Financial Planner, Financial Advisor, or CPA? Which one to use?

[Love This Community]

Thank you for starting this thread. I had a tough time finding a CPA with PFS that can work on a fee only basis. Most that I talked to want AUM. I will keep looking for someone that can look at my overall portfolio and pressure test or advice on simplifying.

[kevink]

While the OP's situation is much more complex than mine I thought I'd share this resource for those looking for a portfolio second opinion and more general advice about estate planning, social security claiming strategies and other big-picture financial issues.

I've been mostly a DIY investor for 20+ years with about 5 years in the middle using a quite good FA firm that charged a fixed fee rather than % of AUM. Being about to turn 65 I wanted to get a second opinion on my investing and withdrawal plans as well as some insights into things I may have overlooked. I read on Bogleheads that the well-known investing writer and FA Rick Ferri offered such services on a fixed fee basis and checked out his website:

https://rickferri.com/investors/

As it says there, Rick is already booked well into next year so I followed his recommendation and checked out his colleague Jon Luskin, who I ended up hiring. He was great to work with and provided insights and advice that will certainly save me a multiple of his fee over time. No overreach either - meaning that he's clear about the need to consult a CPA and/or lawyer for specific issues.

[Love This Community]

Quote:

Originally Posted by kevink While the OP's situation is much more complex than mine I thought I'd share this resource for those looking for a portfolio second opinion and more general advice about estate planning, social security claiming strategies and other big-picture financial issues. I've been mostly a DIY investor for 20+ years with about 5 years in the middle using a quite good FA firm that charged a fixed fee rather than % of AUM. Being about to turn 65 I wanted to get a second opinion on my investing and withdrawal plans as well as some insights into things I may have overlooked. I read on Bogleheads that the well-known investing writer and FA Rick Ferri offered such services on a fixed fee basis and checked out his website: https://rickferri.com/investors/ As it says there, Rick is already booked well into next year so I followed his recommendation and checked out his colleague Jon Luskin, who I ended up hiring. He was great to work with and provided insights and advice that will certainly save me a multiple of his fee over time. No overreach either - meaning that he's clear about the need to consult a CPA and/or lawyer for specific issues.

Thank you so much for sharing this.

[target2019]

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Originally Posted by All Is Lost Good Day, My wife and I hope to retire next year. She will be 66 and I will be 64. I did some arithmetic to see if we will have enough money to live on as well as to help our Special Needs Daughter. In order to see if I have covered everything correctly, should I use a Certified Financial Planner, Financial Advisor, or CPA? I am not looking to buy any type(s) of financial products. I just want to make sure that my numbers are correct and that I have considered everything. FYI- I used the Search function but could not get the specific answer to my question. Thank you for your help.

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Originally Posted by All Is Lost Thank you all very much for the valuable advice and taking the time to help me. I greatly appreciate it. There certainly are a lot of things to consider in choosing the right person. Your responses have given me a lot to think about. Although we have lived in Georgia all our lives, most of our close friends have moved or passed away. The few relatives that we do have live out West. Both my wife and I work for the State and have lived in the same stick-built house for over 36 years. In addition to our small pensions that we will receive form the State, we have 390K in 401K with an interest rate of 1.9%. Since I am too scared to risk any of this money, we keep it in a stable value fund. We also have 110K with an investment firm. Overall, it loses more money than it makes. The company is always trying to sell us products and quite frankly it is overwhelming. Together, my wife and I spend over 9k a year for Term Life Insurance. The main goal that we have is to make sure our special needs daughter is able to survive. We do have a Trust and she is the Trustee. She is NOT on Medicaid or any Government assistance, so it is vital that we make sure everything is correct. The only other retirement goal that my wife and I have is to be able to move. We live in a very Redneck area of the county. Lots of Meth Labs in our area. On average we have at least one drive by shooting ever year and at least two (if not more) deaths on our road from people driving while intoxicated. I never thought our neighborhood would turn out this way. Ideally, we would like to move up North. Maybe the New England area. Due to the low inventory and high prices of homes, I am not sure if we will ever be able to accomplish this.

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Originally Posted by All Is Lost This has opened my eyes to so many things that I did not consider. The Financial Advisor / Friendship arrangement rings true with the FA I currently have now. The reason for having the Life Insurance into our later years of life is so that we can leave our daughter some money to survive on. The odds are against her in obtaining a decent paying job. Is there a better route to go other than leaving her Life insurance? In addition to the Life Insurance, both my wife and I will be leaving her part of our State Retirement Pensions. Once we die, my daughter would receive a small amount of money every month for the rest of her life. That is if the Retirement System holds together. Since my wife and I do not have any close family members, nor do we have any young enough friends who would be willing to be the Trustee for our estate, we made our daughter the Trustee. The only other options were to find a Bank or Trust Company that would act as the Trustee. Most of these places only take clients that have a minimum estate value of 1 Million Dollars which we do not have. I was told by a social worker that there are cases where people who live in multi-million dollar homes have their special needs child on Government assistance and Medicare. Thanks again for all of your help.

If you do decide to come to the northeast, you might want to put the state of Delaware on your list. Each state has different programs for special needs, and you'll need to research to see if what you are looking for is possible in a particular area. There are higher home prices, and higher real estate taxes. The big problem now is the escalation of real estate in the NE. It will be tough to buy in.

My brother, his spouse and special needs daughter collect something from SSA. They do have additionla money saved but he works full time at 72 on various non-profit projects he put together to help those like his daughter.

You do need to be careful who you speak with, as you've found out there are sharks in the water.

One thing you mentioned is the stable value fund investment. Note that in times of inflation you lose a significant amount of buying power each year.

It is not an easy path, I know. I wish you well.

[MTB4me]

A lot of good information and recommendations in this thread. Best of luck to the OPs on their situation. My experience with the whole CFP thing: it’s not worth the paper it’s written on. Worked for a short time with a CFP at Ameriprise, solely because my folks had an account with them for awhile at a different office. She was all about extracting as much money out of me as possible. Tried to churn my accounts and sell me products that benefited her way more than me. Couldn’t run away fast enough. Have received 100x more value from this forum than with that Ameriprise hustler.

[OldShooter]

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Originally Posted by MTB4me A lot of good information and recommendations in this thread. Best of luck to the OPs on their situation. My experience with the whole CFP thing: it’s not worth the paper it’s written on. Worked for a short time with a CFP at Ameriprise, solely because my folks had an account with them for awhile at a different office. She was all about extracting as much money out of me as possible. Tried to churn my accounts and sell me products that benefited her way more than me. Couldn’t run away fast enough. Have received 100x more value from this forum than with that Ameriprise hustler.

WADR, I think your complaint is about Ameriprise not about CFPs in general. Personally I think the CFP is a bit over-rated but generally a good thing. Ameriprise has changed its name a few times over the years, but the behavior (by reputation -- I have never dealt with them) seems to have stayed pretty much as you found it.

Did you check her at https://brokercheck.finra.org/? Sometimes that reveals prior customer complaints. I got a "free steak dinner" promotion one time, checked the guy, and found 21 customer complaints pretty much all settled in the customers' favor and many for six figures.

[MTB4me]

Good point, Oldshooter, I could have been clearer in my post. No findings against this particular adviser, however. My point was that, on its own, a CFP designation doesn’t imply competence and, even though it should, doesn’t imply a fiduciary duty to the client. Beware and do your research. This particular adviser had no remorse for what she did nor did Ameriprise corporate view her behavior as irresponsible or predatory.

[OldShooter]

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Originally Posted by MTB4me Good point, Oldshooter, I could have been clearer in my post. No findings against this particular adviser, however. My point was that, on its own, a CFP designation doesn’t imply competence and, even though it should, doesn’t imply a fiduciary duty to the client. Beware and do your research. This particular adviser had no remorse for what she did nor did Ameriprise corporate view her behavior as irresponsible or predatory.

Yes, but I don't think you'll ever see CFPs stand-alone as fiduciaries.

First reason is that CFP certificates are sold by a private nonprofit, so I'm not sure how they could have legal teeth.

Second reason is more important: CFPs are enthusiastically sold to Series 7 Registered Reps who are not fiduciaries, only governed by a "suitability" standard. Losing the Series 7 people would probably cost the CPF board a major piece of revenue, even cut into the top guy's $1M+ salary.

That said, on October 1, 2019 the CFP Board adopted a new Code of Conduct that mandates fiduciary-like behavior. The consequences for bad actors, though,can only be losing their certificate and the obligation to pay dues. Definite moral hazard there. Also, IMO the Board is not really serious about protecting clients when the code says “ … the Rules are not designed to be a basis for legal liability to any third party. “

As you advised: Beware and do your research.

[oldtimer]

CFP is a certification gained by passing a test and having experience in the field. It does not guarantee that the person's experience does not enter into gray areas outside of the regulations that were covered in the test questions.


I remember attending a test-prep training session for a professional certification for a different industry. The instructor told us to answer the questions per the standards that the test was about, not the way our company may actually do it in practice.

[SecondAttempt]

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Originally Posted by OldShooter Remember this critical fact: Some Guy On The Internet (SGOTI) is not competent to be your estate planning consultant. Neither is “a social worker.” You have a complicated situation involving many important decisions. I’d encourage you to seek out an attorney or CPA (maybe both) and to spend the money necessary to optimize yours and your daughter’s future. This is complex stuff. For example, arranging for your daughter to receive pension payments may simply substitute those dollars for dollars to which she is otherwise entitled from the state. Similarly, receiving insurance proceeds may have the same effect. IOW, the dollars you have arranged for her to receive from you may be totally wasted. Or maybe not. SGOTI has no idea, but the experts you need to find will know the rules as they apply in your state. This critical planing task is far more important and should precede any discussion of a financial planner. It may cost you a few thousand $ but will almost certainly be worth it.

+1 on this. You really need to consult an attorney. In addition to what was stated above, naming her as trustee could be disastrous. She should be beneficiary but not trustee.

I have a Phd and an MBA in finance but if I were in your situation I would still be hiring a lawyer!

[tmitchell]

I just met with a CFP to review where I’m at now that I’m moving into the spend down phase. I actually really liked him and he made some great points around Roth conversations and tax planning. Those two things get me a bit tied up in knots, so I’m considering hiring them to help manage all that.

However, when I run the numbers it’s a bit harrowing how much it’ll cost over 30 years. I plan to die with zero so paying them might help.

I’m on the fence though. Are conversions and tax planning as difficult as u fear? I’m not a big numbers person.

[travelover]

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Originally Posted by tmitchell ......... Are conversions and tax planning as difficult as u fear? I’m not a big numbers person.

Those services can be purchased by the hour. The way they really ream you is by charging an annual assets under management (AUM) fee. Remember "only" 1% is $10,000 a year on a million.

[CRLLS]

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Originally Posted by travelover Those services can be purchased by the hour. The way they really ream you is by charging an annual assets under management (AUN) fee. Remember "only" 1% is $10,000 a year on a million.

^ +1

In addition when your investments drop by 30% ($300,000), to add insult to injury, he/she still bills you their 1% $10k (or is it then only $7k?).

[OldShooter]

+2 Offer to hire him on an hourly rate or a monthly fixed $ amount "subscription."

[tmitchell]

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Originally Posted by travelover Those services can be purchased by the hour. The way they really ream you is by charging an annual assets under management (AUN) fee. Remember "only" 1% is $10,000 a year on a million.

Thanks. Seeing that on paper makes it a lot easier to say no!

[Love This Community]

Connected with Rick Ferri for a 15 minute introductory call. He seemed to be genuine. Looking forward to going through with his fee only service. Will update on how that experience goes in a couple of months. A little background; though I am a DIY’er when it comes to investing, I need someone to look at my portfolio to consolidate and advise what steps I should take to simplify our portfolio and position for growth with minimal tax bite. I guess, I am asking for that perfect recipe…[emoji3]

[G-Man]

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Originally Posted by Love This Community Connected with Rick Ferri for a 15 minute introductory call. He seemed to be genuine. Looking forward to going through with his fee only service. Will update on how that experience goes in a couple of months. A little background; though I am a DIY’er when it comes to investing, I need someone to look at my portfolio to consolidate and advise what steps I should take to simplify our portfolio and position for growth with minimal tax bite. I guess, I am asking for that perfect recipe…[emoji3]

Please keep us updated. I just sent Rick an email as well. Hopefully I can get an appointment in 2023.

[Bamaman]

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Originally Posted by HarveyS I'd suggest you talk with an estate lawyer. You probably need to set something up with a trust for your daughter. The atty may be very knowledgeable about financial issues and/or can make a recommendation. I agree with ERD50 that your friends and family may not be able to provide leads to who you are looking for.

Many such situations require a Special Needs Trust. I'm raising a 11 year old granddaughter and she'll need to be provided for. There are family attorneys that specialize in such trusts.

[Chuckanut]

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Originally Posted by Bamaman Many such situations require a Special Needs Trust. I'm raising a 11 year old granddaughter and she'll need to be provided for. There are family attorneys that specialize in such trusts.

FYI, This may be useful to some.

There is also something called the ABLE account that is similar to a college savings plan, but is intended to help out children who have developmental issues that will have on going effect on their ability to care for themselves as adults.

[G-Man]

I have an upcoming 15 minutes meeting with Rick Ferri next week. For those who have had a meeting with Rick, what information should I have available so that the meeting can be very productive? So, should I send Rick some information in advance as well? Please advise.