Do you have a Financial Advisor?

[wendyroo]

DH and I think it is time to consult/hire a financial consultant, but we don't know where to look or start.

Over the years we have occasionally met with an advisor at our bank to discuss college savings or IRA investments, but those have always been one off appointments that just offered us suggestions. Now we want someone to actually manage our money for us.

Have you had good experiences with a large firm? Or do you prefer an individual or small group?

What are the practical considerations we should keep in mind as we look?

Thanks.

[Miss Tick]

I'm curious too. It would be nice to find someone who works for a flat fee, but that doesn't seem to be too common. Probably because to make what they are worth the fee would be higher than people want to pay - like people that want a great math or foreign language tutor for $3 an hour.

We have a legacy connection to a large, well thought of firm but they would prefer to have all of our assets invested through them, which is a bit tricky, and they would charge 10% of our investment (maybe I'm not remembering that incorrectly). DH enjoys managing our finances, so although we have discussed switching in the past, the trade off has not quite made sense. However, he spends hours a month on our finances, which can be a burden. On the other hand, neither of us likes change or any financial uncertainty, so we just keep doing what we are doing.

Are you interested in finding someone to help you set up a plan for college and retirement? Perhaps evaluate your current investment and savings vehicles? You don't strike me as needing monthly budgeting advice.

[NorthwestMom]

My husband and I have used fee-only financial advisors and that has worked very well for us. We have an array of retirement accounts, and having one person who can assess the investment balance/diversity and advise us on tax implications has been really helpful. I pick my own funds and do not need active investment management.

https://www.napfa.org/find-an-advisor

[catz]

5 minutes ago, NorthwestMom said:

My husband and I have used fee-only financial advisors and that has worked very well for us. We have an array of retirement accounts, and having one person who can assess the investment balance/diversity and advise us on tax implications has been really helpful. I pick my own funds and do not need active investment management.

https://www.napfa.org/find-an-advisor

We’ve done similar and that has been perfect for us too.  

[Bootsie]

The term "financial advisor" can refer to people providing a wide-array of financial services.  It is important to know what type of services you are wanting and needing; that will impact the type of person that you are looking for.  It is also helpful to have a bit of an idea of what type of approach to investing you want to take.  Do you want to own individual stocks?  Do you want to focus on mutual funds?  Do you want to follow an active or a passive management approach?  

[Pawz4me]

We have an investment advisor. We started with one many years ago when DH accepted a voluntary severance package that resulted in a large payout that we didn’t need to live on because he already had another job lined up. His then employer connected people with advisors with a large group. We really clicked with him and have allowed him to continue to manage a portion of our investments over the years. Several years ago he moved from the large group to a much smaller wealth management firm and we moved with him and continue to be happy with what he does for us. We feel that his advice and services have been well worth the money. 

[wendyroo]

55 minutes ago, SusanC said:

Are you interested in finding someone to help you set up a plan for college and retirement? Perhaps evaluate your current investment and savings vehicles? You don't strike me as needing monthly budgeting advice.

 

19 minutes ago, Bootsie said:

The term "financial advisor" can refer to people providing a wide-array of financial services.  It is important to know what type of services you are wanting and needing; that will impact the type of person that you are looking for.  It is also helpful to have a bit of an idea of what type of approach to investing you want to take.  Do you want to own individual stocks?  Do you want to focus on mutual funds?  Do you want to follow an active or a passive management approach?  

Bottom line, we are doing very well financially. Our only debt is our mortgage which is at a very low rate. Regardless, we are paying toward it aggressively such that it will be paid off in under 2 years, well ahead of our goal of '27 when our oldest will be entering college.

DH contributes to his 401K up to the level that his company matches. I fully fund my Roth IRA each year. We have two 529 college savings accounts which we have sporadically funded, but we are very uncertain what level of college savings makes financial sense compared to paying off the mortgage, increasing retirement savings or other types of investing.

Over the past several years, our emergency fund has grown a lot...so that now we have almost a year's salary sitting in a savings account. Obviously this is a good problem to have, and yet I cringe every time I think about that much money sitting around earning virtually no interest.

The two things we do not have are time or knowledge. We are really good at living below our means and following through on simple plans (like the mortgage repayment plan we decided on or annually putting month in my IRA), but we don't have a clear picture of what our financial goals should be at this point...or how to make them happen. Right now we spend about an hour a year thinking about our "finances" (obviously above and beyond paying bills and the like) - and that is really all the time that we can afford or want to spend on it. We are looking to pay someone more knowledgeable than us to make choices and implement them for us.

[mommyoffive]

25 minutes ago, wendyroo said:

 

Bottom line, we are doing very well financially. Our only debt is our mortgage which is at a very low rate. Regardless, we are paying toward it aggressively such that it will be paid off in under 2 years, well ahead of our goal of '27 when our oldest will be entering college.

DH contributes to his 401K up to the level that his company matches. I fully fund my Roth IRA each year. We have two 529 college savings accounts which we have sporadically funded, but we are very uncertain what level of college savings makes financial sense compared to paying off the mortgage, increasing retirement savings or other types of investing.

Over the past several years, our emergency fund has grown a lot...so that now we have almost a year's salary sitting in a savings account. Obviously this is a good problem to have, and yet I cringe every time I think about that much money sitting around earning virtually no interest.

The two things we do not have are time or knowledge. We are really good at living below our means and following through on simple plans (like the mortgage repayment plan we decided on or annually putting month in my IRA), but we don't have a clear picture of what our financial goals should be at this point...or how to make them happen. Right now we spend about an hour a year thinking about our "finances" (obviously above and beyond paying bills and the like) - and that is really all the time that we can afford or want to spend on it. We are looking to pay someone more knowledgeable than us to make choices and implement them for us.

How are you doing on retirement savings?  Are you on track or behind?  

That is awesome about paying off the house!  Congrats, you are almost there.

Yes, having a year worth of $ sitting not making much is not a good idea.  That should be addressed. 

[Annie G]

We have a financial advisor now that dh is retired. For us accumulating money was easy when dh was working-just toss money into the 401k and pick a few funds for the $ to be invested in.  But now we’re learning withdrawal strategies and a seemingly unlimited choice of investment options, and learning about tax advantages.  So the advisor actively manages some and dh handles the rest. We’ve been really happy with our choice of advisor. 
We needed someone who understands us-our lifestyle and our risk tolerance. The advisor is based in a high priced part of Atlanta area and it took a bit for him to realize that our yearly budget is truly realistic for us, since we’ve lived on this forever. (We don’t have the high costs associated with living there) Also we’re keeping our income low  to qualify for high ACA subsidies until we’re old enough for Medicare. So we’re juggling withdrawing enough taxable income to qualify but also taking out from taxable accounts because only the gains count for ACA. 
Every quarter we meet (back to in person next month! YAY) and discuss the investment strategies and what we might want to consider in the upcoming quarter.  We like to be fairly involved, though, and that might not suit the OP. 
My sister has had the same financial advisor for 25 years and talks to him maybe twice a year. She doesn’t want to be involved at all, and that works for her.  

[Miss Tick]

It sounds like your are doing really well. I feel like there is a big gap in financial planning between "how do I get started" and "I'm getting ready to retire" 😄

The link that NorthwestMom posted looks like a good place to start.

2 hours ago, wendyroo said:

Have you had good experiences with a large firm? Or do you prefer an individual or small group?

I think it is always going to come down to the connection you make to the person, or small group, that you are directly dealing with.

The list of practical concerns that I can think of always starts with fees. What fees they will charge, and if there are additional fees levied by the funds themselves, any other fees you need to know about. Those tiny sounding percentages can really add up. You will also want to know if they have a particular fund family they recommend. Some advisors are affiliated with particular funds, which isn't the end of the world, but good to be transparent about. I would ask who you will talk to when you call with questions.

I would expect the initial meeting to be free/low cost and to give some idea of what they would recommend if you decide to go with them. That means you can probably meet with a few people before making a commitment.

I've officially scraped the bottom of my knowledge barrel on this subject!

[wendyroo]

15 minutes ago, mommyoffive said:

How are you doing on retirement savings?  Are you on track or behind?  

On track.

DH is 10 years older than me. He is 50, and our children range from 12 down to 5. There is no way we will be able to pay even the majority of college costs for our kids, but we do want to be in a position to help. So starting in 6ish years, and continuing past typical retirement age (for DH), our finances will be taking a hit. That is one reason we were committed to paying off the house before we reached that stage.

Another huge factor that we have to consider is that, in all likelihood, at least one of our non-neurotypical children will not smoothly launch into adulthood. Our retirement plans need to account for possibly housing and supporting one or more adult children who cannot fully support themselves.

[catz]

Oh we are/were in a very similar position.  We paid off our mortgage about 2 years ago, have no debt, and have a lot in savings.  The periodic/fee based advisor helped us with large chunks of savings ideas and how much to have.  Most people are good to have 6 months accessible and most people do not have anywhere near that amount.  I just heard a story about savings and economy, etc on public radio this week and they said 25% of Americans have no regular savings.  

I just think the ones that are constantly playing with your money are generally WAY overpriced for what they do.  My 75 yo mom is quite well off (owns 2 homes outright, has plenty of money) and does have a FA like this.  But after my father died, she just needed to get that off her plate and I personally have no interest in being in charge of her money when we are doing pretty simple things with our own.  

One thing I will say, we live very conservatively and having savings, a paid mortgage, really hurt us with college pricing at some schools if your kids are college bound.  No world we really cannot afford what the richest in society pay for private colleges.  My kid got a great scholarship and will graduate debt free.  Actually out financial adviser was really good to talk to about us about keeping it real when it came to knowing what we could ACTUALLY budget for college (which has zero to do with what the FA says we can afford) while making good choices for retirement and the future.  

[J-rap]

We have a financial advisor who is excellent.  Our situation is extremely complicated, so it's worth it to us to pay the fees.  We meet with him in-person 4 times/year, and he's always available to answer any question and help us through any financial decision, just a phone call away.  How did we find him?  We asked for referrals from friends who we very much trusted and whom we knew had financial advisors themselves.

[DawnM]

Yes????

My husband works for a large financial firm as an accountant.   He does pretty well with money, and would probably do better if it weren't for the pesky wife and kids.....🤣

We both max out our works' retirement matching amounts and then we have been saving about 1/2 of my salary for a set amount of time, probably Jan, 2022, but we may go longer.

My salary was to pay for the boys' college expenses and we currently have no one in college.   We will in a year though, we may have more than one, so we will see.

But we have a spreadsheet and our goals.   We are falling short on somethings but we have a plan.

[Ottakee]

A great book to give you basic knowledge is The Simple Path to Wealth.

I also learned a great deal at Vanguard website.   Lots of great information.

Just watch the fees    some want to charge 1-3% AUM ( Asset under management) fee and that will eat up your profits.

Vanguard has an advisor for 0.3% which is very low.  My friend is very pleased with this.

I would max out your ROTH IRA if you can....I just chose a target date fund from Vanguard....super simple.

[TravelingChris]

1 hour ago, FuzzyCatz said:

Oh we are/were in a very similar position.  We paid off our mortgage about 2 years ago, have no debt, and have a lot in savings.  The periodic/fee based advisor helped us with large chunks of savings ideas and how much to have.  Most people are good to have 6 months accessible and most people do not have anywhere near that amount.  I just heard a story about savings and economy, etc on public radio this week and they said 25% of Americans have no regular savings.  

I just think the ones that are constantly playing with your money are generally WAY overpriced for what they do.  My 75 yo mom is quite well off (owns 2 homes outright, has plenty of money) and does have a FA like this.  But after my father died, she just needed to get that off her plate and I personally have no interest in being in charge of her money when we are doing pretty simple things with our own.  

One thing I will say, we live very conservatively and having savings, a paid mortgage, really hurt us with college pricing at some schools if your kids are college bound.  No world we really cannot afford what the richest in society pay for private colleges.  My kid got a great scholarship and will graduate debt free.  Actually out financial adviser was really good to talk to about us about keeping it real when it came to knowing what we could ACTUALLY budget for college (which has zero to do with what the FA says we can afford) while making good choices for retirement and the future.  

Yes FA said we could use 1/3 of our income for college=no way at all and we never did.

[catz]

7 minutes ago, TravelingChris said:

Yes FA said we could use 1/3 of our income for college=no way at all and we never did.

Our EFC was over half of our take home pay. 😂🤪  Based on a year where DH got a large bonus.   We live in a somewhat HCOL area.  That whole FA system is just completely broken IMO.  We live in a 2200 sq ft house that needs work, drive Kia vehicles into the ground, do the occasional vacation.  Definitely aren't living like the rich and famous over here.  

Edited July 22, 2021 by FuzzyCatz

[Sunshine State Sue]

We started with Edward Jones in 1995 when my fil passed away and we inherited some money.  I chose a particular advisor because a smart friend of mine used him and liked him.   Eventually, his business grew enough that he moved us off to his associate.  Then we moved 2x and wanted a local advisor.  Then I didn’t like one advisor we had and moved to another.  We stay with Edward Jones because dh doesn’t want to change.

Here is a book recommendation.  How to Retire With Enough Money (and How to Know What Enough Is) by Teresa Ghilarducci.  It’s 116 pages long.  Here are 2 quotes:

On page 16 (this is in reference to 401K managers but this applies to EJ as well): They manage money in a professional manner, but they are conflicted, they further the interests of the financial institution, not you.

On page 75: Fiduciary loyalty essentially means an ethical obligation to you, the customer.

There have been times over the years that I felt pressured to do something that I did not think was in my best interest.  For example, I felt that our advisor highlighted the pros of long-term care insurance and downplayed the cons.  I will say that sometimes I feel pressured, but dh feels the advisor is just giving us information.  With EJ, your fees are hidden.  For a few years, the law required that they inform you of your fees, but that is not the case anymore and I have to specifically ask for the information.  Our fees are $1000+ per year.

About 6 years ago, dh and I started ROTH IRAs.  His is with EJ.  Mine is with Vanguard.  We contribute he same amount each year, but my account is considerably larger than his.

If I had to do it all over again, I would not choose EJ because they do not have a fiduciary responsibility.  I would choose a fee-only certified financial planner with a fiduciary responsibility.

YMMV.

Edited July 22, 2021 by Sunshine State Sue

[TravelingChris]

2 minutes ago, FuzzyCatz said:

Our EFC was over half of our take home pay. 😂🤪  Based on a year where DH got a large bonus.   We live in a somewhat HCOL area.  That whole FA system is just completely broken IMO.  We live in a 2200 sq ft house that needs work, drive Kia vehicles into the ground, do the occasional vacation.  Definitely aren't living like the rich and famous over here.  

Yeah-  we had old vehicles, old house, and I am disabled.  Fortunately, dd2's school took that into consideration and our costs were much lower.

[TravelingChris]

Just now, TravelingChris said:

Yeah-  we had old vehicles, old house, and I am disabled.  Fortunately, dd2's school took that into consideration and our costs were much lower.

Oh and our EFC was more than the school cost- which was ridiculous.

[catz]

7 minutes ago, TravelingChris said:

Oh and our EFC was more than the school cost- which was ridiculous.

LOL our EFC was over the cost of any school in the country.  🤣

I am not denying our privilege AT ALL.  But in a country with very few social safety nets for retirement or health care people who have been able to having amounts widely considered prudent by financial planners I think it's unfortunate that the college system doesn't use more sophisticated calculators.  We came to parenthood later than many too.  I'm glad we found a good solution and I am sure we will have options for our 2nd kid too, I am really in favor of an overhaul of that whole system.  

Edited July 22, 2021 by FuzzyCatz

[Bootsie]

3 hours ago, wendyroo said:

 

Bottom line, we are doing very well financially. Our only debt is our mortgage which is at a very low rate. Regardless, we are paying toward it aggressively such that it will be paid off in under 2 years, well ahead of our goal of '27 when our oldest will be entering college.

DH contributes to his 401K up to the level that his company matches. I fully fund my Roth IRA each year. We have two 529 college savings accounts which we have sporadically funded, but we are very uncertain what level of college savings makes financial sense compared to paying off the mortgage, increasing retirement savings or other types of investing.

Over the past several years, our emergency fund has grown a lot...so that now we have almost a year's salary sitting in a savings account. Obviously this is a good problem to have, and yet I cringe every time I think about that much money sitting around earning virtually no interest.

The two things we do not have are time or knowledge. We are really good at living below our means and following through on simple plans (like the mortgage repayment plan we decided on or annually putting month in my IRA), but we don't have a clear picture of what our financial goals should be at this point...or how to make them happen. Right now we spend about an hour a year thinking about our "finances" (obviously above and beyond paying bills and the like) - and that is really all the time that we can afford or want to spend on it. We are looking to pay someone more knowledgeable than us to make choices and implement them for us.

Does the firm that handles the 401K for your husband's firm have a financial advisor who will meet with you and do a basic overview/plan?  For many people, the 401K money is the single largest investment they have, so having someone who is familiar with the options associted with that plan is a good place to start.  Many 401K plans have greatly reduced/simplified the chioces of investment options.  That person would also know how much more you might be able to be contributing to tax-favored retirement plans through payroll deduction, which would be someone on auto-pilot for you so that you do no have to spend time on it.

If that is not available or you need someone pass that, I would favor a fee-based financial advisor rather than a firm that charges a % for investment decisions.

[Tree Frog]

1 hour ago, Sunshine State Sue said:

We started with Edward Jones in 1995 when my fil passed away and we inherited some money.  I chose a particular advisor because a smart friend of mine used him and liked him.   Eventually, his business grew enough that he moved us off to his associate.  Then we moved 2x and wanted a local advisor.  Then I didn’t like one advisor we had and moved to another.  We stay with Edward Jones because dh doesn’t want to change.

 

Here is a book recommendation.  How to Retire With Enough Money (and How to Know What Enough Is) by Teresa Ghilarducci.  It’s 116 pages long.  Here are 2 quotes:

 

On page 16 (this is in reference to 401K managers but this applies to Edward Jones as well): They manage money in a professional manner, but they are conflicted, they further the interests of the financial institution, not you.

 

On page 75: Fiduciary loyalty essentially means an ethical obligation to you, the customer.

 

There have been times over the years that I felt pressured to do something that I did not think was in my best interest.  For example, I felt that our advisor highlighted the pros of long-term care insurance and downplayed the cons.  I will say that sometimes I feel pressured, but dh feels the advisor is just giving us information.  With Edward Jones, your fees are hidden.  For a few years, the law required that they inform you of your fees, but that is not the case anymore and I have to specifically ask for the information.  Our fees are $1000+ per year.

 

About 6 years ago, dh and I started ROTH IRAs.  His is with EJ.  Mine is with Vanguard.  We contribute he same amount each year, but my account is considerably larger than his.

 

If I had to do it all over again, I would not choose Edward Jones because they do not have a fiduciary responsibility.  I would choose a fee-only certified financial planner with a fiduciary responsibility.

 

YMMV.

 

We started with a company in the early 90's that is supposed to help military and often had local FA's in the areas where we were stationed. They recommended a 3 prong approach: retirement, investments, and life insurance. I've been dissatisfied with the FA we currently have for a myriad of reasons since we started with him. With the info given last week, dh is also dissatisfied. (We were led to believe one of the 3 prongs was different than what it is. I don't believe life insurance should be used as a retirement tool.) However, he feels we should stay with this particular company because he will likely pass away before me and he wants someone to help me navigate the military system when that happens. This FA isn't a man I would trust to act in my best interests if I'm widowed and I'm lobbying hard to change to a different company. All that to say, I'm following along to glean information.

[wendyroo]

3 minutes ago, Bootsie said:

I would favor a fee-based financial advisor rather than a firm that charges a % for investment decisions.

I think this is what we are leaning toward: a fee-based fiduciary. Also, in our situation, it is an absolute non-negotiable that they are able to meet virtually - there are simply no safe child care options, I refuse to conduct financial meetings while also entertaining 4 immature children in an office building, and I think it is important, especially initially, for DH and I to both participate in the meetings.

DH has set up free "introductory" meetings with two companies next week. Both of the websites were very vague about fee structure, so I am dubious that they are actually what we are looking for, but it is a place to start.

 

[Annie G]

2 hours ago, Sunshine State Sue said:

 

On page 16 (this is in reference to 401K managers but this applies to Edward Jones as well): They manage money in a professional manner, but they are conflicted, they further the interests of the financial institution, not you.

 

About 6 years ago, dh and I started ROTH IRAs.  His is with EJ.  Mine is with Vanguard.  We contribute he same amount each year, but my account is considerably larger than his.

 

 

I’m not sure I necessarily agree with the quote. I feel that our firm is very interested in making money for us. If they don’t, we’ll take our money elsewhere.  I mean, every business is trying to make money for themselves while also giving their customer good service and good value. Whether it’s a restaurant, a retail store, a construction trade…they are balancing making money while also giving the customer good value. I’m not convinced financial advisors are doing any less for my interest than my local plumber is when I need their service.

 

As for two Roths with equal investments but different returns, Vanguard has very low fees. But are you saying it’s more than the fee cost that is the difference? Are the investments showing different gross returns? We use Vanguard but haven’t ever used EJ.   But even Total Stock Market funds will vary because it depends on how each are weighed. They usually have many of the same stocks but at different percentages.  That alone changes gross growth.   My IRA is more aggressively invested than dh’s but neither of us are ‘wrong’. Just different approaches. 

[kbutton]

5 hours ago, wendyroo said:

Bottom line, we are doing very well financially. Our only debt is our mortgage which is at a very low rate. Regardless, we are paying toward it aggressively such that it will be paid off in under 2 years, well ahead of our goal of '27 when our oldest will be entering college.

DH contributes to his 401K up to the level that his company matches. I fully fund my Roth IRA each year. We have two 529 college savings accounts which we have sporadically funded, but we are very uncertain what level of college savings makes financial sense compared to paying off the mortgage, increasing retirement savings or other types of investing.

Over the past several years, our emergency fund has grown a lot...so that now we have almost a year's salary sitting in a savings account. Obviously this is a good problem to have, and yet I cringe every time I think about that much money sitting around earning virtually no interest.

The two things we do not have are time or knowledge. We are really good at living below our means and following through on simple plans (like the mortgage repayment plan we decided on or annually putting month in my IRA), but we don't have a clear picture of what our financial goals should be at this point...or how to make them happen. Right now we spend about an hour a year thinking about our "finances" (obviously above and beyond paying bills and the like) - and that is really all the time that we can afford or want to spend on it. We are looking to pay someone more knowledgeable than us to make choices and implement them for us.

A FA would absolutely be able to help with all of this. Ours makes money from our investments, but I think it's tiny. We met with her a time or two, but now that we're set up with most things (she made sure we had our estate plan, insurances, etc. all in order as well), we mostly just e-mail her if we have a question. She lives in a different state, but that hasn't been a problem, though if we lived in the same state, she could've helped more directly with some of the side things like insurance (she offers many services, and she is a CPA as well as an attorney, IIRC). 

Different advisors will have different preferences, but they should all talk about goals, and if they want you to change something major, they should be able to explain why. For instance, of FA prefers we put money into retirement over paying off the mortgage, but I am sure that advice would vary if our circumstances were different. We don't have 529 plans due to having 2e kids, so that makes a difference as well. 

Nicely done on being so proactive and on the emergency savings. I am sure and advisor can offer you an accessible fund that will be better than savings. :-) 

4 hours ago, wendyroo said:

On track.

DH is 10 years older than me. He is 50, and our children range from 12 down to 5. There is no way we will be able to pay even the majority of college costs for our kids, but we do want to be in a position to help. So starting in 6ish years, and continuing past typical retirement age (for DH), our finances will be taking a hit. That is one reason we were committed to paying off the house before we reached that stage.

Another huge factor that we have to consider is that, in all likelihood, at least one of our non-neurotypical children will not smoothly launch into adulthood. Our retirement plans need to account for possibly housing and supporting one or more adult children who cannot fully support themselves.

You might specifically ask about a SN trust. Your FA may be more of a support about this than a knowledge base--you might need to see a SN attorney who does estate planning. 

[Sunshine State Sue]

1 hour ago, Annie G said:

As for two Roths with equal investments but different returns, Vanguard has very low fees. But are you saying it’s more than the fee cost that is the difference? Are the investments showing different gross returns? 

Yes, Vanguard has very low fees.  EJ, because it is more actively managed, has higher fees.  That may be partially why my ROTH is larger than dh's ROTH.  EJ is never going to steer you towards low fee index funds.  They are not profitable enough for EJ.

I'm glad you like and trust your firm.  Is it a national chain whose name you would be willing to share?

ETA: EJ has made money for us, which is partially why dh is reluctant to change.  Still, I'm not convinced they have my best interest at heart.

Edited July 22, 2021 by Sunshine State Sue

[Wildcat]

2 hours ago, wendyroo said:

I think this is what we are leaning toward: a fee-based fiduciary. Also, in our situation, it is an absolute non-negotiable that they are able to meet virtually - there are simply no safe child care options, I refuse to conduct financial meetings while also entertaining 4 immature children in an office building, and I think it is important, especially initially, for DH and I to both participate in the meetings.

DH has set up free "introductory" meetings with two companies next week. Both of the websites were very vague about fee structure, so I am dubious that they are actually what we are looking for, but it is a place to start.

 

Part of the reason the websites are vague with fee structure is that there are often lots of hidden fees that are only found in the fine print of paperwork once you sign up. One thing that catches people off guard is the fee to move your money to a different place, should you so desire.

You are being smart to find a fiduciary, fee-only advisor. Another thing is that many will call themselves fiduciaries, but they really aren't... it's not that they are lying, but that many just don't understand what that is.

Do you have any family or friends with money who you can ask for names of people you can interview?

If you and/or your dh have any interest in learning to do this on your own, it's not that difficult. The important part is having the interest so you can learn. If that's missing, you are far better off with an advisor.

56 minutes ago, kbutton said:

A FA would absolutely be able to help with all of this. Ours makes money from our investments, but I think it's tiny. We met with her a time or two, but now that we're set up with most things (she made sure we had our estate plan, insurances, etc. all in order as well), we mostly just e-mail her if we have a question. She lives in a different state, but that hasn't been a problem, though if we lived in the same state, she could've helped more directly with some of the side things like insurance (she offers many services, and she is a CPA as well as an attorney, IIRC). 

Different advisors will have different preferences, but they should all talk about goals, and if they want you to change something major, they should be able to explain why. For instance, of FA prefers we put money into retirement over paying off the mortgage, but I am sure that advice would vary if our circumstances were different. We don't have 529 plans due to having 2e kids, so that makes a difference as well. 

Nicely done on being so proactive and on the emergency savings. I am sure and advisor can offer you an accessible fund that will be better than savings. 🙂

You might specifically ask about a SN trust. Your FA may be more of a support about this than a knowledge base--you might need to see a SN attorney who does estate planning. 

OP, you should definitely meet with an attorney who handles SN trusts, as @kbutton said.  He/she should have some suggestions on structuring things, and that should help you with the terminology when speaking to an advisor.

 

[madteaparty]

DH does all that, I keep a general eye. 
If I found myself alone I would be using index funds exclusively which I would pick myself. So I guess no, we don’t have and wouldn’t have an investment advisor. 
Eta that if I absolutely needed one I would go through personal recommendations 

Edited July 22, 2021 by madteaparty

[Ottakee]

41 minutes ago, Sunshine State Sue said:

Yes, Vanguard has very low fees.  EJ, because it is more actively managed, has higher fees.  That may be partially why my ROTH is larger than dh's ROTH.  EJ is never going to steer you towards low fee index funds.  They are not profitable enough for EJ.

I'm glad you like and trust your firm.  Is it a national chain whose name you would be willing to share?

ETA: EJ has made money for us, which is partially why dh is reluctant to change.  Still, I'm not convinced they have my best interest at heart.

Read the book, The Simple Path to Wealth. 

Likely you could roll it all over to Vanguard and stop paying the high fees.

[PeterPan]

3 hours ago, wendyroo said:

meet virtually

Any advisor should be able to meet virtually. This has now become the norm.

Yes you want someone with fiduciary responsibility, but no I don't think it's as clearcut as Edward Jones not having one. I think it may depend on the products. You could google. As long as the profits make the fee worthwhile, to me it's all good. You have enough to get into Edward Jones' better tier (where the rates drop and the service improves), so it's worth comparing. My dh put us there and we have a complete hands off approach. My father put his money with an EJ person in his state who was a SCOUNDREL, a used car salesman (literally) who never should have been handling money. The guy sold him all kinds of crap (before the fiduciary responsibility changes) and we had to clean it up. 

So there are scoundrels and people with their heads on straight. You can usually tell the ones who are good because they are too full to get into, sorry. I would have some hesitancy about advisors completely on their own. Could be fine or could be not. (stories, jail time) I looked at individuals when I was moving my dad's money but decided to keep it within EJ.

Make sure you get good advice on your IRAs btw. Your people will tell you this, but you have to roll over very carefully when moving them. 

54 minutes ago, Sunshine State Sue said:

EJ, because it is more actively managed, has higher fees. 

They have tiers of management and the fees *drop* when you have more in. My dad's fees dropped in half when I brought him over to our EJ. And I could cut them further if I wanted to be involved in the management. It wasn't worth the stress to me, so I went with the highest level of management, the don't bug me with anything plan. 

[PeterPan]

18 minutes ago, Ottakee said:

Read the book, The Simple Path to Wealth. 

Likely you could roll it all over to Vanguard and stop paying the high fees.

What does this mean?

**Vanguard is client-owned. As a client owner, you own the funds that own Vanguard.

[Annie G]

1 hour ago, Sunshine State Sue said:

Yes, Vanguard has very low fees.  EJ, because it is more actively managed, has higher fees.  That may be partially why my ROTH is larger than dh's ROTH.  EJ is never going to steer you towards low fee index funds.  They are not profitable enough for EJ.

I'm glad you like and trust your firm.  Is it a national chain whose name you would be willing to share?

ETA: EJ has made money for us, which is partially why dh is reluctant to change.  Still, I'm not convinced they have my best interest at heart.

Fidelity and Vanguard are who we use, with the majority in Fidelity.    For the past two years (that’s the data I have right here), even with fees, our managed accounts have earned a higher return than our self managed accounts.  It’s close, but when you factor in the tax advantaged investments the managed are clearly doing better. I really have no idea how to invest in tax free things(I don’t mean Roth, I mean muni bonds and such), foreign things, etc. which is what we’re learning by being actively involved in how the managed accounts are being run.  
I’d love to learn enough to feel confident in managing all our accounts but since we’re retired, I’m pretty cautious about biting off more than I can chew.

[Clarita]

We have a financial advisor. I believe we pay them a flat fee and they manage some of our stocks for us, but not all of our finances - they don't even pick the stocks. They help us to "leverage our positions" (or make sure if our stocks drop we don't lose too much money because they've done stuff with our stocks to get cash to cover those loses). My husband gives them how much money we want to make a year (in percentages of course), with the knowledge that the "more" we want to make the more risk that is involved. If you are interested in that sort of thing I can ask my husband how it works (again, I think this would be his 3rd time telling me).  I can take notes and give you all the technical terms of what the financial advisor does for us.

We have been pretty satisfied with the performance. They don't do anything that is beyond what my husband could have done. It's worth it to us because it's pretty stressful to watch your stock prices go up and down everyday, plus they are watching the stocks full time so my husband can focus on the work that is giving us the bulk of our money and spend time with the family.

[Sunshine State Sue]

7 hours ago, Ottakee said:

A great book to give you basic knowledge is The Simple Path to Wealth.

Who is the author? JL Collins?  I see another...

[Sunshine State Sue]

2 hours ago, Ottakee said:

Likely you could roll it all over to Vanguard and stop paying the high fees.

I do plan to roll over my 401K to Vanguard.  I don't think I will be able to persuade dh to do the same with EJ. 😆

[Bootsie]

7 hours ago, Clarita said:

We have a financial advisor. I believe we pay them a flat fee and they manage some of our stocks for us, but not all of our finances - they don't even pick the stocks. They help us to "leverage our positions" (or make sure if our stocks drop we don't lose too much money because they've done stuff with our stocks to get cash to cover those loses). My husband gives them how much money we want to make a year (in percentages of course), with the knowledge that the "more" we want to make the more risk that is involved. If you are interested in that sort of thing I can ask my husband how it works (again, I think this would be his 3rd time telling me).  I can take notes and give you all the technical terms of what the financial advisor does for us.

We have been pretty satisfied with the performance. They don't do anything that is beyond what my husband could have done. It's worth it to us because it's pretty stressful to watch your stock prices go up and down everyday, plus they are watching the stocks full time so my husband can focus on the work that is giving us the bulk of our money and spend time with the family.

As far as the bolded, is this a term that you are using or is it a term that your financial advisor is using?  In financial/investing terms, this terminology would mean that you are borrowing to buy a financial asset.  So, you might want to buy $10,000 worth of Apple stock and you use $5000 of your money and borrow $5000 of your broker's money.  That way you can make a return on $10,0000 worth of stock with only a $5000 investment (minus the interest you pay to your broker).  The risk is that if Apple stock goes down in value you can lose your money and still owe your broker money.  

[Bootsie]

8 hours ago, PeterPan said:

What does this mean?

**Vanguard is client-owned. As a client owner, you own the funds that own Vanguard.

It is somewhat akin to how a credit union does not have outside stockholders and customers; if you have an account at a credit union you have shares in the credit union.  

[Ottakee]

7 hours ago, Sunshine State Sue said:

Who is the author? JL Collins?  I see another...

Yes the JL Collins one 

[PeterPan]

5 hours ago, Bootsie said:

It is somewhat akin to how a credit union does not have outside stockholders and customers; if you have an account at a credit union you have shares in the credit union.  

But doesn't that seem like almost a ponzi scheme when it comes to investments? If you have money in a credit union, you have FDIC covering your loss if something happens. But if buying into Vanguard means you own funds that are Vanguard (ie. you're heavily invested in vanguard), then you're dependent on telling people who great vanguard is, people buying vanguard so you can withdraw from vanguard, and so on. You're suspceptible to any falls, whims, internal issues, illegalities whatever with vanguard. 

Just trying to figure this out, because that doesn't seem like a good plan. How much are they investing in outside funds vs. their own company? 

I mean, I don't want to be jipped any more than the next person but it seems odd to me and like there's some risk involved there. The whole point of investing is diversified risk.

[AngelaGT]

I use Vanguard.com.

I pay the extra percent fee for management services of my retirement accounts.  I can arrange phone sessions with them when ever I want and they are very patient to answer all of my questions.  Their website has a tremendous amount of educational material.  My IRA seems to perform better thank my husbands 401K with Prudential with the school system.  We maximize our retirement savings yearly-as we are able.

[Ottakee]

1 hour ago, PeterPan said:

But doesn't that seem like almost a ponzi scheme when it comes to investments? If you have money in a credit union, you have FDIC covering your loss if something happens. But if buying into Vanguard means you own funds that are Vanguard (ie. you're heavily invested in vanguard), then you're dependent on telling people who great vanguard is, people buying vanguard so you can withdraw from vanguard, and so on. You're suspceptible to any falls, whims, internal issues, illegalities whatever with vanguard. 

Just trying to figure this out, because that doesn't seem like a good plan. How much are they investing in outside funds vs. their own company? 

I mean, I don't want to be jipped any more than the next person but it seems odd to me and like there's some risk involved there. The whole point of investing is diversified risk.

No, that isn't how it works.   With vanguard you are investing in the exact same investments as other companies....be it mutual fund, bond, stocks, etc.   So you investments are just as secure and just as risky as other places.   The difference is the fees.  Other, for profit ones charge higher fees and often they make commissions and extra fees for getting you to invest in their higher fee options.   Vanguard fees are very low for the exact same funds.

For example, if you buy stock in Apple from place A or from Vanguard you pay the exact same price for it (provided it is bought at the same time) and either gain or lose the exact same amount.   Place A though might charge you a 1% fee for their services to help you buy Apple where Vanguard only changes 0.03%......over time that means you have a lot more money left.

Hopefully others can explain it better.

[PeterPan]

12 minutes ago, Ottakee said:

With vanguard you are investing in the exact same investments as other companies.

Oh I'm sure some things are the same. Just there must be something different, the something that line is referring to. 

 

[Ottakee]

2 minutes ago, PeterPan said:

Oh I'm sure some things are the same. Just there must be something different, the something that line is referring to. 

 

The difference is the fees.  Vanguards are much lower, meaning you keep more of your money and over time that really adds up.

[KSera]

In looking at fee based fiduciaries from the NAFPA list shared earlier, I'm wondering how typical it is for them to want you to move everything to whichever money management firm they work with. They say they have no relationship with the company, but use it so they have access to moving your money around for you. I understand they need a way to do that if you don’t want to be the one to handle the actual transactions. I don’t like that though, and am wondering how common. I’m thinking we would need to do the actual handling ourselves to get around that, and just use the FA for advice. 

Edited July 23, 2021 by KSera
typo

[Ottakee]

This is another good book on basic investing and how to find a financial advisor.

The Boglehead's Guide to Investing

[Ottakee]

1 hour ago, KSera said:

In looking at fee based fiduciaries from the NAFPA list shared earlier, I'm wondering how typical it is for them to want you to move everything to whichever money management firm they work with. They say they have no relationship with the company, but use it so they have access to moving your money around for you. I understand they need a way to do that if you don’t want to be the one to handle the actual transactions. I don’t like that though, and am wondering how common. I’m thinking we would need to do the actual handling ourselves to get around that, and just use the FA for advice. 

Most of the time they will want you to move everything to them as then they earn more money.  Most advisors will charge an AUM fee (assets under management).

So say, you have $100 with them and they charge 2%, they take $2 out of your account.....every year.    So, $100,000 accounts means $200/year and so on.

Over 20-30 years all of that money adds up as that is money you aren't investing for all of those years.

Fee only means they don't get a commission.   Some will work for just an hourly rate but most want to manage your money as then over time they have a steady stream of your income.

Another thing to watch is actively managed funds (especially those that are in taxable accounts) can really cost a lot in taxes if they do a lot of buying and selling and you have to pay short term capital gains.

[Bootsie]

6 hours ago, PeterPan said:

But doesn't that seem like almost a ponzi scheme when it comes to investments? If you have money in a credit union, you have FDIC covering your loss if something happens. But if buying into Vanguard means you own funds that are Vanguard (ie. you're heavily invested in vanguard), then you're dependent on telling people who great vanguard is, people buying vanguard so you can withdraw from vanguard, and so on. You're suspceptible to any falls, whims, internal issues, illegalities whatever with vanguard. 

Just trying to figure this out, because that doesn't seem like a good plan. How much are they investing in outside funds vs. their own company? 

I mean, I don't want to be jipped any more than the next person but it seems odd to me and like there's some risk involved there. The whole point of investing is diversified risk.

No, it is not like an investment ponzi scheme.  It is more like a co-op.  

People are not investing "in Vanguard".  It is more like they are investing "through Vanguard".  Vanguard will have a mutual fund, such as their VTSAX.  Investors purchase shares in the fund, and the money they use to purchase the shares is then used by the fund managers to purchase stocks.  Stocks from almost 4000 different companies are purchased with this pool of money.  Alphabet, Microsoft, Amazon, Apple, Facebook, and Tesla are the stocks in which the most money is invested.  A much smaller percentage of the money is used to purchase stock of smaller companies.  The fund is really a large, diversified investment that was purchased with pooled money.  The investors make money when a company such as Microsoft pays dividends or the stock price for the company increases.  Then the value of the mutual fund rises, with investors benefiting relative to the portion of the pool they funded.  

Investors don't make more money because their friends also invest through VTSAX.  That makes the fund bigger, and the fund purchases more shares.  But, there is a new investor who gets a proportionate return in the future.  Investors in VTSAX will not do any better than the returns in the individual underlying stocks held by the fund.  It would be impossible for me to purchase stock in almost 4000 different companies to diversify my portfolio in the way I can do so as being a part of the mutual fund pool Vanguard offers.  

The risk that an investor has is that Alphabet, Microsoft, and the other companies that are held in the fund drop in value.  There is SIPC insurance that provides coverage for investors if Vanguard took their $10,000 and didn't purchase the stocks in the funds but took off to a remote island.  In other words, it insures that if the company says there are 100 shares of Amazon, there are 100 shares of Amazon.  SIPC does not guarantee the VALUE of the Amazon stock.

 

[Bootsie]

5 hours ago, KSera said:

In looking at fee based fiduciaries from the NAFPA list shared earlier, I'm wondering how typical it is for them to want you to move everything to whichever money management firm they work with. They say they have no relationship with the company, but use it so they have access to moving your money around for you. I understand they need a way to do that if you don’t want to be the one to handle the actual transactions. I don’t like that though, and am wondering how common. I’m thinking we would need to do the actual handling ourselves to get around that, and just use the FA for advice. 

It sounds as if you are looking for a fee-only finance advisor to provide a plan for you to follow and should look for someone who will charge an hourly rate (or a flat fee to develop a plan).  

You would not want an advisor who charges a fee based upon "assets under management" from what you state.  In that situation the advisor is using a third party to provide the logistics of buying stocks, selling stocks, and the record keeping involved with that.  Whenever I have looked at the commission fees those third parties charge, they have been much higher than buying and selling stocks on my own.  Some of that is due to the record-keeping and regulatory loophools they have to jump through.  

 

[2squared]

I determined basic financial plans for us to follow early in our marriage. Once those plans were established, I spent minimal time managing our finances because everything is on auto pilot. 

My first priority is retirement. We contribute at least 15% of our combined income into a 401k, and we invest in the appropriate target retirement fund. At our income level and tax rate, Roth IRA’s are not an optimal choice, but we did invest in Roth’s when our income tax liability was $0, because then it did make sense. When I complete our taxes, I can see where we compare to standard benchmarks like x savings by y years old. Once set, retirement funding is on autopilot  

I determined how many years I wanted to take to pay off our mortgage when we bought our house, I set up the automatic payment, and I haven’t thought about it since. 

I determined how much we need to pay for the kids’ college, and I set that amount to automatically transfer to a money market account at Vanguard. As long as the kids’ college expenses are in line with my initial estimates, I don’t need to review further. 

I determined how much cash I want on hand for an emergency fund. Since my other goals are on autopilot, when we have more than the target emergency fund, we know we can splurge. I have an investment account for excess funds, and I channel money there when our bank account gets too big. I draw it down when we splurge on wants - kid vehicles, vacations, remodeling, etc. 

Our wealth building and goals are are on autopilot and we have a healthy income, so we are at the stage where we are OK spending.