't do any better than a sensible individual who takes the time to read a few Boglehead wikis.

No need to rebel, nun; nobody is trying to force you to do anything. Make your own choice and go with it. Peace.

For the life of me, I simply do not understand why this is such a contentious topic here.

And ... 1% aum is waaay overpaying for all but the smallest accounts.

 

[FinanceDude]

I find all this quite humorous........

 

[Midpack]

I find all this quite humorous........

+1. It's not contentious at all to most, some members [-]enjoy their rants[/-] like to restate their views often...

 

[My Dream]

This topic is of interest to me since I'm in somewhat the same predicament but I hesitate in posting to this thread since I noticed there are a few sharp teeth wondering around. Maybe I should start my own thread, but I need to find a few bouncers first.

Bbbam1, you know of any?