Fiduciary planners who are paid by the hour or a flat rate vs commissions are said to be a good thing to consider if you are interested.
When I was searching some years back, I was told there were only 2 by the hour non-commissioned financial planners in our state that employer contracted with that I could choose among. Hopefully there are several in your area and you can interview a few to see what they offer and their ballpark price.
Iâm a Bogleheads, but I donât see financial planners as the root of all evil. I even think that for some people, they are helpful. IF you are likely to sell when the market takes a correction AND you would listen to your planner not to, theyâre worth their fees. IF you want to be undiversified AND youâd listen to your planner to diversify, theyâre worth it.
Mind you, I donât do my own tax returns, gardening, mowing, or house cleaning, chores that I could do. But financial planning in our case is so easy that I spend the few hours per year to do it myself.
I knew we needed to be able to lower the risk level of our portfolio, Found our guy some years back. We have shaped things to being exactly what we wanted. Hâs 401k is outside of our Financial person, and he is fine with that. He actually also provides me some guidance on the investment choices with the 401k.
If one has a pension or sizable annuity, or as others have said, real estate holdings - to where one doesnât need to really have a financial plannerâŠ
Our fellow started in a one person office with one FT administrative help a number of years ago, and has moved up with office, staff, and other planners like him (he is President of the company). With more and more holdings, we move up with lower administrative fees on holdings (for example, the group assets in various classifications, are with TD Ameritrade). Our Roth IRAâs are in one of the group holdings. We have purchased annuities through our fiduciary/financial planner which have been terrific for reducing our risk (money was taken out of 401k to purchase annuities). I would not have had the insight that our fellow did on selecting the right annuities. At each sit down (we schedule twice a year, and the financial group also puts on two âstate of the marketâ seminars - for current and potential clients - which give us good info). I see a number of people I know in the state of the market seminars - we are in a mid-sized community.
SWAN is key. Making sure your portfolio risk is comfortable for you. H was very pleased to see that there is a very high probability that we will not run out of money and even have a sizable estate if we both lived to 100. We do have LT care insurance (unlimited years of benefit, a gold standard product not available to purchase any more).
Timely discussion.
Anyone else use Vanguard financial services? Pros/Cons? Would you recommend?
We have used 2 different financial planners for about 10 years, and repeatedly ask if it is worth it to us. We changed to our current planner for a variety of reasons, but are questioning that choice as well. Both were supposedly âfiduciaryâ companies. Neither have done very well with our accounts. Current account has risen on average only 4% per year for the last 4 (including the recent drop). Basically, they have us invested in a variety of low-cost mutual funds. We can do that ourselves, but were expecting they would do at least slightly better, and be helpful in other aspects of our financial lives as questions arose (i.e. can we afford this or that luxury, or which accounts will we raid first on retirement, etc.)
Both created a financial plan, and would re-visit it yearly. At first, our current planner helped with other questions, but have slowly pull back. We only contact them perhaps 3-4x per year, so I donât think we ask excessive questions. For instance, when we recently asked about which retirement accounts to withdraw first for income, they directed us to our accountant.
DH wants someone to watch over our savings, especially as we age. Time becomes more precious, and he (and I) would rather do other things with that time. BUT, I donât think our current planner does any more for us than Vanguard can do, at a much smaller percentage fee (0.3% of assets under management).
Just so people know, I am not at all against Bogleheads - I am a long time âactive lurkerâ on that site, and posters there give some great advice. (I think CC is the only site Iâve ever actually posted to).
@kjofkw, I think Iâm deciding that Iâm going to keep paying for a trip least another year, and use the guy to help us answer the types of questions you seem to want answered, and get our financial house in order, get (another) professional opinion of how we look for retirement, etc. Iâm going to âmake him earn his feeâ as opposed to being very passive, as I have been so far.
@kjofkw , 30 basis points on AUM (assets under management) is what Vanguard PAS charges. As a pro, thatâs better than most; as a con, itâs more than 0. Some people have Vanguard set up a plan, and then stop using them shortly afterward.
But, they arenât Dr. Phil or Suze Orman; they wonât tell you if you can afford a BMW or if you should buy a Toyota. We have a substantial account, and I do not want to give anyone 30 basis points what I can do probably as well in a few hours a year. I donât feel that way about gardening, because that takes real skill :))
As far as your returns, there really is no free lunch, at least not one that someone will make available to you. The people I know who have outsized returns are lucky (until theyâre not!), work for a successful start-up, or have huge machinery behind them (large capital base, computers co-located with the Exchanges, math geeks going wild, etc.). For the rest of us, there is a correlation between returns and risk.
@HIMom You probably already know this, but there are financial firms which have a specialist on staff who understands trusts and planning for kids with special needs, health concerns etc. I have a friend who set up a trust for her son. I think itâs a great idea. Could make a huge difference not only in terms of how you approach retirement but also in terms of how you think about many issues.
Wow on the market volatility these days!!
@kjofkw Nothing against Vanguard, personally have never used them. Everything against using a financial planner who it tied to a single firms fund, ideas and thinking. In my 20s avoided F ( firm) like the plague after I learned my returns were being eaten away by loads, fees etc. Now we only use firms which invest our $ in stocks, bonds and other asset classes. We donât believe or invest in mutual funds. Why when you can have an asset class investment in other ways with no costs. Also, stopped doing 529s when we found out the load fee was 5%. I thought that was crazy. OMG. Giving someone money so they can take 5% up front with very low returns. I can sell lemonade and have a better chance of return than that scam. Might work better for some in states with different tax structures but for us was a very bad deal.
Thanks @Happytimes2001. We are still waiting and hoping that D will one day be able to hold a job but will discuss this further with our estates and trust attorney when we meet with him again.
The good thing is that both of our young adults are good at living below their means and staying as healthy as they can.
Re: volatility, have to agree with Kudlow (wow!) that markets do not like election months where there is a likely change in leadership. Uncertainty brings out fear in the markets.
We use a financial planner/advisor. My life is so complicated both financially and otherwise that I need help paying attention to finances and taking care of things. I have a couple of companies (and am co-founding a third), have a dynasty trust, had a defined benefit plan, several 401ks, etc. At one point, I had a stake in a hedge fund management company that I helped people start. It is really helpful to have someone keep track of whether we are rebalancing, whether we are properly insured, whether we should rent or buy if we move West for part of the year, whether we are organized for maximum tax benefits, etc. We pay a fixed annual fee for the services of the planner, who does not get compensated from our investments. However, the fixed fee appropriately tracks asset complexity (rather than size).
We also nominally have a second person, who is a âwealth managerâ at a big brokerage firm, but I donât use this firm to do planning. They do a sensational job of service. Move money from here to there. I also get access to PE fund investments that I would not otherwise see, which have performed very well over time. Our kids benefit from having this kind of service (private banker-y, I guess). The financial planner does have a younger person on staff to help the kidsâ generation. Smart business.
When I was younger and my life was less complex (I was a professor with some outside consulting), I would never have thought of using a financial planner/advisor. No need if life is simple or if you have the time. But, similar to @IxnayBob , I also donât mow my lawn, clean my house, do my laundry or my taxes. All of those things I did at one point. I figure I am best off using my time and energy to create economic value (and get paid for it), help my family and friends, and do good in the world. I think the tradeoff is worthwhile, though I have never looked closely.
Stocks and bonds and other assets have transaction costs to buy and sell.
Also, what 529 plan has a load fee of 5%? https://www.savingforcollege.com/529_fee_study/ suggests that most statesâ direct-sold plans have options where the total 10 year costs are lower than 5% of the initial amount (the costs may be mainly in mutual fund management costs, not loads).
have you ever checked on your performance by backtesting your portfolio (in something like portfolio analyzer) and compared that to a corresponding mutual/index fund? How about the risk of each? In other words, does your performance adjust for the additional(?) risk?
âStocks and bonds and other assets have transaction costs to buy and sellâ
Oh good god. The $5 trading fee charged by Schwab is pittance. Capital gains⊠you canât escape them either way.
Re the 529 with a load fee. In Michigan, you can invest directly in the state sponsored 529 or you can use a broker to do it for you and pay the fee. Apparently the brokers wanted in and this is how it was changed.
If your state only has a 5% fee plan, check out other states with very low fees. You may not get a state tax deduction, but you can withdraw qualifying expenses tax free.
We didnât do any 529s. We did buy state bonds that matured when our kids would start college. They had a 9% fixed interest rate which was about the market rate at the time. We were happy with the certainty we felt it provided. The money was handy in helping pay some of their tuition and would have funded both of them to have 4 years at in-state U, including living in the dorms. Unfortunately, at the school they actually attended, it paid for less than 1 year of tuition & expenses. 
We also did an educational IRA for each child but sadly didnât choose the best investments for those eitherâmisguided by our broker.
When I was in my 20s and 30s, before I adopted my daughter, I put away the then $2000 IRA limit every year and managed it myselfâduring times of high interest, I bought CDs and then I read the NY Times financial section every day for tips about Fidelity funds and bank IPOs. Then I got my daughter and my life became crazy busy, and I just let it sit. It grew a crazy amount over the years but I never touched it through crashes and booms.
When my dad died just before my daughter left for college, I realized I had enough money between my not-huge-but-not-nothing inheritance plus my Fidelity iRA funds for a Vanguard personal advisor, and I went for it. No complaints whatsoever. While he doesnât give specific tax advice, he has been very helpful with ways to structure my mandatory IRA withdrawal (Iâm 70) and the income tax consequences, what to do about taxes on the executor and trustee fees I got from being my dadâs executor, etc. I knew that I wasnât going to find hot new mutual funds reading the business section of the NY Times anymore, and I figured that having a guy backed up by a huge data processing enterprise was the way to go.
I have always had a frugal lifestyle (by necessity!) and I figured I would get by in retirement with by continuing to âlive smallâ (as opposed to living large). Last year I emerged from retirement to start on my MSW and (knock wood) my plan after graduation as an MSW next May is to work full-time for three years and get my CSW (Clinical Social Worker) license and then I will have many more better-paying part-time job opportunities. Whatever I make (and of course social work is not known for good pay!) is more than I would make just collecting social security and taking mandatory withdrawals from my IRA and taking the rest of what I need from my non-IRA nest egg. My daughter graduated debt-free from college last May and hopefully I will be able to help her a bit when she goes to graduate or professional school in a few years.
I never looked at my Fidelity statements through various crashes (especially 2008-10) and the value always came back, just as I am sure that it will come back on my Vanguard accounts.
@ucbalumnus I could look up the 529s with the 5% fee. It was taken as the money went in ( thatâs why I saw it so clearly once I started putting in a lot one year). Honestly, I was shocked as I watch those kinds of fees very carefully. I had explored various funds and states. Where we are, we didnât have many good options.
@bluebayou Yes, Iâve checked how we are doing in a variety of ways. I hold a masters in Econ so this is something I like to do. We have done so much better than the market ( after all why would we pay someone money if their returns are the same as, or less than the market). I also check every investment and its return quarterly ( we have about 100 various investments). I understand what every company does and I ask questions. If itâs returns are low or negative ( its sold pretty quick).
When the market goes down, I continue to look at all statements. I also read the prospectus of new fund like things ( sometimes the FP uses these to get into investments we would otherwise not be able to tap) For example, on a business trip my spouse found Vietnam doing very well. It wasnât easy to invest in their individual stocks so we used a fund to make it work. Has done very well.
The volatility of our investments is much lower than previously. We no longer have the huge returns we got in the 90âs ( I bought MSFT in 1990) but we have balance and less likelihood of things going South quickly. So, I guess Iâd say we diversified across sectors and no longer have huge returns ( we were invested in tech in the good years), but also rode the 2008 market out without losing much at all ( 2-5%). We arenât conservative in our portfolio, i.e. we donât hold a large % of bonds.
Overall, I donât think we could have gotten there without a planner. We have busy lives and though we both understand finance, we donât have the time to spend on it each day.