If you have a financial advisor

[y4m]

How are they paid? (and about how much annually, if you are comfortable sharing)
What do they do for you?

We met with an advisor who is somewhat fee-based (charges a percentage of assets under management).  For that percentage he'd look at our whole financial picture, including some tax strategy, and regularly rebalance, meet with us as regularly as we like to advise, etc.  We are at a point where we have enough going on and not enough time to actively look at it, so the idea of a strategy is appealing.  But maybe it would make more sense to just pay someone hourly and have them create a plan for us that we execute vs. him doing the execution.

If you have this type of relationship, how do you evaluate whether it is working?

[Deleted]

This is exactly the set up we have.. It's based on a percentage of managed assets. It's 1.25% up to 300K and then 1% after that until 1 mil I think. I follow our assets, but honestly I don't know that I know enough to whether it's "working."

[Deleted]

Our FP works either way (fee or commission). We paid a fee for our initial planning, mostly because my old job paid it and I was out to bleed them for every penny. He helped me optimize my tax strategy for that layoff payout, put that money into mostly retirement investments, and then evaluated our overall picture to recommend a monthly savings amount that we should have for retirement. We've both got pensions and felt unqualified to figure out what we needed on top of that. Plus he confirmed we were saving enough for the kid's college.

On an ongoing basis, he does make a small commission off our stuff, but we're in pretty low-cost mutual funds, so it's not a big deal. He did sell DH some life insurance, but we definitely needed it.

[y4m]

Super helpful rnv. I don't think I explained it well, but we're exactly where you were--debating my diy vanguard approach versus a full service manager. I agree that in between isn't right for us. I either need to own this fully or have someone I trust own it fully.

This advisor is really into Dimensional funds, which I need to get my head around.

Could I ask what percentage yours is charging?

[y4m]

Jan 28, 2015 8:21:22 GMT -5 RockNVoll said:

I have no idea what Dimensional funds are (is it this?).

Yes - DFAs.  Supposed to be a middle ground between the vanguard low-cost approach and more active management.  

Thanks for the rates!  This guy would let us start at .85 as a discount because my parents use him.

But then we started debating whether it made more sense to just use Vanguard's advisory services, which are more like .3 but certainly not the same level of service.  Or maybe a planner with more of a CPA background, because our tax situation is likely to get complex with buying a house for DH's parents.

[Deleted]

I think RNV hit the nail on the head of why I have a hard time assessing whether it's "working" right now because our portfolio is diversified and hasn't seen the gains that I know some have described on here from funds that I assume are mostly in stock funds. The goal though is for consistent long term growth and to avoid some of the volatility of the market, the effects which we will see only in the long term. At the end of the day I feel like I can trust our advisor (who came highly recommended from friends who know a lot more about this stuff) and we're certainly doing better than my paralyzed fear that had all of our non-retirement savings in cash. In 2 years we've increased our non-real estate value by 40%, which a combination of savings and market growth/investment income. I'm pretty happy with that.

[jwright]

We use the same financial advisor that my parents have used for years, and I don't know what I would do without him. I talked to him about buying my first house, ending my first engagement, getting married, quitting my first job, etc. His referral is the reason I have my current job. We own commercial real estate; investments in startups, publicly traded partnerships, and other funds, not all of which I understand and he is able to keep up with everything. We pay .5% of assets under management and meet a minimum of quarterly, but I call any time I need to talk something through. He is like a very knowledgeable family member at this point.

I know not everyone is looking for that kind of relationship, but our family tends to move forward at light speed, our FA is the one pumping the breaks, picking up the spilled pieces, and generating the reports that make it all work. I recommend him as often as I can.

[heliocentric]

It sounds like you are already with Vanguard. They have a level of planning between DIY and actively managed. We used it last year and it met our needs, but we were primarily interested in having someone review our asset allocation, recommend fund types (not specific funds) and make sure we were on track for retirement. The fees vary depending on how much you have invested there, but in some cases it's minimal or even free. At the time they also offered 60 (or 90?) days afterward where you could contact them for free with questions.

Not sure if it will meet all your needs, but it might be worth looking into.

investor.vanguard.com/what-we-offer/investing-help/help-me-when-i-need-it?Link=facet

[Deleted]

I'm pretty sure our advisor charges us either 1.25% or 1.5%. After reading this post I feel like we are over-paying. He has done well for us but I can't compare to what we would have done on our own. He's the expert and I just don't have the time.
I'm going to question him on the fee though.

[cosmowife]

There is a new website called Personal Capital. I can't vouch at all for their services but they offer this type of service for less than 1% I believe. There are also a couple of free meetings at the beginning when you sign up for the site. I am using the site because it can pull every single one of my retirement accounts (even my weird ones through work) but I doubt I will use their other services. However, the guy is certainly trying to get me as a client. Might be worth looking into, especially since the free intro appointment is part of the deal.

[jc2009]

Last summer when I read that Vanguard had opened up its .3% Advisory services to accounts with just $50K I jumped on it. It was a long process but they now manage our retirement money and I manage our other investments. I was hoping they would manage everything but their software is really only set up to handle retirement goals. When I log into my account now, I see two portfolios, one with our retirement accounts and one with our self-managed accounts.

I'm not in love with the advisory services. It's very impersonal but for .3%, I feel it's worth it. Basically they set you up with a four fund portfolio and rebalance it for you as needed. I'm sure I could call our advisor with questions but I haven't had any so far. Eventually I do plan on self-managing our retirement accounts and feel like it is a good stepping stone.

[y4m]

Jan 28, 2015 12:53:57 GMT -5 jc2009 said:

Last summer when I read that Vanguard had opened up its .3% Advisory services to accounts with just $50K I jumped on it. It was a long process but they now manage our retirement money and I manage our other investments. I was hoping they would manage everything but their software is really only set up to handle retirement goals. When I log into my account now, I see two portfolios, one with our retirement accounts and one with our self-managed accounts.

I'm not in love with the advisory services. It's very impersonal but for .3%, I feel it's worth it. Basically they set you up with a four fund portfolio and rebalance it for you as needed. I'm sure I could call our advisor with questions but I haven't had any so far. Eventually I do plan on self-managing our retirement accounts and feel like it is a good stepping stone.

Thank you for posting this--very helpful to hear about this experience!

[Deleted]

I use a fee-only advisor, and pay them hourly for whatever services I need them for.

I'm too hands-on (and low-key as an investor - I buy & hold boring dividend-rich mutual funds) to give up 1% of my portfolio to a wealth manager, though I have met with some that are really impressive. For me, it's more of a preference - I want to manage my dollaz!

Our advisors are Timothy Financial if anyone wants to check them out, I'm a fan.

[Deleted]

PS: I use the fee-only option as a "gut check" on my own planning and to ensure I'm identifying and covering off on blind spots. They do that really well.

[Poppy]

Jan 28, 2015 13:07:21 GMT -5 @shoegal said:

I use a fee-only advisor, and pay them hourly for whatever services I need them for.

I'm too hands-on (and low-key as an investor - I buy & hold boring dividend-rich mutual funds) to give up 1% of my portfolio to a wealth manager, though I have met with some that are really impressive. For me, it's more of a preference - I want to manage my dollaz!

Ditto this. We hold most of our money at Vanguard in a pretty simple allocation, but I like having an expert perspective and having someone look at our full picture. We found our advisor on napfa.org and have been very happy. But I am a control freak and I had a bad experience with a commission based advisor when I was younger.

[cjeanette]

Jan 28, 2015 8:26:25 GMT -5 y4m said:

Jan 28, 2015 8:21:22 GMT -5 RockNVoll said:

I have no idea what Dimensional funds are (is it this?).

Yes - DFAs.  Supposed to be a middle ground between the vanguard low-cost approach and more active management.  

Thanks for the rates!  This guy would let us start at .85 as a discount because my parents use him.

But then we started debating whether it made more sense to just use Vanguard's advisory services, which are more like .3 but certainly not the same level of service.  Or maybe a planner with more of a CPA background, because our tax situation is likely to get complex with buying a house for DH's parents.

That is a good rate. I am leery of any advisor who seems attached to a specific fund family. We use a variety in our mutual fund models since typically fund companies have strong funds and some not so strong.

[irishbride2]

My family is very much in the FA business. H is an FA and a parent runs a major FA company.

Both are huge proponents of fee based and my H especially looks down on the FAs who push products. But he has seen a lot of scummy FAs push products that bring 7% fees and the like, which is terrible. Avoid product pushers for sure.


eta: My h does however refer low maintenance clients to vanguard if he thinks their needs are simple enough. So vanguard is a good option

[njohnson1972]

Jan 28, 2015 8:26:25 GMT -5 y4m said:

Jan 28, 2015 8:21:22 GMT -5 RockNVoll said:

I have no idea what Dimensional funds are (is it this?).

Yes - DFAs.  Supposed to be a middle ground between the vanguard low-cost approach and more active management.  

Thanks for the rates!  This guy would let us start at .85 as a discount because my parents use him.

But then we started debating whether it made more sense to just use Vanguard's advisory services, which are more like .3 but certainly not the same level of service.  Or maybe a planner with more of a CPA background, because our tax situation is likely to get complex with buying a house for DH's parents.

DFA works with very few fee-based advisors.  They are selective.  They are big into French-Fama theories.  Fama has won a Nobel Prize for his research.