Hello! Would love some insight/advice on whether I should use a Fidelity CFP at this stage of my financial journey. I am 56 years old, my wife is 53, we have one daughter that is 22 years old and is out of college and in the workplace (has her own place). Our house is paid off, we have no debt, and we live a pretty frugal lifestyle. My wife and I have approx. 950K made up of a combination of mutual funds, annuities, CDs, and bonds. I will say that I have generally been a good saver overall (even as someone that never made a lot of money) but not a good investor as I have been too risk aversive; the majority of my investing has been in low risk, low yield investments. I would like to retire at 65 and possibly work part time doing something at that point. I am mainly concerned about setting up my investments strategically for tax purposes, etc. I like the CFP I had a consultation with but not sure if the approximate 1% fee of my financial holdings is worth it? Any advice would be appreciated, and please let me know if you need more specifics to provide a more educated opinion. Thanks.
Advise on using a Fidelity CFP
- Thread starter El Gecko
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Qs Laptop
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It's worth talking to your Fidelity representative as they are really good with retirement planning. You can learn a lot and ask a lot of question. BUT, just be ready to get a sales pitch for some of their assets under management custom funds. They can give you the soft sell or the full court press. Be ready.
I didn't go for their managed stuff because they wanted 0.95% to manage it. I would never pay someone to manage my money, I feel I can do it myself.
I didn't go for their managed stuff because they wanted 0.95% to manage it. I would never pay someone to manage my money, I feel I can do it myself.
Thanks, I appreciate that insight....and yes, I was already feeling a bit of "the squeeze"
If your not good at it, It may be better to have someone do it for you. They do have some cheaper options, s and p 500 individual stocks that they manage for .40 percent. And the robo advisor that was about the same. I tried them both and they did do well. Better then I did. But after the percent was taken off it was negligible. I still have some funds managed, as if I die, the familly has no intrest, and I want to vet the people that will manage it. So I have 30 percent managed by fido.
Good point. I do need to see what other options are available. As an example, part of my investments are RSU stock from the company that I work for (about 70K, I believe, as long as I can stomach another three years or so of working there), and that was included as far as the assets they are basing their cut on....I really don't need them to manage that.
No, no, no. A thousand times no.
These are your options:
- learn to manage your portfolio yourself; it isn't difficult
- find an advisor that charges by the hour
If you want to take a shot at it yourself: https://www.bogleheads.org/wiki/Bogleheads®_investing_start-up_kit
Texas Proud
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As others have said... NO...
BUT, you can have a person as a FA that does NOT charge a fee... they give recommendations buy YOU do all the work.. you can take or leave their suggestions...
The fee part is where they invest your money... and the one account one of my sisters had they bought like 50 or 60 individual stocks!!! Some as little as $500 (IIRC)... a waste of time IMO..
Both Fidelity and Schwab offer FREE consultation...
BUT, you can have a person as a FA that does NOT charge a fee... they give recommendations buy YOU do all the work.. you can take or leave their suggestions...
The fee part is where they invest your money... and the one account one of my sisters had they bought like 50 or 60 individual stocks!!! Some as little as $500 (IIRC)... a waste of time IMO..
Both Fidelity and Schwab offer FREE consultation...
Sunset
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
And some slimy FA's will invest your money in funds that front end loads of 3.5% up to 5.75% (I'm helping a relative now), plus the funds have annual fees of 0.55% to 1.07%
They will also mail you a Christmas card each year
They will also mail you a Christmas card each year
Like most others here, I would counsel against FA, but there are in-between options. One, you could start with a simple S&P 500 Index Fund, or Total Stock Fund, investing whatever % of your total you'd be comfortable with. Or, maybe hire that FA and ternibate the service within a year, once you've gotten an idea of how you want to allocate your money.
Semi-Retyrd
Recycles dryer sheets
Based on your age of 56 and expectation of retiring at age 65, you will retire around 2035. So
the simplest low cost solution that should be a benchmark to measure against any CFA recommendation is VTTHX - Vanguard's 2035 target date fund. See Morningstar for details.
VTTHX currently has a roughly 67/33 balanced and globally diversified portfolio that will automatically be tuned to be more conservative as you age. Its .08% expense ratio is dirt cheap and $119B size will ensure it never has financial issues.
To start you could safely put 80% of your portfolio in this fund and use the remainder to experiment if you wish to learn more about investing.
Alternatively you could put 95% of your portfolio in this fund and just go live your life knowing your investing results will almost certainly beat the majority of retirees.
If you have a conversation with a CFA giving you a sales pitch, ask him can he beat VTTHX and if so how?
Good Luck and Cheers, Dennis
the simplest low cost solution that should be a benchmark to measure against any CFA recommendation is VTTHX - Vanguard's 2035 target date fund. See Morningstar for details.
VTTHX currently has a roughly 67/33 balanced and globally diversified portfolio that will automatically be tuned to be more conservative as you age. Its .08% expense ratio is dirt cheap and $119B size will ensure it never has financial issues.
To start you could safely put 80% of your portfolio in this fund and use the remainder to experiment if you wish to learn more about investing.
Alternatively you could put 95% of your portfolio in this fund and just go live your life knowing your investing results will almost certainly beat the majority of retirees.
If you have a conversation with a CFA giving you a sales pitch, ask him can he beat VTTHX and if so how?
Good Luck and Cheers, Dennis
I wouldn't ask this question. An inexperienced investor might believe the BS that is sure to be emitted.
L-5Player
Recycles dryer sheets
The irony of someone who is risk averse, but still willing to pay a yearly 1% AUM fee, is that they are accepting the reduction of a standard 4% safe withdrawal rate in retirement to 3%. That's a risk unto itself. Think about it: your spending power in retirement is lowered by 25% for the duration.
It's a similar irony as people who allocate heavily to CDs and T-bills, staying just ahead of inflation but with no growth, who also intend to draw from their assets for decades. The risk can actually be higher than following a typical 60/40 equities to bonds allocation invested in broad index funds.
The key is how you respond to volatility. If you are going to panic and sell to cash at the slightest market dip, then you need someone else at the reins. But at least go into it with eyes wide open. The withdrawal rate compromise is real and mathematically significant.
It's a similar irony as people who allocate heavily to CDs and T-bills, staying just ahead of inflation but with no growth, who also intend to draw from their assets for decades. The risk can actually be higher than following a typical 60/40 equities to bonds allocation invested in broad index funds.
The key is how you respond to volatility. If you are going to panic and sell to cash at the slightest market dip, then you need someone else at the reins. But at least go into it with eyes wide open. The withdrawal rate compromise is real and mathematically significant.
DrRoy
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Having done it before, I will never have a FA that charges a % of assets as their fee. Don't you do it either. If you feel the need for help, find a FA that charges a flat fee only. The National Association of Personal Financial Advisors
Fidelity has been the custodian of my 401k and other retirement assets for many years. I have a Fidelity retirement planner I meet with twice a year (can be more) at the Fidelity local office and pay nothing. Been using the same guy for about 5 years and have not been charged a penny. He has provided me advice and recommendations on many retirement topics. However, I have the last word in executing the recommendation. I believe my former employer had an arrangement with Fidelity to provide this retirement planning service to employees but I could be wrong.
Thank you! Sounds like a good route to go!
I need to look into this, that would be a much better option. Thanks!
Good points, and totally agree...irony may be too kind a word for that school of thought, so thanks for not beating me up too badly
. Appreciate the input!Thanks Dennis, and cheers to you...all good points!
I will try to keep my BS radar on full blast....I am definitely less experienced than I should be at this point in my life but I will not fall for it given the overwhelming response of "don't do it" from the forum. Thanks,
Thanks! Feel like I have already burned a lot of money by not being wiser with my investing so really don't want to burn anymore! Appreciate it!
I will not, and thanks for the info and assertive response!
planuntilthefisthits
Recycles dryer sheets
In my area, most of the NAPFA charge an AUM fee.
Thanks to all that replied to my inquiry, and not being too judgmental on my lack of financial knowledge. I was told about this forum a few years back and wish I had joined earlier. Heard great things about it, and so far not disappointed. Thanks again!
planuntilthefisthits
Recycles dryer sheets
OP, I started my financial journey with:
1. Ameriprise: Sold high fee mutual funds that performed terribly. Fine. I learned about the sharks in the water.
2. An independent CFA: He was good. He taught me a lot about investing, all while taking his 1% off the top. He taught me so much, I decided I could do what he did, so took my money to Fidelity and replicated his AA without his 1% fee.
3. Fidelity. I don't have an AUM account, but the corpus eventually grew so large, that they assigned an "advisor," who I see as a relationship manager. He connects me with resources they have. He also occasionally attempts to get me to "buy" products/services that will earn him and Fidelity fees, but he is OK when I inevitably turn him down.
4. Next and eventual step: Name a successor trustee. I'm looking at one now that is local, charges per hour, and will work with my accounts at Fidelity.
1. Ameriprise: Sold high fee mutual funds that performed terribly. Fine. I learned about the sharks in the water.
2. An independent CFA: He was good. He taught me a lot about investing, all while taking his 1% off the top. He taught me so much, I decided I could do what he did, so took my money to Fidelity and replicated his AA without his 1% fee.
3. Fidelity. I don't have an AUM account, but the corpus eventually grew so large, that they assigned an "advisor," who I see as a relationship manager. He connects me with resources they have. He also occasionally attempts to get me to "buy" products/services that will earn him and Fidelity fees, but he is OK when I inevitably turn him down.
4. Next and eventual step: Name a successor trustee. I'm looking at one now that is local, charges per hour, and will work with my accounts at Fidelity.
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