Financial advisor

[brk81144]

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Was wondering how much you guys are paying for their services and what type of services to expect from them? Talked to a group today charging $2500/year for all encompassing services and was wondering if that's a rip off/steal/normal

 

[dchristismi]

Go get the White Coat Investor's eponymous book. It's a quick read, written by one of, ahem, "us," and is a very straightforward approach. Go read his blog, too.

That seems high.
But then again, I take WCI's approach that if I can learn renal physiology, I can certainly learn investing.
My taxable accounts are at Vanguard in their low-cost index funds; my individual 401K is there as well. (I *just* opened it, as I am newly independent contractored.) My back-door Roth is there as well.

 

[ThoracicGuy]

Was wondering how much you guys are paying for their services and what type of services to expect from them? Talked to a group today charging $2500/year for all encompassing services and was wondering if that's a rip off/steal/normal

That's way too expensive. You likely will get put into funds that have alot of fees associated with them as well. When you get to the point where you can figure out who is a good or bad advisor, you can pretty much do all of the work yourself.

Read through WCI's book as well as the Bogleheads forum. There's a financial forum here as well that can be helpful. Personally, I just do it all myself.

 

[deleted547339]

Put another way, at 7% interest over 30 years, that's a quarter million dollars. At a 4% withdrawal rate, that's a $10,000/yr for your retirement.

You can make a whole lot of bad decisions investing your moneyed still not have it cost you $250,000.

 

[The White Coat Investor]

Was wondering how much you guys are paying for their services and what type of services to expect from them? Talked to a group today charging $2500/year for all encompassing services and was wondering if that's a rip off/steal/normal

$2500 is a great price. I only know a handful of competent advisors working for $1-5K a year. Most charge far more. Financial advice is expensive stuff. That said, this is something you can learn to do yourself successfully and there is A LOT of savings there over the decades.

Typical rates are 0.5-1% of AUM, $100-500 per hour, or $1000-10,000 per year depending on how they charge. Many doctors are paying $20-30K+ a year in AUM fees.

 

[Jlaw]

Was wondering how much you guys are paying for their services and what type of services to expect from them? Talked to a group today charging $2500/year for all encompassing services and was wondering if that's a rip off/steal/normal

Depends how valuable their advice is. Most financial advisors I've seen can advise you on basic stuff you can read about yourself in a book or online. If they actually knew what they are doing with investments they would not be a financial advisor. It also depends on your assets. A lot of places charge a percent of assets under management when they invest for you and that could exceed $2500 easily if you have a larger estate.

 

[goodoldalky]

Initially I found similar rates but after getting some bad advice designed to make the advisor money I dumped the idea altogether and became my own financial advisor. It takes a lot of time to learn what to do yourself, so your mileage may vary. I personally find it to be relatively fun work to do.

 

[Jlaw]

Initially I found similar rates but after getting some bad advice designed to make the advisor money I dumped the idea altogether and became my own financial advisor. It takes a lot of time to learn what to do yourself, so your mileage may vary. I personally find it to be relatively fun work to do.

100% agree. Financial advisors make money by convincing you to give them (or more likely the giant company they work for) your money. They make the same amount whether you make a 50% return or lose 50% . I would advise folks to stay away unless they are simply looking for general advice on how to structure an investment strategy, and even that is readily available online.

 

[link2swim06]

It surprises me so many smart people (doctors?) hire financial advisors. Most of what they tell can be easily learned with little effort.

The biggest crock is the 1% fee. It sounds so little until you actually look at it.

For example:
7.5% annual avg. return
-1.5% taxes
-3% for inflation

So left with a 3% average net gain

Now the investment 'advisor' wants to take 33% of my gains...no way in hell.

That's $100,000s in the long term of lost compound interest because you can't read a few books and figure it out yourself.

And if you want to exert nearly no effort...just sign up for vanguard index funds or betterment and you will still end up better and requires about 30 minutes to setup.

 

[goodoldalky]

If you don't want to expend any time or effort read up on the Jack Bogle popularized 3 or 4 fund portfolio. Minimal thought minimal effort minimal time except rebalancing yearly. Bogleheads.com is a good place to start for this.

Do that and max out your 401k in the lowest fee index funds, max out a backdoor Roth yearly, and take as much of the rest as you can in the four fund portfolio (VBTLX VTSAX VTIAX VGSLX) and you have beaten anything any financial advisor can do for you. Without giving them hundreds of thousands of dollars.

Also the other big thing to do is make sure you have some good own occupation disability insurance.

Can I send you a bill? 🙂