Financial Adivsor

[troyw]

to weigh in on the fee-only advisor, i recently went looking for one in the philly area. the LOWEST rate i could find was a 5k flat fee. needless to say, im not paying 5k. i would be willing to pay 150-250/hr just to pick the brains of a non-partisan, smart advisor. i dont know if such services exist, at least here.

$150 per hour does exist...try this site - garrettplanningnetwork.com/

[rj.phila]

to weigh in on the fee-only advisor, i recently went looking for one in the philly area. the LOWEST rate i could find was a 5k flat fee. needless to say, im not paying 5k. i would be willing to pay 150-250/hr just to pick the brains of a non-partisan, smart advisor. i dont know if such services exist, at least here.

[Mr Nice Guy]

No it was a different firm. However I was offered a job by NMFS at one point.

I was supposed to have an interview for an internship with NWFS today, but after doing research it was not the fit for me. It appears that the internship was purely sales, and I would have to contact family and friends and try to sell them insurance. I dont like to mix family and business....

[dczech09]

Any chance this was Northwestern Mutual Financial Services?

No it was a different firm. However I was offered a job by NMFS at one point.

[robertgpitts]

I finally have my finances in order to the point where its time to meet with a financial advisor. I know I can do it all myself, but I do want someone with more knowlege than myself to help me. A mistake made now can have major consequences thirty years from now.

Hi Angio. I'd really urge you to slow down and educate yourself more before meeting with anyone - even a fee-only advisor. You need a solid foundation from which to evaluate the advice you'll be given.

I recommend the following books:

- Personal Finance for Dummies by Eric Tyson. He is thorough, has a level head, and is not afraid to criticize the financial services industry.

- The Elements of Investing by Burton Malkiel and Charles Ellis. They are well-respected in the investing arena and strongly tilt toward index investing.

- The Little Book of Safe Money by Jason Zweig. He steers a course through many of the financial pitfalls that can snare savers/investors.

Best wishes.

Robert Pitts
Freedom Personal Finance
Lakeland, FL

[Mr Nice Guy]

Just a quick FYI, no I do not work for this firm anymore and am no longer a licensed and registered rep.

Any chance this was Northwestern Mutual Financial Services?

[disneysteve]

Someone mentioned the percentage agreement only working if you turn you entire portfolio over to that person.

Hmmm. . .well, if you weren't going to turn your investments over. . .why would you even need an advisor then? You could just pose a question here or I suppose pay by the hour to pick someone's brains.

Yes, that last bolded part is exactly the point, as I see it, of a financial advisor. To get advice and just advice. Not to have them buy and sell securities for you. Not to put you in ill-advised "investments" like whole life insurance policies or annuities within your retirement account or any other such nonsense. If I ever use an advisor, it will be to lay out my portfolio and plan and get his opinion as to how I'm doing, just like the "How am I doing?" segment on the Suze Orman show but in more detail. No way am I handing over control to anyone else but I can see the value in spending a few hundred dollars to get a professional to look things over.

[Scanner]

Someone mentioned the percentage agreement only working if you turn you entire portfolio over to that person.

Hmmm. . .well, if you weren't going to turn your investments over. . .why would you even need an advisor then? You could just pose a question here or I suppose pay by the hour to pick someone's brains.

I mean to me, you either know investing, wish to DIY, or not.

Either do Karate No. Or Do Karate Yes. Do Karate Guess So. . .get squished, just like grape.

[troyw]

Very good breakdown. I can see why you'd be willing to pay the money to have that person "on retainer" throughout the year. It is somewhat similar to why I pay a CPA to do our taxes. I'm sure I'm quite capable of doing them myself but this way I'm sure they are done right and, throughout the year, I often call or e-mail him with tax-related questions and there is no charge for those consults. Of course, my CPA happens to be my cousin, but still, the peace of mind of having an experienced tax professional to whom I can turn when I have a question is worth the money I pay him each year.

Obviously, financial planners are not for everyone. Some people can do better going at it alone. I don't think it's a "one size fits all" situation by any means, and I am in no way saying that someone must use the services of a planner...simply that we chose to do it.

Thanks for the all the great discussion!

[MonkeyMama]

If I were going to see an advisor, I would only ever consider the 3rd option.
The 1st option isn't really an advisor - it is a salesperson. Stay away.
The 2nd option only applies if you are turning over your portfolio to this person to manage, which is something I would never do.

If I have an advisor review my portfolio and make comments or suggestions about things I could be doing better, there wouldn't be any commissions involved. I wouldn't be investing with/through this person. I would just be getting their input and then going out and making my own investment decisions and transactions.

AGREED 100%.

I have never hired option #3, because I have never come across anyone in the field I felt had more knowledge than I did, and more importantly, that I could TRUST. So while in theory #3 sounds pretty okay to me, in reality, it is really hard to find someone in the field of financial planning.

All of my financial mentors told me they wished they learned that in their 20s/30s/40s. Very financially savvy people (millionaires) who wasted money on financial advisors in their earlier years.

I am very against being penny-wise pound-foolish, and see that a LOT in my field with legal decisions. That said, I also see people lose a LOT of money looking for financial advice while I see DIY-ers do far better. This is kind of my exception to the rule. Financial planning fees/commissions just eat so heavily at returns. Likewise, it's easy to do diversified low-cost investing somewhere like Vanguard.

If finances are greek to you or you just have no interest in taking the time, or want another opinion for some peace of mind, option #3 isn't terrible. Get more than one opinion though would be my advice. Shop around extremely carefully.

[disneysteve]

A typical meeting goes as follows...

Hope this helps...

Very good breakdown. I can see why you'd be willing to pay the money to have that person "on retainer" throughout the year. It is somewhat similar to why I pay a CPA to do our taxes. I'm sure I'm quite capable of doing them myself but this way I'm sure they are done right and, throughout the year, I often call or e-mail him with tax-related questions and there is no charge for those consults. Of course, my CPA happens to be my cousin, but still, the peace of mind of having an experienced tax professional to whom I can turn when I have a question is worth the money I pay him each year.

[dczech09]

Just a quick FYI, no I do not work for this firm anymore and am no longer a licensed and registered rep.

[dczech09]

I've met with 3 different advisors over the past few years just to see if one of them could sell me on why I should pay them for their advice. I'm no investing guru, but I do have a BS and MBA in finance, so I consider myself a tough sell.

I've walked out of their offices every time thinking "you've got to be kidding me"! Most of these guys don't know much more than the basics, even the ones that claim to only work with high net worth individuals.

If I ever did choose one, I would definitely choose a fee-only advisor.

I concur. After I graduated with my BS back in May of 2009, I landed a job as a financial advisor with a firm in the Twin Cities. My "training" consisted of these guys trying to sell me on selling their whole life and annuity products. I crunched the numbers a realized something was amiss; there was no way their "projections" would bear fruit.

Half of the people in the firm had some high profile clients, made good money, and were dressed in good fashion. However, when it came to math and any concrete knowledge, they knew next to nothing.

These people are salesmen. Don't get me wrong; we need salesperson in our society and ppl who can process transactions. However I think calling them "advisors" is misleading. Only about 10% of these people deserve the title.

[JoshuaHeckathorn]

I've met with 3 different advisors over the past few years just to see if one of them could sell me on why I should pay them for their advice. I'm no investing guru, but I do have a BS and MBA in finance, so I consider myself a tough sell.

I've walked out of their offices every time thinking "you've got to be kidding me"! Most of these guys don't know much more than the basics, even the ones that claim to only work with high net worth individuals.

If I ever did choose one, I would definitely choose a fee-only advisor.

[troyw]

After the initial visit when a full review gets done and a plan gets designed, what happens at the annual visits that is worth $300-400 to you? That's a lot of money if all he is doing is looking things over and saying, "Everything looks good. Keep it up." Even if he makes a couple of suggestions for you to rebalance, I can't see paying hundreds of dollars for that. So for those of us who have never worked with an advisor, please tell us what service he provides that you feel are worth the cost.

A typical meeting goes as follows...

Two hours of in person meeting to discuss current state of accounts and any changes necessary.
Review life insurance.
Discuss any family changes like pregnancy, etc.
Debts are addressed to ensure we are still on track.
Investments are discussed / reviewed to ensure our allocation is correct.
Advisor recommends any necessary changes but we make the changes and purchases ourselves.

The $400 we pay annually represents less that 0.5% of our portfolio which is an acceptable amount for us in our current situation. I guess we consider it "piece of mind" to not have to pick our investments across all our accounts.

I will say this, our advisor was great when we took out our long term disability policies last year. He spent a lot time calling the insurance agent to ensure that our policies were up to par and that we being covered appropriately. Also, phone calls and email during the year are not billed because they are included in his $400 annual fee.

Hope this helps...