Do you have a financial advisor?

[superstah]

Recently I have found out that some of my close friends and family that have "financial advisors" -- many of which seem to me to be just salespeople/brokers who want to sell them loaded funds.

I've considered looking into getting a financial advisor, but have always been concerned about them working in my best interest, especially since I feel like offering loaded funds are not in my best interest. I'm guilty of being too busy to read everything about every single fund I currently invest in and would hope that someone like a financial advisor would help bridge that gap.

Are financial advisors necessary? If so, how would you find someone you can trust?

[snafu]

You've nailed it. For the most part, 'financial advisors' are salesmen/women selling financial products that are touted featured or promoted by their firm for a variety of reasons. Their commissions are usually silent, paid from front load or Management Expense Ratio [MER] or whatever term they chose to use. Some 'financial advisors' have taken difficult courses and acquired the designation of 'Certified Financial Planner' [CFP] but they are still sales staff selling their company's preferred product. Clients can do their own research and ask to buy other products, mostly self directed but the added feature of discussing their choices with a CFP.

There are Financial Advisors who directly charge clients an hourly rate and give advice that targets client's needs and specific circumstances. Clients can follow that advice or not...

I've long held products from a specific institution and several years ago was assigned a CFP who sees me to discuss my holding which I prefer to research myself. He's primarily a 'hand holder' for his list of clients when the market is volatile and people want sell low and buy high...reverse of smart investing.

You might listen or look at a 'boiler plate' portfolio to see if there is any benefit for you. They do encourage clients to divy up holdings to include a mix of bonds, equities, foreign/international holdings. Hope friends and family are asking appropriate questions.

[feh]

Chances that you need a FA are close to 0%.

Learn how to manage your own investments here: http://www.bogleheads.org/wiki/Bogle...g_start-up_kit

[Fishindude77]

I'd like to hear some others weigh in on this too.

I'm nearing retirement and pretty well squared away with no debt and a pretty nice portfolio, but have always done things my self following my own instincts and advice from family and piers.

That being said, I have a fair amount of cash that needs to be working for me and am a bit stumped regarding what to do with it in today's investing environment. Have recently been approached by an agent, but the long and short of that seems to be that he wants to sell me either long term care insurance or get me to buy into one of their municipal bond based products.

Leaning towards just doing my own thing.

[feh]

Leaning towards just doing my own thing.

A wise choice.

Investing is not rocket science. When you run into a topic that isn't clear to you, folks over on bogleheads can assist you.

[MonkeyMama]

I would not waste my money on a financial advisor. (I also see a lot of fraud in my line of work. So though I don't think all financial advisors are inherently bad, I've yet to find one that I would actually recommend to anyone).

I do second the boglehead recommendation. They know their stuff. They give great financial/tax/investment advice. For FREE. & as long as you don't give them your personal bank info, they won't abscond with your money or charge you hidden fees. If you want to go solo but just aren't sure, it's easy to bounce ideas off of them and get some feedback that maybe you hadn't thought about.

[disneysteve]

But if you are busier, older or more wealthy then financial advisor can save you.

You can lose a ton of money believing that financial advisors can "save you".

[Bright]

We use a fiduciary financial advisor. We pay for advice only. He really helped me understand and gain confidence in how I was investing.

[LivingAlmostLarge]

Nope. Probably not until we have more ideas about our future financials. Right now we are just spending money.

[A-Aron1]

When I was 18 (25 now) my older brother who is a financial advisor talked me into maxing out my Roth IRA. He taught me everything I know about investing, types of funds, loads, expense ratios etc. Even with the loads (6 or so different american funds) my returns have been decent. I enjoy having someone in my corner that I trust and who wants to see me do well. I know indexing is probably a great idea but I'm not sure if I want to have that conversation. Is having a financial advisor worth it....not really sure! I know he spends a decent amount of time on me.

[feh]

When I was 18 (25 now) my older brother who is a financial advisor talked me into maxing out my Roth IRA. He taught me everything I know about investing, types of funds, loads, expense ratios etc. Even with the loads (6 or so different american funds) my returns have been decent. I enjoy having someone in my corner that I trust and who wants to see me do well. I know indexing is probably a great idea but I'm not sure if I want to have that conversation. Is having a financial advisor worth it....not really sure! I know he spends a decent amount of time on me.

Here's the thing - once you come to the conclusion that nobody can consistently beat the market, expenses become extremely important in determining your returns.

If you think that .5% or 1% doesn't make a difference, you are very wrong. Especially at your age.

The cumulative expense ratio for my portfolio is .15%, with no loads. Please figure out what yours is, then compare how returns will be affected over decades by using this tool:

https://www.calcxml.com/do/inv12

Further reading:

https://personal.vanguard.com/us/insights/investingtruths/investing-truth-about-cost

http://www.nytimes.com/2013/10/16/your-money/the-erosive-effect-of-expenses-on-a-portfolios-value.html?_r=0

[disneysteve]

When I was 18 (25 now) my older brother who is a financial advisor talked me into maxing out my Roth IRA. He taught me everything I know about investing, types of funds, loads, expense ratios etc. Even with the loads (6 or so different american funds) my returns have been decent.

Very sad to hear this. That's an unfortunate story. It's bad enough when advisors sucker strangers into those load funds but to do that to close family members is really pathetic.

[A-Aron1]

Very sad to hear this. That's an unfortunate story. It's bad enough when advisors sucker strangers into those load funds but to do that to close family members is really pathetic.

I'll most likely move over to vanguard or fidelity. Better investing with loads than not at all...I suppose that would be a positive up to this point.

[disneysteve]

Better investing with loads than not at all...I suppose that would be a positive up to this point.

True. At least he got you to start investing. It was to his personal financial benefit but it did you some good too.

[amarowsky]

I'm in the process of finishing an internship in personal finance. And most of what everyone here claims is fairly accurate.

There is no good income in an advisor in specifically and intimately managing a few clients. That's why they offer broad stroke investing advice into either dumping investments to money managers or basic funds. Long story short, they are not specifically worried about rate of return. Their time is most spent trying to find new clients and them throwing them into one of several hoppers that determine the recommendations they'll be given.

They do provide benefit in a few ways that are helpful. First like mentioned earlier they can be a guiding hand to introduce people to the investing and saving world. 2nd they can make very simple illustrations about how much you will have in retirement against some of the average estimated costs (highly emphasize estimated). And they can offer some recommendations for structured withdrawal strategies that can be more helpful than just the standard 4% out of ira/401k actually. Also they do help make sure income Insurances are covered and usually provide multiple recommendations for estate attorneys and cpas.

So if you go too one with all the fees baked in, then you can get a lot of good knowledge and visual aids for no cost. Just make sure not to sign them a check. I've seen a lot of clients get way more from the advisors than the client. I suppose the best way from both sides would be a fee based advisor. You should get a high caliber professional who can help give you direction when You think you need it, and you're not getting vampire tapped 1.5-2% of your assets.

Other side of the coin, someone who is not interested or enthused about their finances. I see no harm in letting some professional manage their money, getting a return only 6% off their assets, that are actually making 8% still beats the hell out of letting it sit in a bank and shrink by inflation.

Needless to say I'm not taking the job. They offered me full time, but I'm not aggressive enough to be that kind of sales person. Plus they provide no market, and most of my warm market I prefer to give advice to because I want to not for financial gain.