The 4 biggest fears about firing your financial adviser

[Dtail]

Those fears sound reasonable to me. Mass media tells people investing is best left to experts. Those of us who know it can be done wisely without being a CFA have no loudspeaker to use to reach the masses (other than boards like this). I don't fault those who believe they need to pay AUM fees when they have no exposure to a DIY methodology (or are actually math-challenged, and I know a few smart people who I would urge to pay someone just to avoid a terrible math-based mistake).

On the issue of miscalculating raises, way back in the day when I was pretty new I was given a 3.5% raise but it was processed as 4.5%. I noticed the mistake in my first post-raise check. I told my manager who laughed and said I probably calculated wrong but he would have payroll check it. I was right. Although it cost me a few dollars a month for pointing it out, I was forevermore branded as a guy who was impeccably honest ("Can you believe what that guy did? Who does that? Nobody would have ever caught that.") which absolutely helped my career in the company far more than that few dollars would have helped my wallet.

I didn't know how far word had traveled in that 500-person company until one Saturday I was in the office catching up on some things when I got a call from the security desk. The CEO had called in from his weekend cabin 70 miles away, asked the security guy to look at the sign-in sheet and tell him who all was in the office on a Saturday. The CEO then asked for me. Wanted me to get the hidden key to his office, boot up his PC, and call him back. He gave me his password, told me to open a certain email and read him the phone number of the sender. When that was done the CEO said he had asked for me because he remembered hearing about my raise story and trusted me not to read other emails or poke around his office, then forget the password, and forget where the hidden key was. At that time I was just an employee with a supervisor who had a manager who had a director who had a VP and somehow the CEO knew my name.

Great post. Kudos to you.

 

[DrRoy]

+1 on OP's responses to the 4 fears.

 

[lauradrops]

It kills me to pay a FA, but pay I must. He is the safety barrier between my husband and the accounts. My husband needs to be talked down from every blip that happens that affects the market. That is too much work for me.

Essentially, our FA is my husband's therapist and well worth the money we pay him.

 

[tenant13]

I moved my cash from Marcus to Chase in order to get 2k Private Client Bonus. I had 5 years worth of expenses there that would have taken me all the way beyond 59.5 and close to 62. I had a plan of using that cash for ROTH conversion taxes. I'll re-evalute in November. If after a year and all the fees I'll end up with more than what Marcus would have paid, I'll consider it an interesting lesson. Private Client status doesn't hurt either.

So far I've learned that Chase makes everything both insanely complicated and opaque. There's so much activity in those managed accounts that I get a headache just looking at the statements. The fee/commission structure and disclosures are presented in such a way that I can't even figure out what and when I'm paying. I can see how most people when faced with this type of service would assume that it's a rocket science.
My advisor tries so hard to become my "friend" that it's laughable. He even called me to make sure "I'm fine" when there was one of those mass shootings not that far my home. And yes, there was a Xmas card.
At the time of moving the money to Chase I created two test portfolios on Morningstar that are the hypothetical alternatives to what Chase is doing. Something that took me 10 minutes. They are both doing better.
I'll stick to the original plan of staying with Chase for a year - I doubt I'll lose money - but given how much I dislike their way of running things I doubt I'll go beyond that. Unless they actually do better.

 

[HFWR]

I’ve never had one to fire, well, except me, and I’m FIRED!

 

[Perryinva]

Ding ding ding! Same here. I got me here, which is the only reason they even want me to sign with them. Now that the hard part is done, I should pay them for what?

 

[jazz4cash]

It kills me to pay a FA, but pay I must. He is the safety barrier between my husband and the accounts. My husband needs to be talked down from every blip that happens that affects the market. That is too much work for me.



Essentially, our FA is my husband's therapist and well worth the money we pay him.

Great point. Likewise a co-worker used Eddie Jones to manage his accounts because his spouse was convinced hiring a professional was better. He used to tell me it was OK to pay more fees and if the FA lost money, he could still look his wife in the eye. Also she was much younger so my co-worker expected she would outlive him. He used to ask me about stuff and I’d respond but also ask why he doesn’t ask his “guy”. His response was that his “guy” always made things overly complicated. I also have to say his “guy” was not overly aggressive about generating fees.

 

[jazz4cash]

It kills me to pay a FA, but pay I must. He is the safety barrier between my husband and the accounts. My husband needs to be talked down from every blip that happens that affects the market. That is too much work for me.



Essentially, our FA is my husband's therapist and well worth the money we pay him.

Great point. Sometimes the state of mind of a spouse or survivorship considerations can dictate a course of action. There are FA services out there that are more reasonable than others.

 

[ukwildcat]

A very good investment advisor is hard to find. If you find one, keep him or her.

 

[mtbikelover]

Very happy with our FA. Looking at our accounts tonight, I realized that they recommended a few stocks/funds that have had huge gains and they have more than covered our 1% fee.

I like that I can call them up and they handle all the Roth conversions, they do our taxes, they keep copies of all of our important documents (trusts, previous years taxes, etc), they manage my husbands company 401K, and they have taught my kids about saving and helped them open a Roth.

And, like someone else said, it makes my husband feel more comfortable to have someone else managing it as my husband is very very risk averse.

We have about $3M and 1/2 of that is subject to the 1% fee as we don't pay the fee on cash, on my 401k that is with fidelity, and my husbands insurance annuity that can't be moved for 2 more years. So we pay them about $15k a year. It's worth it to us.

Oh...and we get an amazing Harry and David basket at Christmas time

 

[CaliKid]

Very happy with our FA. Looking at our accounts tonight, I realized that they recommended a few stocks/funds that have had huge gains and they have more than covered our 1% fee.

I like that I can call them up and they handle all the Roth conversions, they do our taxes, they keep copies of all of our important documents (trusts, previous years taxes, etc), they manage my husbands company 401K, and they have taught my kids about saving and helped them open a Roth.

And, like someone else said, it makes my husband feel more comfortable to have someone else managing it as my husband is very very risk averse.

We have about $3M and 1/2 of that is subject to the 1% fee as we don't pay the fee on cash, on my 401k that is with fidelity, and my husbands insurance annuity that can't be moved for 2 more years. So we pay them about $15k a year. It's worth it to us.

Oh...and we get an amazing Harry and David basket at Christmas time

I have part of my money with an advisor such as you describe and I am perfectly happy with the arrangement. I don't get the Harry and David basket though so I need to talk to my guy!

 

[meleana]

We have a fee only advisor from the Garrett network. I do my own investing. The one thing that is hard for me is all these tax strategies- like Roth conversions and staying under a certain income to qualify for ACA coverage and capital gains and dividend income These are the things that I don't get and frankly, I want to enjoy life and not have to deal with all this complicated stuff.


Getting a CPA this year to do our taxes (I had always done them for the most part). Hoping he can assist with this stuff as well as I am tired of trying to understand it and spend so much time on it. Not getting any younger.

 

[May Ham]

Happy i did it all myself

There are 3 kinds of investors:
1) Those who don't know where the market is headed
2) Those that don't know that they don't know
3) The investment professional that knows that he doesn't know, but has to
appear to know.

It isn't that hard. Read and take your time you will be much more concerned with your money than someone who gets your 1% whether you
make money or not. Besides I would rather spend the $10,000 on myself than give it to FA. Stick to index funds. I prefer Vanguard because they are very low cost. Of course they also have low cost advisor to help if you prefer.

 

[Beachcomber]

You are going to the wrong "retirement seminars", the ones I go to are at Ruth's Chris Steak House and include fillet mignon and salmon.

The people offering the free meals refer to attendees as "plate lickers".

But if they sign up a small % who attend, it is very worthwhile for them.

 

[jdnd9091]

FA thoughts

I'm running my own accounts in my 401k and so far the returns seem decent, but I'm not sure what the market returns are in that span. I have a 40% one year, 20% three year, 13.5 five year & 11.68 ten year. I can't imagine paying an advisor would have done better than that. I was thinking of investing 225k with a FA this year, but not sure it is worth it.

 

[May Ham]

It would seem to me that your FA would have to get over $2250 above the market return to warrant paying them. I have doubled my money ( while still withdrawing small amount over past 16yrs ) and doubt an advisor would do more. Also if you are being charged for trades above that it really digs into your return. Buy and hold, rebalance is my motto. Works for me.

 

[blueskyk]

We have a fee only advisor from the Garrett network. I do my own investing. The one thing that is hard for me is all these tax strategies- like Roth conversions and staying under a certain income to qualify for ACA coverage and capital gains and dividend income These are the things that I don't get and frankly, I want to enjoy life and not have to deal with all this complicated stuff.

+1 We've had fee-only planners for decades and feel like we get a lot of value for our $500 spent about every 18 months. For less than $30 per month, the advice (and our execution of it) helped us reach our retirement goals. Our Starbucks expenditures were double this.