Financial Advisors

[Happily Retired 2019]

Hi Everyone-this is my first thread. My question is how often should your financial advisor contact you to go over your portfolio? If the rule is that the customer must call advisor, how often do you call? How much input do you have with your advisor. I do not know too much about the stock market and I think it is time now to learn!!!

 

[SevenUp]

I do not know too much about the stock market and I think it is time now to learn!!!

Consider spending some time reading Getting started - Bogleheads and articles linked there.

 

[Closet_Gamer]

I don’t use an FA but I believe a quarterly touch base is typical. If the FA is recommending (or making) lots of trades in/out of mutual funds be wary.

 

[Exchme]

Consider spending some time reading Getting started - Bogleheads and articles linked there.

This!

The only thing OP needs to know is that John Bogle, the late CEO of Vanguard said he didn't know anyone that could beat the stock market and didn't know anyone that knew anyone that could do it.

So your advisor can't either. All you need is a Total Stock Market fund and an intermediate bond fund like Total Bond or Internediate Treasury.

While they haven't done well lately, some international exposure is a reasonable thing to add so a Total International Stock fund can be included. That's all you need and you can pocket the advisory fees and other hidden costs you advisor may be extracting such as using high cost funds, churning accounts, inappropriate investments with high commissions. You only get to count on 3-4 % of your investments to spend, your advisor's cut comes out of that.

 

[JDARNELL]

I think they are required to do it once a year as a min. We are in the process of doing some consolidation with one of our brokerages and right now we are meeting every month or so. My long term goal is just once a year.

 

[iloveyoga]

I don't use an advisor, but I would recommend quarterly for at least a touch base. I personally think all accounts need at least a brief quarterly review.

 

[Rianne]

Many on this forum do not use FAs. Their expenses are too high and you could just as well DIY with your portfolio. I would watch a few financial Youtube videos, there are some good ones. Follow Boglehead advice as well.

You didn't mention your age. Are you starting out, in the middle, or going to RE. How is your portfolio set up? There are many threads on this forum discussing asset allocation, taxes, Roth conversions, etc. I've learned so much on this forum reading threads and asking questions. Lots of smart folks here.

 

[Joseph]

Agree with previous poster, quarterly updates if you’re paying someone. I most like will never use a FA for investments but possibly use a CFP for estate, insurance etc. I am a CPA so I can handle my own taxes and fairly well versed on basic planning ( this board is a good tool. Some real smart people here). But it never hurts to used a fee only planner for more difficult situations.

 

[pacergal]

Quarterly,

 

[target2019]

Hi Everyone-this is my first thread. My question is how often should your financial advisor contact you to go over your portfolio? If the rule is that the customer must call advisor, how often do you call? How much input do you have with your advisor. I do not know too much about the stock market and I think it is time now to learn!!!

If you have an advisor, then he/she should contact you a certain number of times trhoughout the year in order to keep you engaged in the results.

I suppose if you never contact the advisor on your own initiative, they should call at least once a year minimum.

Stay tuned here and ask more questions. It can only help!

 

[Still Learning]

We use a Financial Planner who also happens to be a CPA. Has been doing our taxes but only started to use his financial planning in a limited hourly capacity starting 3 years ago, we still manage our investments. We also retired in 2019 and find it useful to first have our taxes completed and then schedule a 1 hour financial planning session post 4/15 with current and proposed financial growth spreadsheets. The combined services run about $600 annually and provides us feedback on our investment thoughts along with tax implications we should be aware of.

If you use separate financial planning/tax preparation services you may want to meet twice with a financial financial planner, first to discuss their recommendation and again after you have a chance to reflect and understand any tax implications.

 

[Dtail]

I am a DIY person, but have access to generic FA's at Fidelity for no cost.

 

[OldShooter]

We're DIY as well. After too many years of complexity we are now down to basically one equity index fund and one issue of TIPS. Last strategy trade was two or three years ago. Not too much need for monitoring. Next decision will be early 2026 when the TIPS matures.

Re "time to learn" yes. It is never too late. Here's a starting point:

• "If You Can" by William Bernstein https://www.etf.com/docs/IfYouCan.pdf (free 16 page download)
• "The Coffee House Investor" by Bill Schultheis Amazon.com (This is Bill's first book; read it before reading his second one.)
• "The Simple Path to Wealth" by JL Collins: https://www.amazon.com/Simple-Path-Wealth-financial-independence/dp/1533667926
• "The Bogleheads Guide to Investing" by Taylor Larimore et al Amazon.com

What you will almost certainly find is that your FA has assembled a ridiculously complicated portfolio and is doing too much trading. They do this not for investment reasons but in order to intimidate the client and make him think he needs an investment advisor. Most people don't. The next thing you'll find is that once you have ditched the FA and radically simplified the portfolio you can relax and adopt the Bill Schultheis philosophy. You will probably enjoy his second book at this point.

 

[scrabbler1]

I have an (unpaid) Account Executive at Fidelity. I meet with him once every 12-18 months.

 

[easysurfer]

My philosophy is the less I see a financial advisor, the more money I'll keep for myself.

 

[Mr._Graybeard]

I talked recently with a Fidelity rep who suggested my bond portfolio was too complex (I hold a lot of muni bonds). A dozen years ago another rep looked over a larger bond portfolio and said, "I like what you've done here." I'm reminded of an acronym we had in the newspaper biz, OAO (one a------'s opinion). That's why I like broad index funds and ETFs for our equity position. I think it holds less true in the bond market (again, OAO).

 

[HI Bill]

Ditch the advisor and go with the Bogleheads "3-fund portfolio". Simplicity. Low Cost. Unless you're prone to panic selling or don't understand taxes well enough to make decisions on what to sell when based not only on gains, but tax consequences. Not quite as good as a 3-fund portfolio would be a low-cost robo-advisor.

Three-fund portfolio - Bogleheads

www.bogleheads.org

 

[MarieIG]

Welcome to the forum Happily Retired. If you are paying a percent for AUM, feel free to contact your financial advisor as often as you want.

I do agree with the reading recommendations listed in this thread. There is obviously no "need" to rush to do anything, but as it appears that you are already retired, you (hopefully) have some time to expend your knowledge regarding asset allocation, funds, and investments. Your self-education will also allow you to better understand the investments, costs, returns being achieved, etc.

Best regards.

 

[TheWizard]

Many on this forum do not use FAs. Their expenses are too high and you could just as well DIY with your portfolio. I would watch a few financial Youtube videos, there are some good ones. Follow Boglehead advice as well.

You didn't mention your age. Are you starting out, in the middle, or going to RE. How is your portfolio set up? There are many threads on this forum discussing asset allocation, taxes, Roth conversions, etc. I've learned so much on this forum reading threads and asking questions. Lots of smart folks here.

The OP's name implies he/she retired five years ago.

I agree the most people that have been here or at BH for a while have learned enough so they don't need a financial advisor...

 

[jazz4cash]

Many on this forum do not use FAs. Their expenses are too high and you could just as well DIY with your portfolio. etc..

I agree the fees are too high for the Assets Under Management fee structure but if you really are a beginner the fee might be worth it until you get more comfortable. Many of us have less issue with the fee-only structure whereby you pay a one-time or annual fee for the advisor to setup or review your portfolio. Also consider id you want other services like taxes, insurance advice, estate planning, college funding, etc. Many of us also use free advisors provided by Fidelity, Vanguard, etc. That’s working well for me but I am basically DIY’r that likes to do research and crunch numbers.

 

[OldShooter]

Having an FA as a guide or teacher is intuitively attractive, but I'm not sure it is a good idea. The half-dozen or so "professional" portfolios I have reviewed were always overly complex. One $15M portfolio had over 100 individual stocks from the FA's standard multiclient "sleeve" and suffered from excessive trading. Others leaned heavily on expensive stock-picker funds. In all cases, regular trading was a feature -- speculation instead of investing IOW.

This is all completely understandable from the FA's point of view (even the robots!) because it serves to intimidate the client and reinforce his fear that investing is so complex that a mere mortal must hire priests and witches to manage their investments.

@Happily Retired 2019, you really don't need this. Even if you don't want to read a few books you can get most of what you need from the Bogelheads.

 

[Lorenzo]

I used a FA for several decades, until very recently. He contacted me quarterly. He listened as I explained what was going on in my life, any changes in my goals, if I needed help with anything in particular. He was a good guy. Very occasionally, I had a financial question that he helped me with. So I did get SOME value ouf of the relationship. But recently, having more time on my hands as I am on the cusp of retirement, I increasingly asked myself what value did I get from his services?

The only thing OP needs to know is that John Bogle, the late CEO of Vanguard said he didn't know anyone that could beat the stock market and didn't know anyone that knew anyone that could do it.

So your advisor can't either. All you need is a Total Stock Market fund and an intermediate bond fund like Total Bond or Internediate Treasury.

This is good advice. My FA indeed believed in not trying to "beat the market," and so he had my asset allocation in much like a Total Stock Market and total bond fund: a Large Cap ETF, a Small-Mid Cap ETF, and a total-market bond ETF. Did I really need an FA to set me up with such an absolutely plain-vanilla, textbook asset allocation when this is exactly what the most basic Intro to Investing book or automated robo-advisor would have advised? I suppose I appreciated my FA's help with this in the early 1990s, when I was busy with life, and investments could not be made with the click of a mouse. But now? Why did I need an FA who was charging me 1% of assets to "manage" a plain-vanilla, couch potato type portfolio? To rebalance every once in a while among these few ETFs? I think I can handle that. So I ditched the FA.

 

[OldShooter]

... I suppose I appreciated my FA's help with this in the early 1990s, when I was busy with life, and investments could not be made with the click of a mouse. But now? Why did I need an FA who was charging me 1% of assets to "manage" a plain-vanilla, couch potato type portfolio? To rebalance every once in a while among these few ETFs? I think I can handle that. So I ditched the FA.

That is the FA's dilemma. I have talked to a couple of them about this exact issue. Basically, to justify the AUM fee they have to show the client some action and some complexity even though it may even be counterproductive for the portfolio. I think it could even be characterized as a breach of fiduciary duty, but the industry will never go down that path.

There are individuals who will benefit significantly from hiring a good FA though. We know a woman in her 50's who spent 10+ years living in the basement apartment of her mother's house and taking care of mom. She had no money of her own, only what mom gave her. Clothes from Goodwill, etc. At mom's death this woman suddenly found that she was inheriting an estate that was well north of $1M. No way did she have the skills to manage money just in her personal life, not to say the skills to set up and manage a competent portfolio. DW and I referred her to a female FA who was well-suited to be her "surrogate financial mother." It has turned into a very beneficial relationship.

 

[Happily Retired 2019]

Thank you all for the great advise. I spent too much time worrying working and only thought about putting my money into a 401K to make it grow-which it did-but did not take the time to learn anything. I relied on my FA. I will definitely read and learn- to be continued . . . Thanks again. You guys are a great crowd!!

 

[Luvtoride]

We’ve had a FA for about 4 years, most of which time was planing for retirement.
We meet at least annually to review our written plan and assess how we’re doing and any adjustments needed (if anything changes in our circumstances). We call him anytime during the year with any questions as needed.
Our FA is much more than as Asset Manager. He provides guidance on many issues including:
- Medicare/ health insurance (had our IRMAA premiums reduced almost immediately after we started Part B)
- Pension draw strategy (single/ joint life and %age)
- Social Security draw/ timing when the time comes
- tax considerations and reduction
- estate planning for our kids and grandchildren
- other investment strategies and allocations

Yes, all of this could be done/ learned on a DIY basis (which many here do and enjoy). I don’t want to spend my time “managing“ my retirement. We’re very comfortable with our FA and with our plan (and the fees charged). We’re enjoying having more time to travel, spending with friends and with our kids and grandkids.

Just another opinion and perspective for OP.