Who has used a financial advisor?

[caninelover]

Hi,

I have a question for everyone...I'm wondering how many people on here have used a financial advisor to help with retirement planning, either during the accumulation phase or prior to FIRE-ing to come up with their plan for how to draw on the money? Or have you done everything on your own?

I'm trying to get a handle on how useful their services/advice would be compared to what I can do on my own with calculators like Firecalc...

Thanks in advance, and Happy Monday to everyone!

[My Dream]

I've used several financial advisors that were recomended by family, friends etc. I think it depends on the actual advisor since I haven't had much luck in this field. Bottom line for me was that all advisors never came through with what they projected. In other words the charts etc. are useless unless I actually receive the returns they are expecting. As for planning that's great and sound good but 5-10 years downt he road the returns were about 70 % less then projected therefore I threw there plans in the garbage. Sorry if you sence a bit of attitude but that isn't my intent.

Again do your research and if you do go with an advisor, I hope you find a good one.

[Walt34]

I did before retiring. The guy I went to retired from the same agency I did about ten years sooner so he was familiar with the retirement system. I just wanted to know if there was some unknown "gotcha" that I wasn't anticipating. Showed him the numbers we had and he said "Go for it, you're in great shape."

[ERD50]

The advisor I used once to was worse than useless.

He didn't really care if the numbers I gave him made sense, as long as he could plug a number in the spreadsheet so it could chunk out pages of colored charts, and friendly sounding advice.

A couple examples - he never asked what I would need to pay for health care in retirement, I listed no car loans, so that was the end of that - but how about the $ to replace those cars when needed?

-ERD50

[Rich_by_the_Bay]

Many advisors I've met have various boilerplate investment portfolios which they customize for you, similar to what happens in wills, estates, etc. Nothing wroing with that in my opinion. My main objection was cost, and when I learned that indexing sensibly gives as good a return on investment it became hard to justify having a third party involved all the time.

I tried it for a while, but as my confidence built up I gradually let him go. He wasn't adding value, though his advice seems sound to me, in retrospect. I'll probably make my share of mistakes, but nothing close to the 1.5% I paid for outside advice. I'd be delirious knowing I was paying 1.5% on investments which were doing -20%.

[FIREd]

I used a FA for a few years, but I realized that, for all I paid in fees and commissions, the FA added little or no value.

[Sarah in SC]

A fee only hourly planner can provide some peace of mind, a sort of checkup to what you are already doing, if you feel like that is helpful. There are a lot of folks far less investment savvy than this crowd, and they need a lot more hand holding.

One thing, be *absolutely* sure you know beyond a doubt how they get paid and what their qualifications are. Check out the CFP board of standards website to learn more about what to look for in a planner if you go that route.

If you have a trusted banker or accountant, their recommendation can go a lot further than your friend at church or whoever, who may not actually know how well their planner is advising them. I will say this: investment planning is 1/6th of what a good planner should be talking about with you. Asset allocation is important, but you should also be addressing estate planning, tax planning, insurance planning, and other long-term and short-term goals as well.

Never mistake a stockbroker or insurance shill for a real financial planner.

[Bestwifeever]

To me asking the people on this board about investment advisors is like asking a quilting club if you should send your fabric to someone else to make a quilt for you. I am sure there are great advisors out there for those who need them and Sarah's advice above about what to look for in a FA is spot on, but many of us here are happy with the way we make our own quilts .

OTOH I would not tell someone to never use a FA or that personal financial planning is easy--everyone has different goals and level of comfort with how to meet those goals.

[FinanceDude]

Quote:

Originally Posted by Bestwifeever To me asking the people on this board about investment advisors is like asking a quilting club if you should send your fabric to someone else to make a quilt for you. I am sure there are great advisors out there for those who need them and Sarah's advice above about what to look for in a FA is spot on, but many of us here are happy with the way we make our own quilts .

Quote:

OTOH I would not tell someone to never use a FA or that personal financial planning is easy--everyone has different goals and level of comfort with how to meet those goals.

Ok, you are FOR SURE on my X-mas card list.

[ERD50]

Quote:

Originally Posted by Bestwifeever To me asking the people on this board about investment advisors is like asking a quilting club if you should send your fabric to someone else to make a quilt for you. I am sure there are great advisors out there for those who need them and Sarah's advice above about what to look for in a FA is spot on, but many of us here are happy with the way we make our own quilts . OTOH I would not tell someone to never use a FA or that personal financial planning is easy--everyone has different goals and level of comfort with how to meet those goals.

While I agree in general, the catch-22 is, if you don't know the basics of financial planning, it is hard to tell if your FA is doing a good job or not.

If you know how to quilt, you can at least look at a quilt and tell if it is a quality piece or not. Then you can do the make/buy decision.

I just think the vast majority of personal financial planning is simple enough that by the time you have learned enough to tell a good FA from a mediocre one, you can do most of the planning yourself. At that point, maybe pay for a review just to make sure you are not missing some finer details, or hire one by the hour for specific needs as they arise. But I don't think that paying any x.xx% just to "manage" a portfolio makes sense for anyone willing to educate themselves a bit (and I mean a bit - basic AA and index fund knowledge).

-ERD50

[novaman]

When I bought my practice 20 years ago, the selling dentist gave me some very sound advice on this subject. He said that ultimately you need to watch out for your own portfolio, because if the advisor screws up, he/she will just shrug their shoulders and say "oh well"- but you will have lost your retirement.

So, while I have gone in to listen to the advisors at fidelity, I take what they say and lump it in with all the other advice I can glean from other sources and make my own decisions.

[youbet]

Back in the days of MegaCorp generous fringe benefits, I was provided with dollars I could use for a variety of services. I decided to go with financial planning.

DW and I were referred to a firm who had us fill out zillions of forms and questioraires and we were interviewed at length several times by several knowledgible folks. The output was a detailed analysis of where we were financially and some plans for going forward to reach FIRE. These were presented over several two hour sessions which included some instruction and Q and A time as well. Everything was also provided in written form. There was no selling whatsoever.

This occurred about 15 years ago and cost MegaCorp about $4k. I guess that would be close to $8k today.

I thought it was very worthwhile although, admittedly, if I had been paying for it I'm sure I would have cringed at the cost. (The other alternatives MegaCorp authorized using the money for weren't very interesting or useful to me.) It turned out DW and I were generally on track and our own plans were similar to those suggested. But it was a great confidence builder having someone else verify you're not headed into a huge mistake. And we leaned some new things as well.

15 years later, I still occasionally thumb through that report and note how things have progressed vs. the detailed analysis of our starting point and which recommendations we followed, which we didn't and how things worked out vs. projections.

[freebird5825]

Quote:

Originally Posted by Sarah in SC A fee only hourly planner...the CFP board of standards website to learn more about what to look for in a planner if you go that route. ...I will say this: investment planning is 1/6th of what a good planner should be talking about with you. Asset allocation is important, but you should also be addressing estate planning, tax planning, insurance planning, and other long-term and short-term goals as well.

I went through this "soup-to-nuts" exercise 7 years ago with a senior level CFP and his assistant, who now has her CFP. We had an upfront contract, with cost and deliverable products all in writing.
I delivered all the booklets about retirement, and a spreadsheet of my then fledgling portfolio data. We discussed goals, estate planning, insurance and risk factors, etc.
Best money I ever spent.

[CuppaJoe]

Happy Monday to you, Caninelover, a retiree’s favorite day.

A work friend became a stockbroker in 1972 and set up a meeting for three of us from work. She taught us about mutual funds, after a second meeting I started investing. I don’t regret the 5% load I paid for a couple of years because I don’t think I would have started on my own for many years; and I believe no-load funds were scarce or non-existent then. That got me interested enough that I started reading news stories about investing and devoured the fund’s financial statements. After a while I was skimming all the new DIY books.

I’ve enjoyed a couple of American Century all day info events but haven’t seen a convenient one in the last few years. Schwab would be very happy to give me a free consult; should I do it?

[Animorph]

I did something like youbet, but on my own nickel. I wanted a sanity check on my financial planning. He didn't come up with with a whole lot, but we did get our estate planning done. It was worth it just to know we weren't missing anything important, and I got to look like I knew what I was doing in front of DW. I think he didn't push us towards diversification as much as he should have, but I ended up getting out of all that company stock on my own anyway. It might be interesting to go back and look at the output we took home, but I doubt it has a whole lot of relevance now.

[SecondCor521]

I got a "plug in the numbers and get 20 pages of pretty looking graphs" thing from a NWML agent who was probably trying to sell me whole life at the time.

I dug into it and realized that I didn't like the assumptions that the report made. And there were errors in the data the guy entered. And it didn't really fit my life -- it was like an off-the-rack suit that hadn't been tailored. Finally, I couldn't look under the hood and see how the calculations were made. I'm sure as heck not going to trust someone else's spreadsheet for something like that without looking at all the calculations.

Since then, I've just gradually "rolled my own". I now have a totally customized spreadsheet that is tailored to me with all of my assumptions and quirky financial situation. Any mistakes are mine to live with. When the time gets closer I'll post the raw numbers and ask for feedback here.

2Cor521

[Nords]

Quote:

Originally Posted by caninelover I have a question for everyone...I'm wondering how many people on here have used a financial advisor to help with retirement planning, either during the accumulation phase or prior to FIRE-ing to come up with their plan for how to draw on the money? Or have you done everything on your own? I'm trying to get a handle on how useful their services/advice would be compared to what I can do on my own with calculators like Firecalc... Thanks in advance, and Happy Monday to everyone!

Most use advisors because they can't (or don't want to) do for themselves, or because they want a check on their logic/numbers.

I used an AXA "free consult" that had incredibly detailed checklists to fill out with all sorts of data. As I completed the exercise I realized that I hadn't missed anything. When I went in to chat about the next step they said they were upgrading their software for more powerful features. I decided that I'd done enough and wasn't going to pay for old software or wait for new.

Another advisor said over the phone "You sound like you know what you're doing. What about just living off 3-4% per year?"

Then there's John Greaney's perspective:
Is it Christian if you give more of your money to a financial advisor than to the Church?

[LOL!]

Well, if you are an FA, here's how to keep your clients:
What’s More Important? Client Retention or Academic Theory

[Dawg52]

I never paid for a FA but basically got similar information from our company outside 401k advisors. A firm that came in and made presentations to our employees about our 401k retirement plan. I built a good relationship with them and they basically reinforced the plan I had in place.

They hinted they would love to take stay in touch after I retired, but I knew it would not longer be 'free' at that point.

[W2R]

As Sarah in SC and others point out, it is VERY important to check out any potential financial advisor (see her post above). I have read so many stories about those who didn't bother, and regretted it.

NOBODY cares about your financial situation and whether or not you can safely retire, more than you do. Even if you have a financial advisor, I think that you still have the responsibility to learn as much about personal finance and investing as you can in order to double-check his advice. (You need to learn enough to verify and have confidence in FIRECalc's results too, as good as that software is.) In the process of learning enough to double-check a financial advisor, I have become a DIY'er and much more confident in my capability to steer my own ship, so to speak. I have never consulted a financial advisor, and at this point I doubt that I will ever need to do so.

Now, if I was a good friend of someone who just didn't have the mathematical aptitude and capability of ever double-checking a financial advisor, I would suggest that he/she do the following:

(1) take Sarah's steps in finding and checking out a good fee-only advisor.
(2) obtain personal recommendations from trusted friends and associates.
(3) perhaps pay for a session with each of the top two or three fee-only advisors determined by both steps (1) and (2), to see what they agree on and what they differ on.