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financial planner....how to choose one
Old 01-14-2012, 07:48 AM   #1
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financial planner....how to choose one

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
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Old 01-14-2012, 07:50 AM   #2
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Is this a 'fee only' planner or does he benefit from selling you investments?
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Old 01-14-2012, 07:54 AM   #3
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Don't know,yet. The couple that have been working with him paid several hundred dollars just to work with him, and agreed to meet with him multiple times. Is fee for service a better way to go?
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Old 01-14-2012, 07:59 AM   #4
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From Morningstar: 6 Steps to Hiring a Financial Planner
6 Steps to Hiring a Financial Planner
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Old 01-14-2012, 08:01 AM   #5
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Fee for service is definitely my preference. Here is a good source of info: Fee-Only Financial Advisors Home - NAPFA - The National Association of Personal Financial Advisors
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Old 01-14-2012, 08:09 AM   #6
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How do we know if he has our best interests at mind?
i would go by the assumption that he would never have your best interests in mind. Trust, but verify. That's sad to write, but that is the way it is in this world. Even people recommended by friends and family cannot be trusted.

I would be reading books in your situation. Larry Swedroe has some good ones on the subject.
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Old 01-14-2012, 12:41 PM   #7
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Even if he is good for your friends does not mean he is good for you.

Read the advice linked above first. But remember that a planner is not a magic solution. They can help you organize your life but it is still your life. You have to supply the data and he makes sense of it for you.
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Old 01-14-2012, 01:41 PM   #8
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Also, be sensitive to the distinction between "fee only" and fee-based" financial planners. Fee only means, as you put it, fee for service. Fee based means that s/he charges you a fee AND can make some money off any financial products you buy from him/her.
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Old 01-14-2012, 02:06 PM   #9
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i would go by the assumption that he would never have your best interests in mind. Trust, but verify. That's sad to write, but that is the way it is in this world. Even people recommended by friends and family cannot be trusted.

I would be reading books in your situation. Larry Swedroe has some good ones on the subject.
I agree. Sad but true. Been reading/listening/investing/all my life. Read comments in this forum. TAKE YOUR TIME, THERE IS NO RUSH. Talk to "successful" people. (persons with huge net worth). (Their advice is worth a lot more than a financial planner).

RULES OF INVESTING, (ie. stocks/bonds, percentage, based on your age), does not necessarily WORK. Look at the past 10 years.

Sometimes, I would test a person's financial knowledge, by asking a question
I knew the answer to, (REAL ANSWER, NOT WHAT YOU READ)...can be easy
to learn a financial planners real motivation and knowledge of real world investing.

I dress very comfortable, jeans, t-shirt, etc....you'd be surprised how planners assume you are not knowledgeable, you can learn a lot by listening to their resales talk......

One of my questions has always been: If I pay you a fee/commission and follow your advice, Will I make money or lose money?

If the answer is there is no guarantee of making money. WHAT GOOD IS
YOUR ADVICE.

There is not room to cover everything here, I realize for some people seeing
a financial planner is better than going it alone, (I disagree), so just be careful.

Remember the clients of Bernie Madoff.....(excuse the spelling)....
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Old 01-14-2012, 02:09 PM   #10
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One of my questions has always been: If I pay you a fee/commission and follow your advice, Will I make money or lose money?

If the answer is there is no guarantee of making money. WHAT GOOD IS
YOUR ADVICE.
Seriously?
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Old 01-14-2012, 02:26 PM   #11
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... I realize for some people seeing a financial planner is better than going it alone, (I disagree), so just be careful.
You disagree with what you realize? Is that like admitting you can't confess?
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Old 01-14-2012, 02:50 PM   #12
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You disagree with what you realize? Is that like admitting you can't confess?
Investing is confusing. I guess, what I tried say was: long version:

If someone needs to ask for financial investing help, (as they near retirement), they probably have limited financial knowledge. This can be a serious problem.

Sorta of a catch 22. If you do not seek financial knowledge, you cannot learn.

The lucky ones, started this search when we were younger, (in our 20's), so if we are approached by a financial planner, we have a lot of experience and wisdom to fall back on. We can ask more specific questions.

An older, near retirement, couple seeking advice has to be very careful. Financial Planners can be very persuasive to a novice investor.

Hate to say this, but, trust is very difficult to find when money is involved.
Sad but true....

So, logically, a person who has no financial knowledge would be told see a financial planner. However, the "motive" for most financial planners is to make income for their selves......(should not be) ( but welcome to real world)...

That is why, I suggested to OP. Take your time. Do not let a financial planner
rush you. Listen to their recommendations, post their recommendations on this site.....and listen to the comments.....

sorry for the rambling....
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Old 01-14-2012, 03:19 PM   #13
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Originally Posted by infoseeker View Post
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
IMHO you should ask your questions on this forum.

So what is your husband's early retirement offer? Lump sum payment, annuity ?

Many on here will give you their opinions.

Then I'd simply open an account with Vanguard and either follow the advice on their website or you can get free personal advice form them if you deposit enough money. You could do far worse than just putting your money in Target Date fund.
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Old 01-14-2012, 03:31 PM   #14
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One can also use the Bogleheards forum which is arguably the best place on the internet for free investment advice: Bogleheads • View forum - Investing - Help with Personal Investments

To go along with the comments from wolf:
Linda Stern wrote recently (link in another thread):
Quote:
So what are the best non-financial forms of capital that pre-retirees can invest in now to ensure a good retirement? Here are a few.

Investing knowledge. Even (or especially) in this era of auto-enrollment in 401(k)s and the proliferation of financial advisers and products, nothing good can come of being uninformed about investing. The more you know, the more you can grow small contributions into a retirement kitty you can live off of. Break it into small bits and learn a little every month. Learning about mutual funds, stocks, taxes, portfolio management and the like will help you, at the very least, choose the right adviser. And it will also help you stretch your income after retirement.
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Old 01-14-2012, 03:38 PM   #15
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IMHO you should ask your questions on this forum.

So what is your husband's early retirement offer? Lump sum payment, annuity ?

Many on here will give you their opinions.

Then I'd simply open an account with Vanguard and either follow the advice on their website or you can get free personal advice form them if you deposit enough money. You could do far worse than just putting your money in Target Date fund.
+1, I'd ask here, at Bogleheads and Vanguard.
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Old 01-15-2012, 08:10 AM   #16
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+1, I'd ask here, at Bogleheads and Vanguard.
+1+ Almost any advisor will have conflicts. If they work on commission the conflicts will be obvious. If they are fee advisors they will want to permanently manage your portfolio for a large annual sum. In either case, they don't really have a good incentive to educate you because, once you understand what they are doing, you will go your own way.
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Old 01-16-2012, 08:13 AM   #17
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Fee only will cost you about 1.5% per year, on 1 mil thats $15K/year.
A broker will be less but if you listen to his advice it could cost you more than 15K in unknown fees or bad investments.

If you have little experience or confidence, I would try to do it yourself but arrange a mtg with a financial planner with CFP credentials who will charge by the hour (expect it to run about $300/hr) to double check what you are doing. If you are going to go this route, it would be in your best interest to have all your info readily at hand, spreadsheet of your investments, any insurance policies you have, etc so you don't waste time fishing for info.
TJ
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Old 01-16-2012, 09:21 AM   #18
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Fee only will cost you about 1.5% per year, on 1 mil thats $15K/year.
Actually, there are plenty of good advisers who charge half that, but TJ's point is valid.
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Old 01-16-2012, 09:49 AM   #19
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If they are fee advisors they will want to permanently manage your portfolio for a large annual sum. In either case, they don't really have a good incentive to educate you because, once you understand what they are doing, you will go your own way.

Excellent points Don. I'd also add that many advisors want you to fit into a cookie cutter situation where your account is treated the same as other clients of similar age and resources. While not necessarily a bad situation for the client, if the advisor is simply fast tracking you into one of their cookie cutter "categories" where a clerk handles a few simple rebalancing transactions per year, the imagined level of customized service may not really be there.
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Old 01-16-2012, 11:09 AM   #20
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One of my questions has always been: If I pay you a fee/commission and follow your advice, Will I make money or lose money?

If the answer is there is no guarantee of making money. WHAT GOOD IS
YOUR ADVICE.
So, financial planners control the markets, I never knew that! Tell you what, I'll hire you to manage my personal assets, and I want YOU to guarantee I will make money, ok?
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