hiring an advisor

Eyerishgold

Eyerishgold

Recycles dryer sheets
Joined
Aug 14, 2007
Messages
224
How many people use a financial advisor or planner? Do you think there's any benefit to hiring professional help or should I continue to manage my investments myself?

Also, how do I make sure the person I hire is qualified and will have my best interest in mind when making a recommendation?
 
Check their resume and references. Speak with a few of their clients if they will let you. Make sure the financial planner really knows about planning and investing, not just selling you their own services. Also, speak with friends to find out who is using financial planners and get recommendations. Don't just pick from the phone book or use family friends who are new to the business.
 
I am a DIY guy. Although, my mutual fund company provides a financial plan on the cheap. I will get their opinion as a cross-check since it is part of the service and [-]cheap [/-]free.

Should you hire a fin planner or DIY?

My thoughts - If one does not understand how to work it, their best bet is to educate them self. One does not have to be a market wizard to use a good reliable portfolio management/investment approach (think MPT and asset allocation). For planning on retirement expenses, there are tons of books and calculators to help you project your income needs. The same applies to managing the retirement income when you retire. One bit of advice would be to not take inordinate risks and be patient.

IMHO - A financially planner is more likely to just siphon off extra money and lead to lower portfolio growth. Don't get the impression that you are going to get the one or two fin plan wizards that exist. You are more likely to get mediocre or poor. Plus, they will exercise some cookie cutter plan and read the basic advice to you from a cheat sheet.


However, if you are unwilling to educate yourself and do not know how to manage it, professional help is likely to make sense. Just be careful picking the planner.

Good luck. :)
 
I use a FA. I started out by paying for an assessment. It cost me $700 for 1 years worth of advice in addition to the initial assessment. Then I went to a 'commission' plan, where I paid by the transaction. He told me the exact cost per transaction. Since I was not going to churn myself and I was 'savy' enough to take or reject his advice as it benefited me, I kept costs to a minimum. The premium for year 2+_ was probably less than $1000 per year average. Our relationship is starting to change and I am not doing a whole lot of buying and selling. I do meet and discuss my portfolio about 3 times a year (3 or so hours per session). We have agreed to pay a fixed fee for yearly advice of $1000.

Why do I want his advice? While I can do research and do analysis by myself, I have found that I want to do this less and less. Also I am not as 'expert' in fixed income assets and he has been very valuable in helping me set that up. I find that he also is a good sounding board (sort of a 2nd opinion) for ideas and plans I consider. With a net worth of over $2M, I think that $1000 (1/2 of 1 percent if my math is correct) is money well spent. I will look at our relationship each year to see if I am still getting value. When I stop receiving value, I will cut the cord.
 
megacorp-firee said:
I use a FA. I started out by paying for an assessment. It cost me $700 for 1 years worth of advice in addition to the initial assessment. Then I went to a 'commission' plan, where I paid by the transaction. He told me the exact cost per transaction. Since I was not going to churn myself and I was 'savy' enough to take or reject his advice as it benefited me, I kept costs to a minimum. The premium for year 2+_ was probably less than $1000 per year average. Our relationship is starting to change and I am not doing a whole lot of buying and selling. I do meet and discuss my portfolio about 3 times a year (3 or so hours per session). We have agreed to pay a fixed fee for yearly advice of $1000.

Why do I want his advice? While I can do research and do analysis by myself, I have found that I want to do this less and less. Also I am not as 'expert' in fixed income assets and he has been very valuable in helping me set that up. I find that he also is a good sounding board (sort of a 2nd opinion) for ideas and plans I consider. With a net worth of over $2M, I think that $1000 (1/2 of 1 percent if my math is correct) is money well spent. I will look at our relationship each year to see if I am still getting value. When I stop receiving value, I will cut the cord.
Click to expand...

That's actually 1/10th of 1%, which is very low. You are lucky to find a guy willing to do that, but perhaps it is because you don't need a lot of help. Vanguard would charge .50% on $2 million, so you are getting quite a bargain.
 
CourtneyC said:
Speak with a few of their clients if they will let you.
.
Click to expand...

That always sounds good, but I wonder if it is of any real value.

If their clients are largely clueless about financial matters (like most people are, and one reason you might go to an FA), then what do they base their opinion on?

They might be able to tell you the guy/gal was a jerk, condescending, rude, or that they seemed nice, listened attentively, and dressed sharp - but what could they tell you about their qualifications to manage their money with an approriate risk profile, etc, etc, etc? Very little, I suspect.

-ERD50
 
ERD50 said:
That always sounds good, but I wonder if it is of any real value.

If their clients are largely clueless about financial matters (like most people are, and one reason you might go to an FA), then what do they base their opinion on?

They might be able to tell you the guy/gal was a jerk, condescending, rude, or that they seemed nice, listened attentively, and dressed sharp - but what could they tell you about their qualifications to manage their money with an approriate risk profile, etc, etc, etc? Very little, I suspect.

-ERD50
Click to expand...

Not much value, and here's why. He/she will give you the clients that LOVE him the most.........:D
 
Ask them for a list of the typical funds they recommend in various asset classes. This will tell you a lot. What are there favorites?

Don't let them say no to this - we found our previous advsior picked all great funds, but when we moved to Fidelity, they recommended TERRIBLE funds for about 30%. Stuff no one here would ever buy.
 
Callie said:
Ask them for a list of the typical funds they recommend in various asset classes. This will tell you a lot. What are there favorites?

Don't let them say no to this - we found our previous advisor picked all great funds, but when we moved to Fidelity, they recommended TERRIBLE funds for about 30%. Stuff no one here would ever buy.
Click to expand...

Terrible past performance right?

I have the opposite outlook don't trust an advisor that picks all 5 star funds. You can run the same screen they are and pick what has done well lately, in other words chase performance. But you probably won't like the results.
 
FinanceDude said:
That's actually 1/10th of 1%, which is very low. You are lucky to find a guy willing to do that, but perhaps it is because you don't need a lot of help.
Click to expand...
hmmmm now you see why I need help :D.
Yes, in our discussions, he has said that I don't need a lot of hand holding ... he just brings me suggestions on where to park my money for income ... and gives me an overall review once a year to make sure I am still on track. I keep wondering if I need his assistance... and I find that for the price, it gives me a 2nd opinion and helps me sleep at night. ... thanks for confirmation
 
ERD50 said:
That always sounds good, but I wonder if it is of any real value.

If their clients are largely clueless about financial matters (like most people are, and one reason you might go to an FA), then what do they base their opinion on?

They might be able to tell you the guy/gal was a jerk, condescending, rude, or that they seemed nice, listened attentively, and dressed sharp - but what could they tell you about their qualifications to manage their money with an approriate risk profile, etc, etc, etc? Very little, I suspect.

-ERD50
Click to expand...
Great points. I have friends and relatives that use a particular FA because they like him personally. IMO they sometimes get some questionable advice... but hey the guy is 'really nice'. Interesting way to choose a FA ...
what was that old mo-town song? ... smiling faces ...
 
Is anybody familiar with Evanson Asset management?

The supposedly will manage any size portfolio ($1M minimum) for a flat fee of $2000/year.
 
Corporateburnout said:
Is anybody familiar with Evanson Asset management?

The supposedly will manage any size portfolio ($1M minimum) for a flat fee of $2000/year.
Click to expand...

I am

They are a good firm. You will get access to DFA funds, get asset allocations, and thats it. No handholding to be found.
 
Eyerishgold said:
How many people use a financial advisor or planner? Do you think there's any benefit to hiring professional help or should I continue to manage my investments myself?

Also, how do I make sure the person I hire is qualified and will have my best interest in mind when making a recommendation?
Click to expand...

Continue to do it yourself. Continue reading and learning. A "professional" is not interested in your well being but their own.
 
What about fee-only (not fee based) advisors, who are not commissioned and receive no kick-backs? Less than 2% of advisors fall into this category. There is a national organization of fee-based advisors that has a very strict code of ethics. They usually work flat fee or as a percentage of your portfolio (which, if you think about it, makes it in their best interest to give you good advice because they will only increase their income if you do well, not if you trade often or buy commisioned items).

Thoughts about this?
 
missionfinder said:
What about fee-only (not fee based) advisors, who are not commissioned and receive no kick-backs? Less than 2% of advisors fall into this category. There is a national organization of fee-based advisors that has a very strict code of ethics.
Click to expand...
See my post above. Essentially my guy (for me) is a fee-only advisor. Yes, he probably gets a coupla bucks from the commission on each transaction (or maybe not, since he now has converted my account to 'electronic' and I buy and sell by myself at lower commissions than before, (with suggestions from him)). Since I do so few each year (buy and hold and 'eat the interest and dividends), that is a rounding error. For other clients I believe he fee based and others he is 'on commission'. I think this guy is smarter than your average bear and is adding to his client list however he can. If you can find someone who does this for a 'reasonable' fee, then I would go with him. But you have to do your homework and be knowledgeable enough to know if he is 'good' or just a good salesman. Keep reading stuff on this board.

missionfinder said:
They usually work flat fee or as a percentage of your portfolio (which, if you think about it, makes it in their best interest to give you good advice because they will only increase their income if you do well, not if you trade often or buy commisioned items).
Click to expand...
I am not sure that they look further than the meal set in front of them .
 
missionfinder said:
What about fee-only (not fee based) advisors, who are not commissioned and receive no kick-backs?
Click to expand...

I am a rabid do it yourselfer. I will concede there are places "experts" and/or "professionals" can add value. Your wills/POA/living wills should go through an attorney. If you have $2-5MM you should consider an estate attorney. Over $5MM, I think it's a necessity. If you have complicated taxes, you might need a CPA; but if you do, you'd be better off simplifying your life so the standard tax software works for you.

As for investing, this is another place where you can save a few grand by educating yourself. No FA is going to get you into those "winner" stocks and get you a safe 2X or 3X market returns (without losses). If he could he'd be managing a mega pension fund and wouldn't even be available to you. But, the big pension funds don't have these super stars either because they don't exist. Pension funds and endowments are primarily driven by asset allocation. Their size makes them able to operate with very low costs when measured as a % of assets.

If your life is complicated, a FA can help you with questions about how much and what kind of insurance to have. The FA can also be the "bad guy" if you happen to be managing a trust for an unruly, ungrateful mob.

However, most of us mortals can have simple lives. Our insurance needs are straightforward and life planning can really be done successfully after reading a few personal finance books.

So, in summary, my answer is NO, NO, NO......
 
megacorp-firee said:
See my post above. Essentially my guy (for me) is a fee-only advisor. Yes, he probably gets a coupla bucks from the commission on each transaction (or maybe not, since he now has converted my account to 'electronic' and I buy and sell by myself at lower commissions than before, (with suggestions from him)).
Click to expand...

Then he would not be a fee-only advisor. He would be fee based. Fee only advisors belong to a group that has a strict code of ethics and commissions are not allowed. Ask for your guy to put in writing that he is fee only not fee based. You'll find out if he's scamming you about his fees or not.

Home Page - NAPFA - The National Association of Personal Financial Advisors
 
missionfinder said:
Then he would not be a fee-only advisor. He would be fee based. Fee only advisors belong to a group that has a strict code of ethics and commissions are not allowed. Ask for your guy to put in writing that he is fee only not fee based. You'll find out if he's scamming you about his fees or not.

Home Page - NAPFA - The National Association of Personal Financial Advisors
Click to expand...
I think you're missing my point. He IS an Ameriprise associated FA. He is interesting in that he does not 'tout' Ameriprise recommended products (to me). He has the flexibility to get 'paid' in various ways. For all intents and purposes he ACTS like a fee-only advisor to me. He is even doing an analysis of ETFs vs. Vanguard MFs for me. He charges me a flat fee per year for consultation. So for ME, he is a fee-only advisor ... yes I agree, he does not 'belong to the club' and is not certified or whatever they have.
He never represented himself as a fee-only advisor. I think he thnks that he might lose me as a customer if he pushed his products, so we mutually agreed that we would go to this yearly fee. So a grand a year is enough for him to spend time helping me ... and I will continue to do this until I see no value. My goal is to pay attention to this LESS in retirement, not more. Others on this board do this as a hobby, which is great. I choose not to.
 
Corporateburnout - I am familiar with Evanson. The fees stated on the website are true. In essence, you are paying by the hour for service because you pay the same fee for $1 million as you do for $10 million.

I wanted access to DFA funds and I believe this is a cost effective way to do it. Send an email through their website. Dr. Evanson will call you personally to discuss what Evanson does and whether it's a fit for you. He provided me a list of 11 potential references and I contacted two (one MD and one PhD in Mathematics) who had been with Evanson for about 9 years. Both provided strong recommendations. The MD said Evanson had saved him enough money in fees to send his kids to college.
 
Seems to me that there is a difference between a planner and an adviser. A planner may help with AA, insurance needs, estate/tax planning etc. An advisor tells you where (as in what stocks/MF/FI/) s/he thinks your money should go.

I might be willing to pay a planner but not an advisor.
 
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