Choosing a Financial Planner or Investment Advisor (HowTo ?)

[LostDollar]

Doing your own taxes -- and cutting your own hair -- to save money "seems" like a good idea to most people. Especially the general public. To a quality advisor, it is a foolish idea. I do not work with a client who insists on doing their own taxes (albeit, my clients do not have simple, straightforward tax returns -- but even their children -- we get a professional to do it, and the client or child never balks).

That said, I see fee based professionals, commissioned salespeople at insurance GA's, wirehouses, and RIA's, still calling themselves financial planners. I see them calling themselves financial advisors, financial consultants, and wealth management advisors. It's all terminology. Yes, compliance is straightening this out.

My point -- there are top professionals, top quality, integrity, excellent people -- in each category. Being a member of one category doesn't make you good, great, bad, dishonest, or honest.

Could you clarify for me what the term "Fee Based" means when applied to individuals in financial services occupations?

Thanks.

 

[PrivClientSG]

Hey there,

I'm wondering if a financial advisor could help me decide between investing in gold or getting an insurance plan for retirement. What do you think would be best?

I'm torn between the two options and could use some guidance. Should I go for the potential benefits of investing in gold, or would an insurance plan be a smarter choice for retirement?

Thanks!

Go find a seasoned, quality, well-respected, top notch wealth management professional. He/she will explain to you why your question is irrelevant. It's not about "product" -- it's about "planning" and "process".

If you somehow got into my office and met with me, and insisted this is what you wanted to focus on and that's the advice you want from me, the role you want me to play...I would respectfully and politely tell you why you are approaching this very inefficiently and ineffectively, and recommend you find someone else to work with. Good luck!

 

[DHK]

Hey there,

I'm wondering if a financial advisor could help me decide between investing in gold or getting an insurance plan for retirement. What do you think would be best?

I'm torn between the two options and could use some guidance. Should I go for the potential benefits of investing in gold, or would an insurance plan be a smarter choice for retirement?

Thanks!

Both.

 

[liamnoah]

I don't know what Richard does for other people, firms, etc. that bring him in to speak, present, etc. My introduction to him came two ways. One, he was working with a member of my study group. That member presented to our study group about his business model, how his business operates, etc. This guy is a monster life producer and AUM producer. So when he started talking about "marketing" and "client experience" and other related topics, I for one paid attention. The five of us thought enough of this kind of work, that we had Richard come in to present to us at our next meeting (which happened to be in FL not to far from Richard's FL base).
https://www.moneycontrol.com/news/brand-connect/the-5-best-gold-ira-companies-reviewed-11885391.html
The second way was that I contacted him because I found out that a speciality brokerage shop that my partner and I deal with was bringing him in as a guest speaker for a group of their brokers. Since I knew he'd be in town, I called him to schedule a meeting, and wanted to explore working with him directly. I like his perspective on the HNW mindset and marketplace. I think he has some excellent ideas -- from the HNW client perspective -- on how to better connect and serve the HNW, affluent marketplace. I also like that many of his ideas were cultural and about the business model, operation, etc. -- and that was an area I felt I needed help in. For what I use him for and work with him on, I think he's excellent.

I intend to retire later this year, and I’m now deciding between managing my own investments or using an advisor. My portfolio is based on the bogleheads approach with a few additional ETFs. One advisor quoted 1.35% aum which is higher than I want to go.

So here are my questions for the DIY folks and others:

Is 1.35% a standard rate for ‘professional’ management?

Approximately how much time do you devote each month to managing a relatively uncomplicated bogle-inspired portfolio? Id like to limit the time spent so it doesn’t become a time consuming ‘job.’

Would a roboadvisor be a good alternative?

 

[DHK]

Is 1.35% a standard rate for ‘professional’ management?

Depends. Is that "All in" meaning any 3rd party asset management, platform fees, etc.? Or is that just the advisor fee?

When I was last with an RIA firm, the fees were about 1.95%... 'all in'. The advisor got .90% while the rest had the other levels of fees.

However, I don't judge fees in a vacuum either. I'd want to know if it's strategic or tactical asset management. Who are the asset managers and how have they done in the past so I can get a sense of their management style during different years.

Right now, you're focused on price. I'll blame the other advisor because apparently he couldn't get you to see the value of the investment management platform he's using and implementing.

Price in the absence of value is always too high. And telling me how you'd want your portfolio to look like (ie Boglehead style) is an automatic disqualification.

There are other factors that probably haven't gone into your decision-making:
1) Do you want to be a full-time portfolio manager yourself of your own portfolio? Or did you actually want to RETIRE?
2) How many years do you plan on managing your portfolio for? If you're in your mid-60's, do you think you could keep it up through your mid-70's? How about mid-80's?
3) Assuming you're male, statistically, men pass away first. If you're married, will your spouse be able to continue to do what you've been doing all along?

Just asking and contemplating those questions... is what a quality investment advisor and financial consultant should be doing to help you look beyond just 'price'.

 

[scagnt83]

I intend to retire later this year, and I’m now deciding between managing my own investments or using an advisor. My portfolio is based on the bogleheads approach with a few additional ETFs. One advisor quoted 1.35% aum which is higher than I want to go.

So here are my questions for the DIY folks and others:

Is 1.35% a standard rate for ‘professional’ management?

Approximately how much time do you devote each month to managing a relatively uncomplicated bogle-inspired portfolio? Id like to limit the time spent so it doesn’t become a time consuming ‘job.’

Would a roboadvisor be a good alternative?

My firm is "all in" around 1%.

However, "managing a bogglehead portfolio" is not what an advisor does.

The Advisor should pick the portfolio.... and it should have a lower risk tolerance and higher risk adjusted return, vs. a bogglehead portfolio.

If it didnt, no reason to use an advisor.

---

Furthermore. A true Financial Planner does much more than manager a portfolio.

They plan for income, taxes, risk (other than just portfolio risk), and review that plan annually (at minimum).

A retiree needs a Financial Planner. Not a Portfolio Manager.

You can buy a portfolio manager for about 30bps these days.

 

[scagnt83]

Would a roboadvisor be a good alternative?

If you are not going to take the advice of the FP... or allow them re-allocate and manage to fit your needs.... then yes.

But Roboadvisors are basically a risk based portfolio manager.

It is not a Financial Plan.... or a true Retirement Plan.

Thats why it costs 25bps and not 50bps-75bps like a true Planner.

 

[Tahoe Ray]

I intend to retire later this year, and I’m now deciding between managing my own investments or using an advisor. My portfolio is based on the bogleheads approach with a few additional ETFs. One advisor quoted 1.35% aum which is higher than I want to go.

So here are my questions for the DIY folks and others:

Is 1.35% a standard rate for ‘professional’ management?

Approximately how much time do you devote each month to managing a relatively uncomplicated bogle-inspired portfolio? Id like to limit the time spent so it doesn’t become a time consuming ‘job.’

Would a roboadvisor be a good alternative?

A good financial advisor will do a lot more than just "manage a portfolio"

The size of your assets will dictate your pricing with most advisors. That said, a simple portfolio shouldn't require a huge management fee. If you have a decent amount of money (and want to keep your Boglehead approach), you should be able to find under 1% all in.

I would not use a roboadvisor. I would consider using an hourly/retainer-based planner if you're not comfortable/cannot find acceptable AUM pricing. You should be able to find one on [EXTERNAL LINK] - The National Association of Personal Financial Advisors