Poll: Do You Use A Financial Advisor? Definitions in post #1.

[rayvt]

Quote:

Originally Posted by Tree-dweller I hired a FA when I was ready to pull the trigger just to get an independent confirmation that I wasn't nuts and I could pull this off. Other than that, no. Have been self-directed.

So did we. Two, in fact, because we wanted more than one opinion.

The sweetest words we heard were, "You seem to be doing great. What do you need me for?"

[ERD50]

Quote:

Originally Posted by rayvt The sweetest words we heard were, "You seem to be doing great. What do you need me for?"

I also heard "You are doing great, you can retire" from an FA (company paid for it through some benefit plan that was at a use-it-or-lose-it stage, so I used it).

Trouble was, when I looked back at it years later, I realized their analysis was totally amateurish. They just went by current expenses, they didn't ask about future HC costs, and since our cars were paid for we had (magically) no car expenses! And so forth. Garbage.

Now, maybe your FAs were much better, but I go back to my point that unless one knows enough about this, they really can't trust the 'sweet words' from an FA. And again, once you have the knowledge to asses the advisor (and that does not take much knowledge), you probably are better off w/o one.

-ERD50

[jeffmete]

What's weird to me is over 30 years, I put all the savings together to be able to retire (no pension) and as soon as I'm about to retire, I get all these financial advisors ready to tell me what to do with my money? Nobody cared when I had $5K in savings! I guess I'm pretty conservative as I don't invest in any individual stocks, only mutal funds.

[rayvt]

Quote:

Now, maybe your FAs were much better, but I go back to my point that unless one knows enough about this, they really can't trust the 'sweet words' from an FA. And again, once you have the knowledge to asses the advisor (and that does not take much knowledge), you probably are better off w/o one.

Yeah, unless you have the knowledge, it's a Catch-22.

But in our case, we weren't looking for the FA to tell us we were ok. We were looking to see it we had noeglected something important.

We were looking for them to say, "Hey, you screwed up! You should have X but you only have Y."

[Midpack]

Quote:

Originally Posted by ERD50 I go back to my point that unless one knows enough about this, they really can't trust the 'sweet words' from an FA. And again, once you have the knowledge to asses the advisor (and that does not take much knowledge), you probably are better off w/o one.

Quote:

Originally Posted by rayvt Yeah, unless you have the knowledge, it's a Catch-22.

I agree you're better off without one IF you are truly able to DIY, but we realize most people aren't capable, interested or both. For them, they stand a good chance of getting fleeced if they pick one on their own based on an FA's well practiced sales pitch complete with scare tactics and faux complexity. Hopefully any non-DIY investor has a capable family member or close friend, DIY or with a long standing track record with a good FA, to help with FA selection. Otherwise it is a Catch 22 that may end badly more often than not.

[ERD50]

Quote:

Originally Posted by rayvt Yeah, unless you have the knowledge, it's a Catch-22. But in our case, we weren't looking for the FA to tell us we were ok. We were looking to see it we had noeglected something important. We were looking for them to say, "Hey, you screwed up! You should have X but you only have Y."

OK, I can clearly see the value as a double-check to see if you missed something. Makes sense.

-ERD50

[FinanceDude]

Quote:

Originally Posted by Sarah in SC She did spell really well, though. And the info is accurate, more or less, but just not all that relevant to folks who by and large aren't in the same specific boat as her. Nice recap, Nords.

Well, a back office person typically is insulated from many things, so her advice was "ok". The CFP is a great certification but it does not guarantee you a great advisor. Some firms like Ameriprise make it pretty much mandatory yet we know how many of those relationships have turned out for people on this board...........

[kcowan]

Quote:

Originally Posted by ERD50 Trouble was, when I looked back at it years later, I realized their analysis was totally amateurish. They just went by current expenses, they didn't ask about future HC costs, and since our cars were paid for we had (magically) no car expenses! And so forth. Garbage...

Yes I think many people can use a financial planner to help them create a financial plan. That means forecasting future expenses. Once the plan has been created, it only needs to be revisited when any of the assumptions change!

[vinoperson]

I guess I'll buck the trend on this one. For some time now I've used a fee-only (0.75%) FA/CFP who has done quite well with our portfolio; on the whole, better than I did before. He explains his recommendations and let's me do the choosing. I guess like in many other generalizations, there are exceptions.

[Texas Proud]

Quote:

Originally Posted by vinoperson I guess I'll buck the trend on this one. For some time now I've used a fee-only (0.75%) FA/CFP who has done quite well with our portfolio; on the whole, better than I did before. He explains his recommendations and let's me do the choosing. I guess like in many other generalizations, there are exceptions.

I guess if you get what you consider value for your money.... great....

But do you realize how much you are paying him If you have a portfolio of $1,000,000, then it is $7,500 per year... would you feel that he is giving that amount of benefit?

You might have been doing a lot of things that people say not to do... like chasing yield, the best fund etc. etc.... but doing a couch potato or similar might get you better than the FA can do after figuring his fee...

[ERD50]

Quote:

Originally Posted by vinoperson I guess I'll buck the trend on this one. For some time now I've used a fee-only (0.75%) FA/CFP who has done quite well with our portfolio; on the whole, better than I did before. He explains his recommendations and let's me do the choosing. I guess like in many other generalizations, there are exceptions.

How have you determined that he has 'done quite well with our portfolio'?

Doing 'better than you did before' isn't a very good yardstick - a better yardstick would be 'how you could do with a couch potato style portfolio (or something similar)'.

-ERD50

[vinoperson]

Quote:

Originally Posted by Texas Proud I guess if you get what you consider value for your money.... great.... But do you realize how much you are paying him If you have a portfolio of $1,000,000, then it is $7,500 per year... would you feel that he is giving that amount of benefit? You might have been doing a lot of things that people say not to do... like chasing yield, the best fund etc. etc.... but doing a couch potato or similar might get you better than the FA can do after figuring his fee...

Valid point. I've always been fairly conservative with the part of our porfolio that the FA assists us with. On the whole over time, he's done as well as or better than the passive mutual fund benchmark in each category. When I factor in his commission, it's just about a wash. But I have learned a lot from him, which has proved useful in my managing the rest of our portfolio. I can only say from my experience that a good FA...like a good administrator or a good teacher...may be worth it at times, assuming that you do your homework before choosing one (caveat emptor )