Consultation from a CFP

T

Toddtheformeraccountant

Recycles dryer sheets
Joined
Jul 23, 2017
Messages
99
Location
Southern California Area
So I sent this email to a local CFP advertised through one of the reputable FIRE related writers out there (I won't name names):

"Hello there, saw you through the xxxxx web site.

I'm planning on retiring early next year (at 54). I'm a CPA fluent in
finance, having been in corporate finance for the last 30 years
or so, and I've been avidly following the FI/RE community and theory out
there of Kitces, Wade Pfau, et all and have learned a ton from doing so.
I've prepared my own model and also used various monte carlo and
historical projections...so I'm 99% sure I'm in great shape. I kind of
follow the boglehead way...indexing with a few ETF's, 50/50
equities/fixed income allocation. About $8.5M net worth (of which $2.3M
is in 401K/IRA's/HSA/DAF), about $9.7M including home (fully paid for).
Probably $150K/year in living expenses (excluding taxes) for my wife and
I upon retirement. Last kid going off to college this year, other two
already finished college.

I don't think I'd be interested in a comprehensive ongoing level of
service or portfolio management, just the ability to consult on a fee
basis as necessary, starting first by talking through our financial plan
I have developed/built, for an hour or two and see if there are any
holes or aspects or optimizations I have not considered from a financial
estimation, asset allocation, tax, and estate planning standpoint.

No worries if you don't do that kind of limited level of services....if
you do, how would I go about that, if that's not something you do, could
you recommend someone?"


And I got this response:

"Dear Mr. xxxx,

Sounds as though you have accumulated considerable financial assets. Are you fully funded, we do not know. Are you protected against all risks in retirement, we do not know. The field of longevity income planning is a very specialized field. You need to really understand that you are in the process of decline in four major areas, financially, physically, cognitively and socially. Are you prepared?

We have included a white paper for you to read so you can begin your research as you can try to do it on your own. We only work on a monthly retainer and we do not refer because most financial planners do not give advice and definitely are not strategic. Good Luck on your search."

So basically, these guys aren't interested unless they can get a regular source of revenue from me. Not criticizing, if that's their business model and it works for them, more power to 'em. Smart guys apparently.

The white paper they sent was pretty basic, and nothing I didn't know already.

I know the obvious action step is to check with other CFP's...but I'm wondering..which of you have gone ahead and gotten a consultation, and seen any real value from it? What kind of CFP/Planner did you go to? Anybody else in the LA area and have a person to recommend?

Thank you.
 
FWIW, several years ago I tried to do something similar. I looked up about a dozen of them in my area from the NAPFA website, but every single one wanted that ongoing relationship, and most wanted to charge a percent of assets under management although they disguised that requirement in a number of ways. One of them even demanded a percent of my total net worth, regardless of how much they managed.

I gave up and went back to simple DIY.
 
I'm at a very similar age and situation as you are. I have written basically the same introductory email to some planners. So far I've found 3 types of planners:

1. Those that "push product" like annuities using scare tactics "the market has gone up for 10 years... you need 'downside protection'". They like to drop names like Dave Ramsey or the local semi-celebrities. Part of their steak-dinner pitch is to ask if anyone ever read a mutual fund prospectus and then mocking those who say yes. I feel sorry for people drawn to that kind of planner.

2. I found one that was fee-based, affiliated with Kitces' "XY Planning Network" mentioned on a podcast. Our introductory talk was promising but I sensed that he already had all the business he could handle (most of it being AUM customers). He promised to get back to me with a quote/proposal but it's been a month. I don't expect to hear from him at this point.

3. Another eager planner that a friend referred to me after sensing a possible connection with my personality and investment style. And indeed, we had a really great first meeting. I explained what I do and how I do it, and he was truly interested. For our next meeting, he's going to demonstrate what he might do for me. I envision a fee-only advice relationship exactly like what you wrote about. Maybe meeting quarterly for my first year or two of retirement, and perhaps less often after that.

Keep looking. You'll find what you need but it will take some time.
 
Toddtheaccountant said:
So I sent this email to a local CFP advertised through one of the reputable FIRE related writers out there (I won't name names):

"Hello there, saw you through the xxxxx web site.

I'm planning on retiring early next year (at 54). I'm a CPA fluent in
finance, having been in corporate finance for the last 30 years
or so, and I've been avidly following the FI/RE community and theory out
there of Kitces, Wade Pfau, et all and have learned a ton from doing so.
I've prepared my own model and also used various monte carlo and
historical projections...so I'm 99% sure I'm in great shape. I kind of
follow the boglehead way...indexing with a few ETF's, 50/50
equities/fixed income allocation. About $8.5M net worth (of which $2.3M
is in 401K/IRA's/HSA/DAF), about $9.7M including home (fully paid for).
Probably $150K/year in living expenses (excluding taxes) for my wife and
I upon retirement. Last kid going off to college this year, other two
already finished college.

I don't think I'd be interested in a comprehensive ongoing level of
service or portfolio management, just the ability to consult on a fee
basis as necessary, starting first by talking through our financial plan
I have developed/built, for an hour or two and see if there are any
holes or aspects or optimizations I have not considered from a financial
estimation, asset allocation, tax, and estate planning standpoint.

No worries if you don't do that kind of limited level of services....if
you do, how would I go about that, if that's not something you do, could
you recommend someone?"


And I got this response:

"Dear Mr. xxxx,

Sounds as though you have accumulated considerable financial assets. Are you fully funded, we do not know. Are you protected against all risks in retirement, we do not know. The field of longevity income planning is a very specialized field. You need to really understand that you are in the process of decline in four major areas, financially, physically, cognitively and socially. Are you prepared?

We have included a white paper for you to read so you can begin your research as you can try to do it on your own. We only work on a monthly retainer and we do not refer because most financial planners do not give advice and definitely are not strategic. Good Luck on your search."

So basically, these guys aren't interested unless they can get a regular source of revenue from me. Not criticizing, if that's their business model and it works for them, more power to 'em. Smart guys apparently.

The white paper they sent was pretty basic, and nothing I didn't know already.

I know the obvious action step is to check with other CFP's...but I'm wondering..which of you have gone ahead and gotten a consultation, and seen any real value from it? What kind of CFP/Planner did you go to? Anybody else in the LA area and have a person to recommend?

Thank you.
Click to expand...

IMO, this is a waste of time for you, as it would have been for me if I were similarly curious. I wasn't. I decided to DIY years ago and set on a path to knowledge and confidence building through experiences encountered and time-in-seat.

You know as much or more about how to earn, save, invest and manage risk as he/his team do, I pretty much assure you, their shiny credentials notwithstanding.

You've made it. You did it yourself and in fact have the credentials too, just earned it a different way. Oh yeah, and you are RICH too and have set yourselves up for a FatFIRE life (and multi-generational legacy if you so choose) if you keep on it! Well done!
 
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I left engineering and took a stab at financial planning, the posts here echo what I witnessed.

There are 3 types of "planners"-
1) Ones that get paid by transaction (brokers/insurance)
2) Fee based- likely charge a % of assets, but can also collect fees from products (insurance, 12b1, other)
3) Fee only- only people which pay them are the client, no 3rd party compensation (about 1% of planners are fee only).

Within Fee only, there are about 3-5 different models
1) paid as % assets under management
2) fixed fee arrangement per year
3) paid as % of net worth
4) fixed fee+ % assets
5) Hourly rate (would need to be about $400/hr I think)

Unless the one time fee being paid is about $10,000, the hourly rate for a $2000 plan would be low- meaning it would take about 5 hours of prep time for a meeting, so a $2000 one time fee is $40 per hour- I don't work for that cheap as a planner or engineer.
 
I've always wondered about this. The advice here to use an hourly fee based planner sounds good, over one that charges for AUM. But if you're a good planner, working hard to educate yourself and do your research and have a good name and lots of referrals, do you really want irregular hourly clients, or do you want a regular steady client base? Are the less successful planners that can't hold a client base the ones that go hourly? What would you do if you were a financial planner?
 
It's simple economics... I'm guessing that most of the CFPs are busy enough... a low$, one-time fee is a waste of time when there are a plethora of ongoing relationship opportunities out there for the taking.
 
Interested to hear the responses. We’re in Southern CA as well and looking for a similar experience. Went through a planning process with our Vanguard rep and their tax calculations were triple mine, so now I’d like someone to dig in to my model and make sure I’m not missing anything. I’ve had zero luck finding anyone that would be willing to work on a fee basis.

FWIW, given your net worth and withdrawal rate, it sounds like you’re in great shape! Our net worth is similar, with more in housing, and we’re looking at a much higher withdrawal rate! But not RE yet :)
 
I thought I could get the basic advice I needed from people in the offices of my brokers (Schwab, Etrade, Fidelity). "Look at my plan and tell me what I'm missing" kind of advice. None had any interest in doing that.
 
Like many on this board, the OP knows more about financial planning than 99.9% of the general population, and probably more than the majority of "financial planners". People like us are so rare that accomodating us is a losing business model for a CFP.
 
Toddtheaccountant said:
So I sent this email to a local CFP advertised through one of the reputable FIRE related writers out there (I won't name names):

"Hello there, saw you through the xxxxx web site.

I'm planning on retiring early next year (at 54). I'm a CPA fluent in
finance, having been in corporate finance for the last 30 years
or so, and I've been avidly following the FI/RE community and theory out
there of Kitces, Wade Pfau, et all and have learned a ton from doing so.
I've prepared my own model and also used various monte carlo and
historical projections...so I'm 99% sure I'm in great shape. I kind of
follow the boglehead way...indexing with a few ETF's, 50/50
equities/fixed income allocation. About $8.5M net worth (of which $2.3M
is in 401K/IRA's/HSA/DAF), about $9.7M including home (fully paid for).
Probably $150K/year in living expenses (excluding taxes) for my wife and
I upon retirement. Last kid going off to college this year, other two
already finished college.

I don't think I'd be interested in a comprehensive ongoing level of
service or portfolio management, just the ability to consult on a fee
basis as necessary, starting first by talking through our financial plan
I have developed/built, for an hour or two and see if there are any
holes or aspects or optimizations I have not considered from a financial
estimation, asset allocation, tax, and estate planning standpoint.

No worries if you don't do that kind of limited level of services....if
you do, how would I go about that, if that's not something you do, could
you recommend someone?"


And I got this response:

"Dear Mr. xxxx,

Sounds as though you have accumulated considerable financial assets. Are you fully funded, we do not know. Are you protected against all risks in retirement, we do not know. The field of longevity income planning is a very specialized field. You need to really understand that you are in the process of decline in four major areas, financially, physically, cognitively and socially. Are you prepared?

We have included a white paper for you to read so you can begin your research as you can try to do it on your own. We only work on a monthly retainer and we do not refer because most financial planners do not give advice and definitely are not strategic. Good Luck on your search."

So basically, these guys aren't interested unless they can get a regular source of revenue from me. Not criticizing, if that's their business model and it works for them, more power to 'em. Smart guys apparently.

The white paper they sent was pretty basic, and nothing I didn't know already.

I know the obvious action step is to check with other CFP's...but I'm wondering..which of you have gone ahead and gotten a consultation, and seen any real value from it? What kind of CFP/Planner did you go to? Anybody else in the LA area and have a person to recommend?

Thank you.
Click to expand...

At least they were straight with you up front and told you they don't do what you're looking for, rather than telling you to come by and talk about it and then try sales tactics to get you to sign with them.

Maybe set up a consultation with an estate planning attorney, and then get their recommendations from there. I'd imagine in their business, they'd have a good network (or at least know) of CFPs, estate planners, etc.
 
Take a few finance classes for free at the local community college or university. Who needs a CFP? These classes are available to all ages. They give you the information (although I've gotten the finer points from this forum) to understand basic finance and investing. And the threads on this forum have helped in understanding the tax implications and withdrawal strategies.
 
I agree with others here...you are in great shape and I don't think the services of a CFP would be of any use to you. If you are getting the weekly FP emails/reading assignments from Kitces and are diligent in your studies, then I am about 98% certain that your knowledge of the industry is higher than most CFPs.

No one has mentioned, but you highlighted an issue that I have with many of the FIRE blogs. They *love* to recommend services (you know...it's not for the money, it's to just help everyone else out) but I feel many of these services aren't any better than what you would find on your own. I could go on and on about this, but don't want to detract from the OP's thread.
 
I'm available to listen to y'all for an hour or two.
Of course I will just reflect back what you say, and tell you it's ok.

Here's a simple idea. Put your IPS and the barest finance details (as in your post) in a Google Doc. Send the link privately and ask for comments. I was in a doc like that yesterday, started by someone on Bogleheads...
 
Toddtheaccountant said:
... Smart guys apparently. ...
Click to expand...
I'm not so sure.

Case for Dumb: You have quite a pile of assets and are looking for advice. Smart guys would have used this information to coax you into an office visit, hoping that they could successfully pitch you to sign up for services. Instead, they just blow you off.

Case for Smart: They realize that you know far more than they do and probably are running significantly more money than their average client. So it is better to blow you off than to waste time pitching you. "Better to remain silent and be thought a fool than to speak and to remove all doubt."

Either way, I think they did you a favor. And BTW I am with the others who say that you probably don't need this kind of hit-and-run help anyway.

If you have not done as much reading as you can stand, you might want to consider these authors: Any recent book(s) by William Bernstein, "Your Money and Your Brain" by Jason Zweig, "Fooled by Randomness" and "The Black Swan" by Nassim Taleb (though he can be a bit of a nut at times), "All About Asset Allocation" by Richard Ferri, "The Intelligent Investor" by Ben Graham (latest edition with Zweig's comments).
 
How does one go about getting the knowledge needed? I wouldn't mind paying for someone on a fee basis as well - to ensure i'm not overlooking things as well as understanding more for estate planning, etc.

I have looked at possibly taking some of the individual courses online that are requirements for CFP, as an option. I have not found anything at local community colleges.
 
We received a free analysis from a CFP through the 457 plan in which I'm enrolled. It wasn't a hugely sophisticated analysis, but we're not dealing in OP's numbers, either. The CFP did provide two long-term scenarios for Roth conversions and no Roth conversions, which was helpful. OP, it sounds like your situation could be more about estate planning and tax management, since you obviously know how to grow your money. Maybe a lawyer skilled in those areas would be more helpful.
 
Interesting post. I am a CFP, and wondered if I might do something like this when I retire. I will not want to manage assets or refer anyone, and I won't want ongoing relationships. A one time analysis for a fee is something I would enjoy and could do on my time schedule. Glad to hear someone is looking for this.
 
ugeauxgirl said:
Interesting post. I am a CFP, and wondered if I might do something like this when I retire. I will not want to manage assets or refer anyone, and I won't want ongoing relationships. A one time analysis for a fee is something I would enjoy and could do on my time schedule. Glad to hear someone is looking for this.
Click to expand...

I would think that this would be a great way to make a little $ on the side. Some areas of law are slowly moving this way with what is called limited scope representation. Basically, it's helping out people with smaller tasks, but not giving them the whole enchilada. The idea is to offer some limited legal services to those who normally couldn't afford full on representation.

So, I could see that a CFP that offers a one time consultation for say, $500 would have great value to the CFP and the client.

Out of curiosity, is a CFP subject to malpractice claims? I ask because malpractice insurance for an attorney can be very, VERY expensive, especially for coverage that extends for YEARS after the representation has ended. This alone has kept me from doing any kind of legal w*rk for pay. It's just not worth the risk for the small amount of $ I might make.
 
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I don't know. I'm still working and corporate does all that now. That's one of the things I'd have to research. Im sure I'd have to have standard contract drawn up, rent/buy software etc. Sounds like a lot of trouble.
 
LarryMelman said:
I thought I could get the basic advice I needed from people in the offices of my brokers (Schwab, Etrade, Fidelity). "Look at my plan and tell me what I'm missing" kind of advice. None had any interest in doing that.
Click to expand...
I did get plenty of insight from Schwab. But not from those who were there a LONG time. Those were rather curt and suggested fee based or sales. I love the newbies. Those who just got their CFP or working on it but they seem to be transferred to a larger branch once seasoned. Thinking of following one from WC to the Oakland Branch (Stillwell Yang). Most comprehensive review yet and more than willing to give me enough insight to avoid taking SSA until 70. Yes, he understood that I'm self funding LTC so need my income to go UP not DOWN when I hit RMD.

I just need someone to look at it and say "breathe -- you're still on track" despite having to take out 135k to pay off x-DIL. S agreed to a ridiculous payoff for a 2 yr marriage and was stupidly short. I would have said selling all & taking lumps
 
About 15 years ago I engaged a CFP to review my financial plan for a modest fee. She basically agreed that it was solid and suggested some tweaks. She recommended and ongoing relationship but no hard sell. I think she was starting out on a solo career. Others I talked to were not interested. One arrogant guy would only accept me if I turned over my entire portfolio for him to manage. Probably a Madoff wannabe.
 
I used a CFP to run a one time detailed report on strategies and to confirm what I already knew. It gave me peace of mind and had a couple of things that I didn’t think about. It was the same company that managed our Deferred Comp plan. I gave him a shot with some of my portfolio but let him go shortly there after when I added up the fees on top of the fees.
 
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