Advice on hiring a financial advisor?

[geojen]

My husband and I are looking to hire a financial advisor to help with our, well, finances. I've read David Bach's Smart Couples Finish Rich, and have an idea of where to start looking. Who has one, are you satisfied, what is it like, and how did you find him/her?

[meaghanchan]

I don't have a financial advisor, but have this to impart- don't get one who makes their money off of selling you investments. Many of them sell mutual funds with loads or other financial products that make them tons of money, but aren't the best investments for you. Instead, choose a fee-only financial advisor. These will charge more up-front than an advisor who's not fee-only, but they don't receive commissions on the financial products (mutual funds, annuities, insurance, etc) that they sell you, so you know you're getting what's in your best interest, not the best interest of your advisor.

Hopefully someone else will be able to provide more information and/or opinions.

[JBinKC]

Financial advisors has to feed their families so for the most part there is a big conflict of interest. My advice if money is so important to you learn how to do it yourself.

[Ima saver]

I agree with the above two posters. I knew nothing about investing, so I started reading some of the financial books and money magazines. I believe you need to open up some no load, low cost roth ira's in a good mutual fund, also other mutual funds just for your savings. I am with several groups, but i have found vanguard to be the lowest cost mutual fund. You can get into the fund all by yourself. I reccommend the Vanguard Index 500 mutual fund. The minimum is $3000!!

[Broken Arrow]

I don't have one either, but I have been told that it's best to stick with a flat-fee based one first, because they make no money on comission.

[creditcardfree]

Yes, only hire a flat fee based representative. I know American Express Finanacial Advisors are flat fee. I myself do it all myself so I have no specific experience with an advisor.

I'm sure they are very good representatives that work on commission and wouldn't want to steer you in a way to only make money off of you...but you just never know.

Good luck.

[34saving]

I've interviewed 3 financial advisors and none of them seem to know more than I do (which isn't a ton). They all seem to have their pet investments -- for me they usually are front-end loaded mutual funds and variable universal whole life insurance. Strangely, both of these investment vehicles mean a lot of money up front for the advisor . . . I know some people who have "1% a year" advisors, but doesn't seem quite right either since that's ON TOP of the management fees/loads of whatever they're putting you in . . . BTW, if you want the fee based financial plan, plan on paying at least a grand for it.

[safari]

I've been reading about mutual funds and planning to invest into an index fund. Many websites recommend that it's a good first step. I am trying to decide between Vanguard 500 Index Fund http://flagship3.vanguard.com/VGApp/...FundIntExt=INT
and Fidelity Spartan 500 Index Fund http://personal.fidelity.com/product...html?315912204. As I understand it, when choosing between similar index funds, one should only consider expenses, and looks like Fidelity is a better choice because their expense ratio is only 0.1% compared to Vanguard's 0.18%. In addition, based on the reviews, it seems that Fidelity has better customer service. Fidelity requires $10,000 minumum investment, but this is not an issue for me, as I am planning to invest more than $10,000 anyway. The only thing that concerns me is the hidden fees. I'd like to hear from the people who have Fidelity accounts about their experience.

[AK 47]

My advice is to learn how to be yor own financial advisor. Those advisors you interviewed are pushing VUL and load mutual funds b/c that is how they make money. Most of them don't care about their clients, only about cash in their pockets.

If you must, go to a fee-only advisor.

[vsjhoc]

Originally Posted by creditcardfree

Yes, only hire a flat fee based representative. I know American Express Finanacial Advisors are flat fee. I myself do it all myself so I have no specific experience with an advisor.

I'm sure they are very good representatives that work on commission and wouldn't want to steer you in a way to only make money off of you...but you just never know.

Good luck.

At least some of the Ameriprise advisors (formerly American Express Financial Advisors) are both flat fee AND commission-based. I learned the hard way. I paid $900 for a plan that consisted of investments that just so happened to be the ones that the rep made the largest commissions on.

AmEx was also slapped last year by NASD in a class action suit for selling B shares and not telling their clients that the A shares might be less expensive. AmEx had to pay a huge fine and give certain clients the option to convert the B shares to A shares (and pay no fees on the sale of those shares). I very nearly was a member of the class. I sold everything with AmEx except $25,000 that's trapped in an annuity for another 5 years unless I bail and pay the break costs.

One good question to ask an advisor who suggests any type of investment: do YOU own this investment yourself? If they don't, why not, and why are they selling it to you? If they do, is it because they get it at a discount after selling it to you?

[autoxer]

I am my own Financial Advisor, because nobody knows my money and my goals like I do. I've learned everything I need to know from various personal finance blogs, a couple web forums, and a few books. If you've read David Bach's Smart Couples Finish Rich and are willing to keep learning, then you can manage your money very effectively on your own.

[Ima saver]

I have an account with Edward Jones and I seem to know more than the guy running the place . They push load funds all the times! It really is not that hard to do it yourself.

[sweeps]

Originally Posted by safari

I've been reading about mutual funds and planning to invest into an index fund. Many websites recommend that it's a good first step. I am trying to decide between Vanguard 500 Index Fund http://flagship3.vanguard.com/VGApp/...FundIntExt=INT
and Fidelity Spartan 500 Index Fund http://personal.fidelity.com/product...html?315912204. As I understand it, when choosing between similar index funds, one should only consider expenses, and looks like Fidelity is a better choice because their expense ratio is only 0.1% compared to Vanguard's 0.18%. In addition, based on the reviews, it seems that Fidelity has better customer service. Fidelity requires $10,000 minumum investment, but this is not an issue for me, as I am planning to invest more than $10,000 anyway. The only thing that concerns me is the hidden fees. I'd like to hear from the people who have Fidelity accounts about their experience.

This probably should be in its own thread. To answer your question, Fidelity is just fine. Lots of people like it. I personally prefer Vanguard, but there is little difference in my opinion. If you have $100K to invest, by the way, you can get "Admiral" shares through Vanguard. That drops your expense ratio to 0.09%.

[LuxLiving]

Safari - We have our index funds at Fidelity and have been very happy with them. They have a terrific interface on their website and lots of good learning tools and planning software. We've been very happy with the customer service. Phone call reps are very courteous and really take their time to help you understand things and will stick with you thru many questions. Trust me The Hubster asks good penetrating questions and keeps plugging until he is clear on the answers. Fees have not been a big issue for us.

We really like their Full View feature which lets you pull in info from many different places...ie. We can check our networth here easily as it can pull in and collate all the data from our ING Accounts, our Emigrant accounts, our multiple banks, our other assets, our liabilities such as Mortgage Company, and the brokerage account, our IRAs and 401-K's so on and so on, etc.


Good luck in your investing!

-LuxLivingFrugalis

ADDITION: For now we're okay with the multiple location of our many different accounts, but over time we'll probably pull them under one roof at Fidelity and they have a nice set up for that as well.

[Ima saver]

I got admiral shares because I had owned the fund for a long time, over 10 years, I think!

[safari]

Originally Posted by Sweepsplayer

This probably should be in its own thread. To answer your question, Fidelity is just fine. Lots of people like it. I personally prefer Vanguard, but there is little difference in my opinion. If you have $100K to invest, by the way, you can get "Admiral" shares through Vanguard. That drops your expense ratio to 0.09%.

I wish I had $100K to invest

By the way, with $100K minimum I can get Fidelity Advantage Class shares of Spartan 500 Index Fund with 0.07% expense ratio http://personal.fidelity.com/product...html?315912824

Thanks for your reply Lux, I think I am leaning toward Fidelity. I have my 401k with them and like their interface.

[Ima saver]

I only have one fund at Fidelity and that is Magellan. When I opened it, it had a 3%load. I was not aware that Fidelity was now load free. I guess they had to compete with Vanguard.

[LuxLiving]

Safari -

FSIIX - SPARTAN INTL INDEX INVESTOR CLASS up 26.30% since our initial purchase in July of 2005.

I am as they say - H.A.P.P.Y.

[meaghanchan]

Originally Posted by safari

I wish I had $100K to invest

By the way, with $100K minimum I can get Fidelity Advantage Class shares of Spartan 500 Index Fund with 0.07% expense ratio http://personal.fidelity.com/product...html?315912824

Thanks for your reply Lux, I think I am leaning toward Fidelity. I have my 401k with them and like their interface.

Fidelity and Vanguard are both great companies.

One thing to consider is that Fidelity's Spartan 500 Index Fund is something of a 'loss leader' for them (ie, they offer it hoping that investors will buy other funds with higher expenses and make money for their managers later). If you invest in only one fund, the Spartan 500 would get my vote- if you're planning on diversifying later (and want to stay within the same company) you may want to compare expense ratios between similar funds offered at Vanguard and Fidelity.

[safari]

Originally Posted by LuxLiving

Safari -

FSIIX - SPARTAN INTL INDEX INVESTOR CLASS up 26.30% since our initial purchase in July of 2005.

I am as they say - H.A.P.P.Y.

Does Fidelity charge you any annual account maintenance fees or anything else of that sort? I am thinking about investing $20K into Spartan 500 Index Fund and then adding $500 to it every month. Will I have to pay any fees or no?