How to find a good *Independent* financial planner

[Sarah in SC]

NAPFA is probably a good way to find a fee only planner to review your portfolio. It is different to get someone to give you a second opinion than someone to run your portfolio. You should be clear with them that you aren't looking for management, only a review and suggestions, if that in fact is what you want.

 

[doneat54]

Well 10 months later I have hired a guy, spent a month feeding him *everything* related to my holdings, real estate, taxes, accounts, etc. He is going to create a comprehensive plan for me that includes redirecting some of my savings fund streams, re-balancing my portfolio which is very heavily weighted in securities now (and Oct was a scary month!!), recommending a portfolio draw plan, SS strategy, healthcare strategy,etc. His fee is $2400, there are no percentages taken from my accounts. He actually came from a large firm where they did work for % fee, and he did not like that philosophy. He felt like it was a conflict of interest. He prefers to work for free and be able to objectively consider everything. I have been impressed with him so far.

My wife and I met with him yesterday for an interim review, reality check. Long story short, I should change my forum name to "doneat55". He says that at this point my plan/expectations look very do-able. He recommended that I take the lump sum pension, and recommended redirecting some significant cash saving streams to our 401Ks and Roth accounts.

I mentioned earlier in this thread that my brother hired a 0.5% guy and was convinced he was worth it. Well the contract/period has closed and he no longer holds that view.

There is no way I wold have divulged even half of the personal finance details to this group that I did to this guy under a confidentiality agreement. I agree that at the end of the day the decisions are mine, and I should consider everything I can. But I respect this guy's experience.

And lastly, he projected my portfolio to be able to return 8.8% post retirement (before inflation) and would use 4.22% as an inflation value. Both numbers seemed a little high to me.

 

[gauss]

Well 10 months later I have hired a guy, spent a month feeding him *everything* related to my holdings, real estate, taxes, accounts, etc. He is going to create a comprehensive plan for me that includes redirecting some of my savings fund streams, re-balancing my portfolio which is very heavily weighted in securities now (and Oct was a scary month!!), recommending a portfolio draw plan, SS strategy, healthcare strategy,etc. His fee is $2400, there are no percentages taken from my accounts. He actually came from a large firm where they did work for % fee, and he did not like that philosophy. He felt like it was a conflict of interest. He prefers to work for free and be able to objectively consider everything. I have been impressed with him so far.

My wife and I met with him yesterday for an interim review, reality check. Long story short, I should change my forum name to "doneat55". He says that at this point my plan/expectations look very do-able. He recommended that I take the lump sum pension, and recommended redirecting some significant cash saving streams to our 401Ks and Roth accounts.

I mentioned earlier in this thread that my brother hired a 0.5% guy and was convinced he was worth it. Well the contract/period has closed and he no longer holds that view.

There is no way I wold have divulged even half of the personal finance details to this group that I did to this guy under a confidentiality agreement. I agree that at the end of the day the decisions are mine, and I should consider everything I can. But I respect this guy's experience.

And lastly, he projected my portfolio to be able to return 8.8% post retirement (before inflation) and would use 4.22% as an inflation value. Both numbers seemed a little high to me.

Does he use the x% of pre-retirement income as the income needed in retirement (as opposed to calculating the income needed from historical spending data and the appropriate changes when retired?)

This can make a huge difference in the amount needed for LBYM/high savers.

-gauss

 

[gauss]

Told my sister her FP is probably driving a new BMW on his commissions by managing her portfolio.....But they won't listen...FP even recommended them to purchase a variable annuity..Oh well, I can only argue so much with them...

Sounds like they are paying for "peace of mind".

Hopefully it will be worth the price paid for them in the long run.

-gauss

 

[dallas27]

Well 10 months later I have hired a guy, spent a month feeding him *everything* related to my holdings, real estate, taxes, accounts, etc. He is going to create a comprehensive plan for me that includes redirecting some of my savings fund streams, re-balancing my portfolio which is very heavily weighted in securities now (and Oct was a scary month!!), recommending a portfolio draw plan, SS strategy, healthcare strategy,etc. His fee is $2400, there are no percentages taken from my accounts. He actually came from a large firm where they did work for % fee, and he did not like that philosophy. He felt like it was a conflict of interest. He prefers to work for free and be able to objectively consider everything. I have been impressed with him so far.

My wife and I met with him yesterday for an interim review, reality check. Long story short, I should change my forum name to "doneat55". He says that at this point my plan/expectations look very do-able. He recommended that I take the lump sum pension, and recommended redirecting some significant cash saving streams to our 401Ks and Roth accounts.

I mentioned earlier in this thread that my brother hired a 0.5% guy and was convinced he was worth it. Well the contract/period has closed and he no longer holds that view.

There is no way I wold have divulged even half of the personal finance details to this group that I did to this guy under a confidentiality agreement. I agree that at the end of the day the decisions are mine, and I should consider everything I can. But I respect this guy's experience.

And lastly, he projected my portfolio to be able to return 8.8% post retirement (before inflation) and would use 4.22% as an inflation value. Both numbers seemed a little high to me.

Ha. "My money man can generate 50% returns. Only 49% inlflation. So far he's over performing in real returns!"


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[doneat54]

We are actually figuring on pretty much the same monthly expenses post as pre-retirement, although my wife will work 3-4 years beyond me. He is also recommending against over paying our mortgage as we have been (by about 30%) because we are losing tax advantage. I agree, and have been able to see that in our returns each year. We will redirect that income elsewhere as well.

 

[Sunset]

In my own projections in various calculators, I've used inflation numbers higher than the standard given ones as a safety factor since some things do rise higher than 3%.
So I find nothing wrong with your FP's view of 4.22% inflation other than its silly to go to the 2nd decimal (I would have used 4 or 4.4).
Same with the return value, its good to see he is not suggesting some wild number like 12% return.

 

[thefinancebuff]

My brother has one and pays 0.5% of portfolio quarterly. What is the going rate?

The going rate is 0.5% a *year* or less. Your brother is paying 4x.

 

[pb4uski]

.....My brother has one and pays 0.5% of portfolio quarterly. ....

2% a year? Wow. That's highway robbery. He should be getting Super Bowl tickets at that rate.

 

[robertf57]

I am glad you are happy with your new adviser. I am in favor of paying people for their work; not some % of my accumulated work! I have some concerns over the recommendations you have relayed. Perhaps I don't understand the totality of what he has told you:

1) Taking the lump sum at retirement is a decision that needs to be carefully weighed. Too often I have seen people taking a significant drop in the expected value of this asset by taking the lump sum. I hope he gave very clear reasons for this decision and modeled what you are trading off

2) His return estimates may be fine on average, but I sincerely hope he isn't modeling that as an annual return in your withdrawal plan.




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[MichaelB]

The going rate is 0.5% a *year* or less. Your brother is paying 4x.

2% a year? Wow. That's highway robbery. He should be getting Super Bowl tickets at that rate.

This was corrected here

I checked with my brother, he pays 0.5% total annually, 0.125% per quarter.

 

[Birchwood]

We decided to do it our own, and take the possible occasional errors and learn from it. My brother work with a planner from one of the major firms who charge 1% of the total asset/ year. Obviously this planner is not independent and work for the firm.
Despite some of our mistakes along the way, we felt that there are just a lot of information out there to help us decide what to do. Learning it ourselves make us more knowledgeable and confident on financial matters.

The 1% is a lot if a portfolio is worth several millions. I rather pay myself 1% and add another few %'s and live with it.

 

[doneat54]

The going rate is 0.5% a *year* or less. Your brother is paying 4x.

I was mistaken, he is paying 0.5%/yr, 0.125 a quarter... plus some other retainer fees.

 

[doneat54]

I am glad you are happy with your new adviser. I am in favor of paying people for their work; not some % of my accumulated work! I have some concerns over the recommendations you have relayed. Perhaps I don't understand the totality of what he has told you:

1) Taking the lump sum at retirement is a decision that needs to be carefully weighed. Too often I have seen people taking a significant drop in the expected value of this asset by taking the lump sum. I hope he gave very clear reasons for this decision and modeled what you are trading off

2) His return estimates may be fine on average, but I sincerely hope he isn't modeling that as an annual return in your withdrawal plan.

1) The annuity value being offered calcs out at about 5.9%. And yes, he did show a simple rationale of how the lump sum, invested moderately, would outperform the offered annuity value. It is known that my company is "jacking" the lump sum amount once I hit a certain point to incent people "sign out". Likewise, the lump sum offered decays for every year I stay on after that date. The message, and decision are clear.

2) He is not using that % to model annul return/disbursement allowances, in fact, was quite clear that that is an expected LONG TERM average. What we have yet to do is start to look at how the funds will be drawn, from where, and when, all the while rationalizing the tax liabilities.

 

[PatrickA5]

We are actually figuring on pretty much the same monthly expenses post as pre-retirement, although my wife will work 3-4 years beyond me. He is also recommending against over paying our mortgage as we have been (by about 30%) because we are losing tax advantage. I agree, and have been able to see that in our returns each year. We will redirect that income elsewhere as well.

I can think of several reasons why you might not want to pay down your mortgage early, and that issue has been debated many times. However, the tax "advantage" reason would be well down the list.