Great article. I think I need a side hustle. Lol. Actually, we just buy less stuff we don’t need. I hardly ever shop except for food. Haven’t really got a lot of debt. And still thinking about when to buy a new car.
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I rarely make any moves, no matter what the market is doing. I moved some funds when I turned 50, and I just turned 60, so I’m reconsidering my allocation. I will likely keep it as is, but I’m worried I have too much in bonds. I don’t withdraw any at this point, and I won’t until I’m at least 62, probably later.
I wish I’d put more in ROTH, because of the taxes we’ll have to pay when we withdraw. BUT, I don’t fell confident enough in future tax rates to pay to convert at this point.
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Makes me wonder if many of the people who got out of the job market will jump back in with a part time job, to help pay the bills.
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Dh retired last year, but the plan always was for him to get a part-time job. He has two now, one at our local beloved grocery store (don’t ask; he’s always wanted to work for them). He gets 10% off all store-brand food and every couple of months he gets 25%. We have felt no inflation surrounding food, thanks to that. At 25% off the already cheaper store brand, this PT job is actually a real boon. When the 25% discount is on, we load up on things we use all the time and put meats in the freezer. Additionally, the discount works on restaurant meals at a sister store’s nice cafe, a place we used to eat at all the time before Covid.
We had no idea about these perks before he started. We did know the chain was a great corporate citizen, supportive of education and its communities. So, yeah, pick a PT job with great perks!
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Lol, I worked in a grocery store in college and loved it and would totally do it again part time in retirement. (not a big box but like a smaller local store - TJ’s would be a “dream” gig!!!)
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People are always so nice at various TJ’s. Even during Covid, they’d chat and were great.
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I like the article because the source was good - 20 years as a lawyer and manager in financial services. Keeping an eye on the big picture - very sound advice.
Also said some very true facts - potential of losing job or having hours cut, thinking about when you need your money (investments). The general talk about spreading investments across sectors and mutual funds and index funds.
About inflation - thinking about what your real needs are, and if you have some spending money, which ‘want’ works for you - if the current price is good and you think it will go up, or if you need to save up for the ‘want’.
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Anyone use two financial advisors? I’m interested in keeping part of our savings separate from other funds currently under the management of a financial advisor. The financial advisor, while a fiduciary, always wants all other funds under their management. Of course. It increases their fee. Seems a conflict of interest if they pressure too hard, or are unwilling to look at your total picture whether or not all the funds are under their management.
One person I know, actually hired two advisors, and split their savings between them. I was surprised either would accept that arrangement, but if each account was large enough to satisfy the planner, perhaps not so crazy.
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We don’t have two. But we had many account across many companies. It took a while to consolidate. We also had a fairly large amount of a single stock which we had no intention of selling and no intention of paying a % on. Our FA agreed to let us keep it without charges.
Not sure I would/could ask them to consider the funds not under their management. Before we moved the stock our FA knew the amount and what stock it was. He rebalanced on that basis. I think it was nice of him.
We use a fee-only financial advisor for a lot of our assets, but my 401k/Fidelity and some stock is separate.
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We are listening to our financial advisor and have a plan in place moving some incrementally. Will see if the RMD at age 72 gets raised to 75 and then adjust the plan accordingly.
The first week in January was ‘hard’ for many on their investments (including us) - and even our financial advisor didn’t see that drop coming. Watching but not moving anything (financial advisor does on that portion of our portfolio).
We now have our ‘stream of income’ in place for this year with both DH and my SS, and with specific amounts from some of our annuities and other funds based on the money we decided on monthly. We have cash on hand (in our checking account) - enough to handle small and mid-sized purchase/repair needs.
Life is a balance of personal situations one has going on (and what one can and cannot do anything about) and other things going on in community, state, national, and internationally - we have strong faith and cling to it. Try to live life every day in a positive way and not burden ourselves with negativity. Can plan for tomorrow but cannot change the past.
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This happens all the time and many affluent clients have more than 1 advisor.
Full disclosure: I am not a financial advisor but have met with or worked with thousands of advisors in my 20+ years in the financial services industry.
if you have any questions about how financial advisors get paid, what type of questions to ask a financial advisor, or anything about the industry, let me know.
Most advisors are affiliated with 1 of 5 channels:
Wirehouses: Morgan Stanley/Merrill/UBS/Wells Fargo
Banks:
Banks/National: Bank of America/Wells Fargo/JP Morgan
Banks Super Regional: PNC/Truist/5th 3rd etc.
Regional: Too numerous to list
Independent: LPL/Advisor Group/Raymond James/Cetera are some of the largest but hundreds of Indep BDs
Agency: Mass Mutual/Northwestern Mutual, Prudential (More life insurance focused)
RIA: Fee only. Fiduciary.
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Helpful insights. RIA = ?
Registered Investment Advisor?
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Is the fee-only fiduciary the one you’d recommend?
Registered Investment Advisor. Typically smaller outfits that use Schwab or another service for back office. Some firms have used TD Ameritrade as a back office but Schwab bought that.
We have two FAs. The one is a small firm that is a fiduciary and charges a flat fee per year. Uses Schwab for back office. They give advice for all of our assets not just those they manage. They are holistic – they advise our kids on issues like benefits or insurance when they are changing jobs, whether we have the right kinds and levels of insurance, they look for tax advantages given our situation, very good at explaining to ShawWife who is bright but not sophisticated about finances. They did a financial plan which we paid for when we started with them and they updated when the world changes. I asked them, “Can we afford to buy a house in Florida?” and they came back with a thoughtful analysis.
The other FA was a wealth advisor or something like that at a mainline brokerage firm. They have the accounts for my two companies and one 401k, which is big enough for them. I’m guessing they have about 30% of my assets plus the companies’ accounts. They provide superb service in moving money around, anticipating problems – “you are going to go negative in this account, where do you want to transfer money from?” and then they make take care of it. My kids use them for their main accounts. I don’t love the wealth advisor’s suggestions-- clever but high fee investments – and really use the other FA for advice.
The one decision I have to make is that the wealth advisor moved from a brokerage firm to First Republic because he says they allow him to provide better service. I have not moved as the replacement team is doing a good job, but I will explore a move over time. It would be useful to have my accounts at an entity that is a bank as we could do international wires and bank checks there, whereas now we have accounts at a couple of local banks for those purposes.
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We’ve had the best luck with RIA, small boutique firms. Found that a small staff that talks to each other and might have a general approach works for us. Fees aren’t hidden (or in 30 pages documents).
We’ve had two at the firm we are currently with ( 12 years). There was a guy we had for 2 months. I didn’t like him. Talked about sports too much and was arrogant. He was dumped by us. He’s still there but we got a better fit with someone else.
Our FA is very different from us in terms of demeanor and knowledge. I think that helps a lot. He has widened our portfolio and broadened what we invest in and returns have been excellent.
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People think that RIAs (Registered Investment Advisor) are best because they have a fiduciary responsibility to their clients and they generally don’t work off commissions.
I dont believe that just because an advisor is an RIA that they are necessarily better. There’s a couple of reasons:
First, fee only sounds better than commissions but that’s not always the case. They may take 1% of assets but that’s what most advisors nowadays do with affluent individuals. The reason is they are trying to annuitize their “book”. if an advisor has $100 million in assets, they will collect $1 million in fees. This is better long term for the advisor because if the market goes up, they make more while commissions are mostly a one time charge (although some financial products have a trail commission). Whether an advisor gets paid a 1% annual fee or commissions, they have to make money either way so touting it as “fee only” does not mean it’s a better system. Advisors like everyone else who works should get paid for the work but marketing it as better is debatable.
Second, RIAs are fiduciaries so people think they are more dedicated to their clients because they have a higher standard than traditional advisors who go through a “broker dealer”. Broker dealer advisors have a history that every individual can review: https://brokercheck.finra.org/ Any client complaints must be reported in their U-4.
I believe most advisors whether they are RIAs or not, do care about their clients. Some RIAs do holistic planning but many non RIA advisors do as well. Many of the best advisors I have met are not RIAs and are backed by firms who have deep pockets and tremendous reputations. if an advisor with Merrill Lynch steals your money, does anyone think Merrill Lynch, Wells Fargo, Morgan Stanley would just do nothing to protect their clients?
The key to finding a good advisor is finding someone you feel comfortable with and can help you with your specific needs. Advisors’ abilities run the full spectrum from incredibly knowledgeable to having absolutely no clue what they are doing.
Do you need someone just to invest your money? Do you need tax strategies? Estate planning? Someone familiar with Social security and Medicare? Cash flow analysis?
Do you want someone to create a holistic financial plan or just a quick retirement or college planning scenario.
DISCLAIMER: Nothing I say constitutes advice. These are just my opinions and not recommendations. Please do your own research. I use the term “advisors” in the general sense. People affiliated with broker dealers are technically registered representatives.
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Well it turns out that our fee-only financial advisor is an RIA…. I was just not familiar with the term (only “fiduciary responsibility” factors). My husband did all of the research for selection, starting a few years prior to retirement. (I did attend a few different classes with him run by different commission-based advisors prior to that… we just never clicked with any of them.) If any friends had given specific advsiror recommendations, we might have considered other options.
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I’m an FA and occasionally pop in to this thread (and share an opinion when I think it matters). I’ve been at it for 30 yrs. I’m an RIA, a registered rep (broker dealer) and an insurance agent. I mention this because each compensates me differently (fees, semi heaped commissions with trails, front loaded commission with no trails or recurring revenue). You know who doesn’t care how I’m compensated? Me and my clients. I provide a valuable holistic service, solve problems, and provide solutions appropriate to the situation. How I get paid is irrelevant (yes I know some of you will argue that my compensation will steer me to certain scenarios). The fee only folks make a ridiculous argument (IMO) that only they can truly serve client needs because they’re on the same side of the table with their client. I would argue the complete opposite. If they truly don’t “sell” commission generating products, they have vastly eliminated the enormous sea of options available to assist their clients. And therefore, by definition, can’t offer the best because they’ve never even examined how those products would fit in a situation.
I have clients for whom I only manage money via the RIA. I have clients I only provide asset protection services for which generally involve insurance of some sort. Most of my clients are a mix of managed money, insurance protection, income planning, tax planning, etc. I can’t solve all their issues without access to broker dealer and insurance based products. It’s that simple.
The irony is my income vastly increased (and I’m not complaining) when I started using the RIA model to manage money vs. the old Class A share mutual fund and “transactional” brokerage account. It’s FAR less expensive to the client for me to work with A shares or buy stocks and bonds and charge a commission than it is to charge them via an advisory fee. I’m doing the same exact work. I’d advising either way. But the industry (thanks to meaningless, unnecessary regulation) has made it impossible to manage money the old fashioned way.
See if this makes sense to you. FINRA literally won’t let most (maybe all) broker dealer reps buy multiple fund family A shares unless you’ve maxed out the client discounting. So what that means is If I want to use PIMCO and American funds for a client portfolio (fixed income and equity), I can’t unless I’ve fully met the breakpoints (volume per client for discounting) even though PIMCO may be better for the FI and Amer Funds the Equity. I have to choose which family to use when it would clearly be better for the client to use both for their area of expertise. Now I can easily do this by just putting it all in an advisory account and then I can use whatever funds I want. Big secret, over the long term, the advisory account will be enormously more expensive to the client based on the fee schedule. But the SEC doesn’t really care about what’s best for a client. How could they? They don’t know the client.—Perhaps I digress…
Bottom line, if you’re working with a independent, holistic type planner who views products, managed accounts, etc as simply the tools to help you accomplish your goals, it doesn’t matter how they are compensated. What matters is you!
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