Benefit in having a financial adviser?

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cyanide12345678

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I'm curious if others are utilizing a financial adviser. Do you guys feel they are worth whatever cost you pay? And out of curiosity, what cost are you guys paying?

I personally think a good tax accountant is definitely worth it, but I haven't quite understood what a financial adviser adds to the equation that I myself cannot do as well, if not better. Having said that, I like to think of myself as financially savvy as I self manage several personal broker accounts, and have done so since college. I don't feel I need a person to tell me that I need to open up a Sep-IRA account and max it at 55k once my 1099 contract kicks in, or that I need to start putting money in a 529 plan once I have children.

If you're going to argue that a financial adviser regularly checks up on your portfolio and redistributes and manages asset allocations based on age and long term goals which is cumbersome to do yourself, then I'll argue that some of the latest trading platforms can perform this function in a couple of clicks.

So...What am I missing? Why do we need someone to manage our money?

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I would argue that there is benefit to expertise, and it is worth paying for it. Just as a good realtor expertise is valuable or an estate planner, or a mechanic.

Could you go through Vanguard or Fidelity and do all those things? Sure. I also don't let an adviser "manage my money." It's my money. They advise me, and help plan what I'm doing.
 
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In my experience, these guys are great for people who want to focus on earning as much money as they can and really don't want to think/worry about investing/retirement. These investors want to mentally "check out" as far as retirement investing goes. They value having someone local, a familiar face they can call or meet whenever they want to discuss their money. There's nothing wrong with any of that.

Anytime I've met these guys, there's really nothing that they can offer that I can't do myself. It's not like they can guarantee you to outperform the market from year to year. Also, keep in mind that you can have access to a financial advisor and/or even have all your money managed by someone with any of the major brokerage firms (Vanguard, Fidelity, etc..). The financial advisors are free and aren't charging you for every investment or a set rate every year like a financial advisor is going to do.

Personally, I don't think local financial advisors are worth it. I think the happy medium for most investors is to find a good broker like Vanguard or (take your pick) and find a good collection of managed mutual funds and/or ETFs and diversify your portfolio that way. If you are still struggling on where to start, just call them. I can speak for Vanguard in that it's really as simple as setting up an appt to speak with an advisor and telling them what your goals are...he/she will even put together a model portfolio for you based on your goals. If you want it actively managed for a fee, then they'll do that too. The fee is usually much less than what a local financial advisor would charge.
 
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I think I've posted this information on here before but my SEP is with Vanguard and is 100% mutual funds. I max that out early in the year and then everything else goes into a taxed TDA brokerage account that I use for stocks, ETFs, etc... I also like the trading and research tools on TDA. I rarely use an advisor. I'm savvy with investing but no WCI so I can't guarantee that my investing strategy is optimized but so far, it works for me.
 
Personally, I don't think local financial advisors are worth it. I think the happy medium for most investors is to find a good broker like Vanguard or (take your pick) and find a good collection of managed mutual funds and/or ETFs and diversify your portfolio that way. If you are still struggling on where to start, just call them. I can speak for Vanguard in that it's really as simple as setting up an appt to speak with an advisor and telling them what your goals are...he/she will even put together a model portfolio for you based on your goals. If you want it actively managed for a fee, then they'll do that too. The fee is usually much less than what a local financial advisor would charge.

The simplified version of my investment strategy is essentially letting wealthfront figure out a "model portfolio" and asset allocation based on my goals and risk tolerance. Then to avoid the 0.25% fee, I essentially customize/mimic their suggested portfolio on m1finance which takes robo investing to a whole new level with automatic dividend reinvestment and portfolio rebalancing based on asset allocation, all of that for 0 fee. I have free access to a financial advisor through my sofi wealth account which I've never used as I've never thought I needed it. My trading (not investing) platform of choice is e-trade (got grandfathered in after E-trade bought optionshouse). And 1% of my portfolio is dedicated to quite simply gambling on Robinhood (have a limit buy order for bitcoin at 3k that hasn't gone through yet - This is gambling money and doesn't count lol).
 
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I'm curious if others are utilizing a financial adviser. Do you guys feel they are worth whatever cost you pay? And out of curiosity, what cost are you guys paying?

I personally think a good tax accountant is definitely worth it, but I haven't quite understood what a financial adviser adds to the equation that I myself cannot do as well, if not better. Having said that, I like to think of myself as financially savvy as I self manage several personal broker accounts, and have done so since college. I don't feel I need a person to tell me that I need to open up a Sep-IRA account and max it at 55k once my 1099 contract kicks in, or that I need to start putting money in a 529 plan once I have children.

If you're going to argue that a financial adviser regularly checks up on your portfolio and redistributes and manages asset allocations based on age and long term goals which is cumbersome to do yourself, then I'll argue that some of the latest trading platforms can perform this function in a couple of clicks.

So...What am I missing? Why do we need someone to manage our money?
You could either, A) Do these things:

1-Make a will
2-Put six months’ living expenses in an emergency cash account
3-Pay off high interest debt
4-Get term life insurance (if you support others)
5-Max whatever tax advantaged retirement accounts (401k and/or IRA and/or Roth and/or back door Roth) are available to you in a low cost (Vanguard or similar) target retirement date fund
6-Buy a reasonably sized house (if you want to live in a house) as opposed to renting
7-Put whatever money is leftover in post tax account with investment mix similar to #5 (ie 75% stocks/stock fund & 25% bonds/bond fund or other age appropriate mix) and not touch until retirement.

Or, B) You could hire someone to tell you to do those things, and then do those things.
 
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You could either, A) Do these things:

1-Make a will
2-Put six months’ living expenses in an emergency cash account
3-Pay off high interest debt
4-Get term life insurance (if you support others)
5-Max whatever tax advantaged retirement accounts (401k and/or IRA and/or Roth and/or back door Roth) are available to you in a low cost (Vanguard or similar) target retirement date fund
6-Buy a reasonably sized house (if you want to live in a house) as opposed to renting
7-Put whatever money is leftover in post tax account with investment mix similar to #5 (ie 75% stocks/stock fund & 25% bonds/bond fund or other age appropriate mix) and not touch until retirement.

Or, B) You could hire someone to tell you to do those things, and then do those things.

This 1000x.

The only reason you should have a financial advisor is if you are undisciplined (and know it) and need someone to hand-hold you into doing these things.

If you are they type of person who needs to be “talked out” of buying a ferrari instead of maxxing your advantaged savings then get a financial advisor, assuming you’ll listen to them.



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I'm curious if others are utilizing a financial adviser. Do you guys feel they are worth whatever cost you pay? And out of curiosity, what cost are you guys paying?

I personally think a good tax accountant is definitely worth it, but I haven't quite understood what a financial adviser adds to the equation that I myself cannot do as well, if not better. Having said that, I like to think of myself as financially savvy as I self manage several personal broker accounts, and have done so since college. I don't feel I need a person to tell me that I need to open up a Sep-IRA account and max it at 55k once my 1099 contract kicks in, or that I need to start putting money in a 529 plan once I have children.

If you're going to argue that a financial adviser regularly checks up on your portfolio and redistributes and manages asset allocations based on age and long term goals which is cumbersome to do yourself, then I'll argue that some of the latest trading platforms can perform this function in a couple of clicks.

So...What am I missing? Why do we need someone to manage our money?

Maybe you need someone to tell you NOT to open a SEP-IRA and use an individual 401(k) instead so you can do a Backdoor Roth IRA without falling afoul of the pro-rata rule found on line 6 of Form 8606.
 
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Maybe you need someone to tell you NOT to open a SEP-IRA and use an individual 401(k) instead so you can do a Backdoor Roth IRA without falling afoul of the pro-rata rule found on line 6 of Form 8606.

You obviously have more knowledge than me :p In fact half of my knowledge is from your book. I could be wrong and my knowledge can be flawed, but I still think Sep-IRA will have lower costs and fees associated with it compared to a 401k. The long term savings on the fees I think more than makes up for whatever little tax savings of having a backdoor roth IRA. And the Roth IRA I'll still be deducting taxes at my current high income level, which is why I'm personally inclined towards a Sep-IRA. But you obviously know more about this stuff than I do so I could be completely wrong and would love the pearls of wisdom :)
 
Maybe you need someone to tell you NOT to open a SEP-IRA and use an individual 401(k) instead so you can do a Backdoor Roth IRA without falling afoul of the pro-rata rule found on line 6 of Form 8606.
You obviously have more knowledge than me In fact half of my knowledge is from your book. I could be wrong and my knowledge can be flawed, but I still think Sep-IRA will have lower costs and fees associated with it compared to a 401k. The long term savings on the fees I think more than makes up for whatever little tax savings of having a backdoor roth IRA. And the Roth IRA I'll still be deducting taxes at my current high income level, which is why I'm personally inclined towards a Sep-IRA. But you obviously know more about this stuff than I do so I could be completely wrong and would love the pearls of wisdom :)
 
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This all depends. Saying no or yes doesnt even take into account what it is. If you had $5m and you could pay someone $500 to look over your stuff and make sure you are doing it right is it worth it? Especially if you trust them, they are a fiduciary etc.

On the other hand you could have 50k and someone wants $2,500 to advise you.

I can do my own taxes, mow my own lawn and clean my own house. Sometimes it isnt worth it.

Its the exorbitant fees and shady advisors that screw things up for people.

I pay a very low rate, I also know I can do it myself but I dont have the time or energy to do tax loss harvesting, stay on top of investing the way I want and its nice to have someone to bounce ideas off of. At the same time I realize there are other options for all of this. The fairly minimal fee is worth it to me. That being said I think if you are starting out and have no money it is highly unlikely that it makes sense for you to pay an advisor. I tell this to my residents. Those folks are parasites when they see MD/DO.
 
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You obviously have more knowledge than me In fact half of my knowledge is from your book. I could be wrong and my knowledge can be flawed, but I still think Sep-IRA will have lower costs and fees associated with it compared to a 401k. The long term savings on the fees I think more than makes up for whatever little tax savings of having a backdoor roth IRA. And the Roth IRA I'll still be deducting taxes at my current high income level, which is why I'm personally inclined towards a Sep-IRA. But you obviously know more about this stuff than I do so I could be completely wrong and would love the pearls of wisdom :)
Wrong.

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You obviously have more knowledge than me :p In fact half of my knowledge is from your book. I could be wrong and my knowledge can be flawed, but I still think Sep-IRA will have lower costs and fees associated with it compared to a 401k. The long term savings on the fees I think more than makes up for whatever little tax savings of having a backdoor roth IRA. And the Roth IRA I'll still be deducting taxes at my current high income level, which is why I'm personally inclined towards a Sep-IRA. But you obviously know more about this stuff than I do so I could be completely wrong and would love the pearls of wisdom :)

I have no idea why anyone would ever not max out a Roth if they have the money. It’s one of the few gifts we get from the government. They way I see it, you’re required to pay tax on all the money you take home and, while you’re practicing, you’ll take home more than you need. Since you’ve already paid tax on it once, why not let it grow tax free?
 
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You obviously have more knowledge than me :p In fact half of my knowledge is from your book. I could be wrong and my knowledge can be flawed, but I still think Sep-IRA will have lower costs and fees associated with it compared to a 401k. The long term savings on the fees I think more than makes up for whatever little tax savings of having a backdoor roth IRA. And the Roth IRA I'll still be deducting taxes at my current high income level, which is why I'm personally inclined towards a Sep-IRA. But you obviously know more about this stuff than I do so I could be completely wrong and would love the pearls of wisdom :)
As has been noted above, this is exceptionally likely to be incorrect. The SEP-IRA may have slightly cheaper options available to you depending on who you are banking with, however, this with near 100% certainty will not outweigh the loss of the option to perform a backdoor Roth and gain decades of tax free returns.

To answer your original question... maybe you should get a fiduciary financial advisor.
 
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Don’t forget about asset protection, and networking with other useful professionals (lawyers, bankers, CPAs, and other business partners) a financial planner might already know in your area.

You might not need one if all you worry about is retirement savings. But there are so many other fun/interesting things to do. I do not plan on having only retirement savings - I want networth.
 
I'm curious if others are utilizing a financial adviser. Do you guys feel they are worth whatever cost you pay? And out of curiosity, what cost are you guys paying?

I personally think a good tax accountant is definitely worth it, but I haven't quite understood what a financial adviser adds to the equation that I myself cannot do as well, if not better. Having said that, I like to think of myself as financially savvy as I self manage several personal broker accounts, and have done so since college. I don't feel I need a person to tell me that I need to open up a Sep-IRA account and max it at 55k once my 1099 contract kicks in, or that I need to start putting money in a 529 plan once I have children.

If you're going to argue that a financial adviser regularly checks up on your portfolio and redistributes and manages asset allocations based on age and long term goals which is cumbersome to do yourself, then I'll argue that some of the latest trading platforms can perform this function in a couple of clicks.

So...What am I missing? Why do we need someone to manage our money?

Why SEP, not individual 401k?
Don't you do backdoor Roth?
Consider posting on the WhiteCoatInvestor forum.
 
i401k >>>> SEP IRA.

The backdoor is golden. And that reminds me, now that it's January, it's time to drop another 5.5 in... no, wait... it's 6K now. Yay for increased contribution limits!
 
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You obviously have more knowledge than me :p In fact half of my knowledge is from your book. I could be wrong and my knowledge can be flawed, but I still think Sep-IRA will have lower costs and fees associated with it compared to a 401k. The long term savings on the fees I think more than makes up for whatever little tax savings of having a backdoor roth IRA. And the Roth IRA I'll still be deducting taxes at my current high income level, which is why I'm personally inclined towards a Sep-IRA. But you obviously know more about this stuff than I do so I could be completely wrong and would love the pearls of wisdom :)

Vanguard's Individual 401(k) has very little fees. Fidelity's Self-Employed 401(k) has no fees and has the option to invest in ZERO funds with no expense ratios. Can't beat that!

The only disadvantage to a Solo 401(k) -- albeit a small one -- is that you have to file a 5500EZ form every July once your assets reach $250,000. Failure to file this form will be costly. Up to a $25,000 fine I believe.

Solo 401(k)'s are true employer retirement plans and not like SEP's, which are modified IRA's. A Solo 401(k) will allow catchup contributions once you reach 50. Some states recognize them as retirement plans and don't apply the traditional $1 mil limit to asset protection used with IRA's (including SEP's)...

Asset and Creditor Protection for Your Solo 401(k) | IRA Financial Group

IRA Creditor Protection by State & Lawsuit Exemptions for Rollover
 
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Especially if you trust them, they are a fiduciary etc.

Isn't finding one that's a fiduciary the hard part, especially since the "cheaper" ones tend to not be fiduciaries... and instead try to sell you on the high fee product of the month?
 
Isn't finding one that's a fiduciary the hard part, especially since the "cheaper" ones tend to not be fiduciaries... and instead try to sell you on the high fee product of the month?
I phone interviewed like 8 folks. My criteria was simple.

Step 1. Google dimension funds and find all advisors in my area that sell their stuff. (Somewhat difficult to be able to sell dimension funds). I own very little of their funds.

Step 2. Call and ask if they act as a fiduciary.

Step 3. Arrange a time to chat by phone with advisor.

Step 4. In person meeting.

Step 5. Negotiate fees.

That’s how I did it. Worked well for me.
 
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Sounds like questions for a CPA vice CFP.
 
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