Do you have a financial planner?

[Tree-dweller]

I almost have one. I'm in the process of filling out a ton of paperwork to give to a NAPFA FEE-ONLY planner so she can tell us if we're on track, and I can really be in the Class of 2017. She's not cheap, but it's a heckuva lot cheaper than paying 1% of your portfolio each year to a regular planner. Just can't justify that. We interviewed three of the latter, and I just wasn't impressed.

I did the same about a year before I pulled the plug. I just wanted the warm and fuzzy reassurance of an independent professional that my projections were reasonable. Now I try to stay the course with my asset allocation, with no current plans for advisor intervention - but never say never.

 

[Speculator]

Back in the late 90's, I was in an insurance agency which was part of a large national chain and the parent company was adding a new product: "Financial planning." As I was talking with an agent, a phone call came in and the agent asked if I minded if he took the call, since he was alone in the office at the time. Of course, I said it was fine with me. After the initial telephone courtesy rituals were exchanged, he asked the caller what could he do for them? After listening for a few seconds, the agent said to the caller: " Why, of course, we offer many financial planning products!" And with that, the agent simply took a brochure out of a display rack and began reading directly from the brochure, indicating to me the agent had no personal knowledge of the financial services or products he was offering. As another poster suggested, financial planners may well be only salesmen and as such, their opinions are like "noses" and everyone has one.

My suggestion is to reflect on what your goals are, educate yourself on how to achieve those goals, and stay flexible.

Good luck.

 

[urn2bfree]

Fee only advisor who gives me access to the Dimensional Fund Advisor family of furds which are low expense ratio-no-load funds that offer some potential advantages over Vanguard Family of funds. Even when the fee is figured in.

 

[obgyn65]

I do not have a financial planner. I am extremely conservative with my investments, only want CDs, muni bonds and have just begun this year to buy some annuities. I am not sure what a financial planner would do except he / she would find my investments patterns boring.

 

[almost there]

Have used advice maybe 5 out of 30 yrs investing.
Never was that thrilled with it.
Now that I am getting close, am thinking it might not be a bad idea having a pro look things over. Mainly for future tax planning, 401k exception code 5329 line 2, Roth IRA 72t rules and whatever else I might have missed. Am also thinking it might be good for my better 1/2 to get the info on our situation from someone other than my self....
But am hard pressed to pull the trigger........ Not sure why? Maybe I am just too cheap...
Even though I am not looking for advice on where to invest it would be nice to have a pro look things over...

 

[rescueme]

I seek prostitutes for sex "education".

I seek financial planners for "investment education".

Same result; I get the "return" that I could accomplish on my own, with just a bit of knowledge.

...

 

[foxfirev5]

Like most things I'm a DIY guy. When it was time to build a house I took a lot of classes got my builders license and did it. With my investments I spend little time tinkering with my allocation and considerable time researching. With all this research I find that a simple index fund program with a comfortable asset allocation works best.
I can't see any situation where investing your time for your future wellbeing is better. (excercise is one that comes to mind)

 

[urn2bfree]

I do not have a financial planner. I am extremely conservative with my investments, only want CDs, muni bonds and have just begun this year to buy some annuities. I am not sure what a financial planner would do except he / she would find my investments patterns boring.

Not to pick on you, but boring would be the wrong judgement...I would expect they might find them dangerous. And this is exactly the sort of portfolio that perhaps you might want a professional to assess. NOT ONE WHO IS SELLING ANYTHING, a Fee only advisor.
I would expect them to point out that while this portfolio is low on risk for loss of prinicple, it is high on risk for loss of buying power- what if we ever have real inflation again? What protection does such a portfolio provide?

 

[gerntz]

What's the difference between a planner and an advisor? Thread title asks about planner but some have responded about advisor. Thanks.

 

[brewer12345]

What's the difference between a planner and an advisor? Thread title asks about planner but some have responded about advisor. Thanks.

Its like the difference between a whore and a 'ho.

 

[ERD50]

I do not have a financial planner. I am extremely conservative with my investments, only want CDs, muni bonds and have just begun this year to buy some annuities. I am not sure what a financial planner would do except he / she would find my investments patterns boring.

Not to pick on you, but boring would be the wrong judgement...I would expect they might find them dangerous. And this is exactly the sort of portfolio that perhaps you might want a professional to assess. NOT ONE WHO IS SELLING ANYTHING, a Fee only advisor.
I would expect them to point out that while this portfolio is low on risk for loss of prinicple, it is high on risk for loss of buying power- what if we ever have real inflation again? What protection does such a portfolio provide?

I've said it before, but I have to agree with urn2bfree. A portfolio of CDs and muni bonds isn't 'conservative', it carries a high degree of long term risk.

It may very well be low-volatility, but that is different from risk.

-ERD50

 

[Rustward]

I've said it before, but I have to agree with urn2bfree. A portfolio of CDs and muni bonds isn't 'conservative', it carries a high degree of long term risk.

It may very well be low-volatility, but that is different from risk.

-ERD50

Is it possible to have enough "excess" CDs and muni bonds to overcome the long term risk?

For example, would $15,000,000 in CDs and munis cover an inflation adjusted distribution of, say, $100,000/year over 35 or 40 years? This is kind of extreme, so pick your own numbers.

It may not be optimal, but I might take that deal if I was worth $15,000,000.

We don't know how much Obgyn has in CDs and munis, do we?

 

[FinanceDude]

Its like the difference between a whore and a 'ho.

In my experience, most people calling themselves "planners" are life insurance agents............

 

[ERD50]

Is it possible to have enough "excess" CDs and muni bonds to overcome the long term risk?

For example, would $15,000,000 in CDs and munis cover an inflation adjusted distribution of, say, $100,000/year over 35 or 40 years? This is kind of extreme, so pick your own numbers. ...

Sure, you can always cover it with more money. More money is always better than less money .

But if you had that same buffer in a 50/50 AA, the dips would not be so low in absolute terms, as you started with more. A 0% stock allocation took about 1.8x the portfolio of a 50/50 AA for the same historical success for a 40 year period. So what is the risk of a 1.8x 50/50 portfolio dropping back to 1x? Stocks would need to drop to 1/9th their starting value - an 89% drop (assuming the fixed allocations behaved the same for each).

There's nothing 'wrong' with wanting to stay 100% fixed, but one should realize it entails a different kind of risk, and needs a substantial buffer. And historically, if you add in the buffer, it isn't clear what you are protecting against.

-ERD50

 

[almost there]

What's the difference between a planner and an advisor? Thread title asks about planner but some have responded about advisor. Thanks.

In my mind an advisor advises where and how to invest.
(for a %)
Where a planner looks at things I mentioned such as future Tax planning and how to avoid penalties when withdrawing early from things like 401k's, IRA's and pensions.
But I cant say for sure as I have never used one. If I did it would be pay as you go. Nothing tied to my personal investments.

 

[dmdunca44]

We signed up with an FP in 2004 when DH began seriously planning to retire. We did not have a clue about dealing with investments and planning how to live in retirement (I wish I'd know about this forum then).

He did a decent job of advising us, but did steer us into the high fees of American Funds and put our taxable investments into loaded funds (which were not particularly tax efficient).

Last year, I moved our accounts to Vanguard and we are saving over 1% in advisor fees as well as enjoying lower ER in the VG funds I moved to. We now have 5 funds instead of 13 and I am planning to decrease the number of funds as we get into our 70's.

In hindsight, I don't regret using him when we did (transitioning to retirement), but I do wish I'd made the move sooner.

 

[MooreBonds]

I'm sure she gets some sort of commission, but it's not a load, where then money is taken out of my investments right away.

Ah yes, the age-old "but I'm not paying anything for this service" (frequent reply of wage slaves getting royally screwed by 401k funds charging 2% annual fees for basic stock index funds).

It is true that paying "just" 1.5%/year for basic stock funds that will, on average, underperform their index bretheren is much better than losing 5.75% right off the bat to sales charges, and THEN paying 1.5%/year....but in the end, it's like saying your deck chair on the deck of the Titantic is better than someone else's deck chair.

What's the difference between a planner and an advisor? Thread title asks about planner but some have responded about advisor. Thanks.

Its like the difference between a whore and a 'ho.

I would like to formally nominate Brewer's quote to the ER Forum Hall of Fame of quotes. Or even the FAQs. Or both!

 

[Nords]

What's the difference between a planner and an advisor?

If you have to ask then you should avoid both of them...

 

[heyyou]

I pay a fixed annual fee that amounts to .2% of my portfolio. I get a cookie cutter equity allocation using DFA funds with a stock/bond ratio that suits me. I chose the adviser for that equity allocation, the fund family, and the low fee.

When the markets periodically dive, I sleep better knowing there is someone else besides me, saying when I should rebalance. When I was working, I would just continue to buy. In retirement, I am just stunned when my equity funds are down 40%.

As I wrote this, I can now see that I should rebalance more often while the market is dropping, not waiting until it is so low to start. That would split my dreaded rebalancing into increments that I might learn to cope with.

 

[samclem]

As I wrote this, I can now see that I should rebalance more often while the market is dropping, not waiting until it is so low to start. That would split my dreaded rebalancing into increments that I might learn to cope with.

So, if you have to remember to do this yourself and continue to watch the markets, what is that .2% fee buying you? That fee amounts to 5% of the annual amount most retirees will be retirees will be withdrawing, or about 2 1/2 week's worth of living expenses. It's not a lot by the standards of these FAs, but it's still a chunk of change, especially since you appear to already know how to do what is required.

 

[urn2bfree]

So, if you have to remember to do this yourself and continue to watch the markets, what is that .2% fee buying you? That fee amounts to 5% of the annual amount most retirees will be retirees will be withdrawing, or about 2 1/2 week's worth of living expenses. It's not a lot by the standards of these FAs, but it's still a chunk of change, especially since you appear to already know how to do what is required.

I would assume it is for access to DFA funds. I, too, feel that the DFA family of funds is superior in returns and philosophy that it can be worth paying small fees to an advisor to get access to them. Others may have a different opinion of DFA.

 

[ERD50]

When the markets periodically dive, I sleep better knowing there is someone else besides me, saying when I should rebalance.

For me, the 'sleep factor' would just be transferred to wondering if that 'someone' is going to do the right thing. I don't see how it helps, it just removes you one step from the decision. I'm not sure that's a good thing

In retirement, I am just stunned when my equity funds are down 40%.

Well, it happens, better get accustomed to it. But a 50-50 AA would be down ~ 20% - is that 'stunning'? Or save up almost double so you can go all fixed income (how many more years of work would that take)? That would have stunned me! It's tough enough to take a more conservative 3%-3.5% average WR, rather than the 4% 'default'.

-ERD50

 

[travelover]

My old boss was a DFA. Well maybe not dumb...........

 

[Rustward]

For me, the 'sleep factor' would just be transferred to wondering if that 'someone' is going to do the right thing. I don't see how it helps, it just removes you one step from the decision. I'm not sure that's a good thing.
-ERD50

No financial professional can (legally) make a trade on your behalf without your explicit permission or instruction. Sometimes a blanket permission is granted, as it is with discretionary accounts (i.e. wrap accounts and the like, with which most here have little experience). BTW, I would never do a discretionary account with a broker or advisor. In other cases the broker-dealer, advisor, or planner must have your consent. Consent can be verbal or written. Many will not accept instruction or consent by email or voice mail.

Unless you have lost most of your senses, it should be pretty easy to spot churning and commission generating transactions before they happen. As usual, it will pay to understand how things work, and know what questions to ask, and when you should terminate a relationship with a broker, advisor, of planner.

Bernstein addresses brokers in Four Pillars (Your Broker Is Not Your Buddy), but he makes no mention of planners, and the more generic advisors.

 

[teejayevans]

To put fees in perspective, take the fees and divide by $/hr you think they are worth.
So if fees total $10000 and you think a FP deserves $100/hr, that means they should be working for you for a 100 hours/year. Do you think/feel they are working that much? If I was just using a FP for rebalancing advice, I think that would be no.
TJ