Financial Advice

[LivingAlmostLarge]

Has anyone here paid for a financial advisor fee based, not the % based, person look over their investments? Has it helped?

What about CPA? When did you hire one? Was it worth it? Did they save you money?

We used a CPA twice, once when we moved and it helped. The second time wasn't worth it, especially with my DH being late on getting papers together.

But I was reading an article that said you should get professional tax help to save money on "loopholes" and advice on what to invest in.

Thoughts?

We are boring, with nothing too exciting other than a job and investments. I can't think of any deductions we'd have. No second home, rentals, business, etc.

[maat55]

I used a CPA for years while we had children and could file long form. After a couple of years of routine returns, I learned to do them myself.

When I first went into business, I used a CPA for my books and returns. After Quikbooks came out, I only used him for returns.

[MonkeyMama]

No - I would not pay a financial advisor, personally. I've said a few times around here- just so many scammy advisors out there.

As far as the CPA, you probably want a tax professional more than a CPA, specifically. CPAs would generally be more useful for a business situation or a complex tax situation. Otherwise, you are just over-paying. An enrolled agent might be a better choice for you.

I would generally tell you that my more small-time clients are wasting their money (I have told them all this over the years - usually relatives of some of our business clients). But I did have an experience this year where someone actually listened to me, left for 5 years, and came crawling back this year. She just did turbo tax, but she had some IRS issues. I just found her a $900 refund due to a mistake on her last year's return. She was financially savvy and so I was *really* surprised that she made such an obvious error. I always tell my clients we should be saving them more than they are paying us. I was just surprised that this woman is saving more than paying us. So, just to say you don't really know until you pay someone to do your taxes, and see what they find. You could always do your own taxes in turbo tax for a comparison, and see if you are saving any money.

BTW, tax professionals should generally not be giving you investment advice, either. Certainly some professionals do tax and investing and financial advising. BUT, the biggest myth I come across is that CPAs are "investment advisors." ??? What the heck do we know about investments? I've never had an investment course in my life - the CPA exam does not cover investments. So, be careful.

There aren't really any tax loopholes for us minions who make less than $1 million per year. If you have a small business, there are a lot more tax breaks. But without a business the only advice you are going to get is re: 529 plans, HSAs, work retirement plans, IRAs, etc. Those are your tax loopholes. I am sure you are well aware that your mortgage interest is deductible, stuff like that. What I tell my middle class clients is: "retirement and charity." Those are your tax breaks. Turbo tax and tax software is good at asking you questions directed at sniffing out the smaller things that change every year. I'd think that stuff is easy to mess up if you do your taxes by hand, but hard to mess up with a software or online program.

[kork13]

Once.... sort of.

I was a sophomore in college and somehow managed to royally screw up my taxes. One would think that's pretty hard to do as a 20 y/o, but trust me, I somehow managed it. Basically, my parents and I got our tax returns twisted together due to some unusual circumstances that year.
So the IRS sent me a letter something along the lines of: . (When I received said letter, I was: )
Thankfully, a close family friend (my mother's college roommate actually) is a CPA, and she offered to help me sort it all out. She figured out the mess, and helped me file the necessary amendments. What a pain...

btw, that was the last time I used an software program to do my taxes until this last year.... Having carefully prepared my taxes by hand over the last 5 years or so, I now understand enough about my taxes to know when something's not right.

[disneysteve]

I have always had my taxes done professionally. I did have the advantage, however, of my father and uncle running an accounting firm. And no, my father didn't charge me . Since my father's death in 1992, my cousin (who took over the firm along with his brother) has done my taxes. I was just there yesterday in fact. He does charge me, though I suspect he gives me a reduced rate but I'm not certain.

Our taxes are somewhat complicated. We have all of the usual stuff - two primary incomes, mortgage, property taxes, etc. - but we also have various investments with gains and losses, my self-employment income from surveys and ebay, charitable stuff, etc. I'm sure if I really worked on it, I could figure it all out but I'm really not interested or willing to spend the time or take the chance of missing something or making a mistake.

I know people rave about TurboTax, and I've never used it personally, but my suspicion is that the results are only as good as the data entered. If the user doesn't know the right way to answer the question, he isn't going to get the right answer. I'm much more comfortable giving all of the raw data to the accountant and letting him plug in the numbers as appropriate.

[Like2Plan]

Has anyone here paid for a financial advisor fee based, not the % based, person look over their investments? Has it helped?

I have mixed feelings on this. I've never had any luck with fee only advisors, but I have friends for whom this has worked out very well.
Lately, I have been thinking about the 1% of portfolio value fee that some financial advisors charge from the perpective of retirement in which you are not supposed to take more than 4% per year (so that it lasts forever.) Wow! 1% would be 25% of the total--that would be pretty high overhead.

What about CPA? When did you hire one? Was it worth it? Did they save you money?

We used a CPA twice, once when we moved and it helped. The second time wasn't worth it, especially with my DH being late on getting papers together.
But I was reading an article that said you should get professional tax help to save money on "loopholes" and advice on what to invest in.
Thoughts?

When I am doing my taxes, I quite often wish I had a CPA to take care of things. But, then it seems like you need the tax prefessional's advice before you do things that have tax consequences. By the time tax time rolls along about the only thing they can do is give you a disapproving glance for doing something with less than optimum tax consequences.

[dawnwes]

Yes and no. My husband is a CPA.

[LivingAlmostLarge]

tax professional MM? I think our stuff is simple enough to not warrant help, except the year we moved and cashed out abroad. but the cpa we used charged an arm and a leg to do our taxes that year.

No ones used a financial advisor?

[thekid]

I always do did my own taxes (and now my wife's). Use Turbo tax (the canadian equivalent, rather). I actually like doing it. I feel it allows me to stay abreast of our situation. I did have a few tax law course in Uni, but frankly it's irrelevant. Our taxes are simple.

As for investment advisors, I have never retained one and, frankly, the times I've meet advisors the advice and their knowledge level was very mediocre. Then again, I think Mr. and Mrs. Everybody should set a diversified asset allocation and hold low cost diversified index funds forever and anybody that wants to stock pick should have a level of knowledge and time to invest that makes having an advisor a nonsense. Most advisors I've ever meet recommend activily managed funds that really are just shadow index funds that charge 2%+ per year.

I think both taxes and investments are pretty simple for just about everybody. The best bet is to learn the basics well and DIY. Especially for investments, taxes I can understand why somebody would pay 50$-100$ to save the time.

[Like2Plan]

No ones used a financial advisor?

I used a financial advisor with less than optimum results--decided to fire her and didn't bother to sign up for another....

[disneysteve]

No ones used a financial advisor?

Not really a surprise at this site. We are a bunch of self-selected personal finance geeks. The people doing it themselves hang out here. The people who hire somebody to do it for them are a lot less likely to come here looking for advice.

[feh]

Maybe 10 years ago my wife wanted some outside advice regarding our finances. Sat down w/ a guy for about an hour. Don't remember what the bill was, but it wasn't worth it. Pretty much said "you're doing fine" and sent us on our way.

We started using a 1% adviser 18 months ago.

[disneysteve]

We started using a 1% adviser 18 months ago.

I think this was discussed in another thread but how has your experience been so far? Do you feel you are getting something that is worth 1% of your portfolio?

[feh]

I think this was discussed in another thread but how has your experience been so far? Do you feel you are getting something that is worth 1% of your portfolio?

Some days, I think yes, others I think no. I consider the adviser to still be in the probationary period.

Bottom line - over the last 18 months I could've done as well or better by simply having a vanilla portfolio for somebody my age. In that sense, it hasn't been worth it, and I think there's a decent chance we'll end the relationship sometime in the next 6 months.

Having an expert on hand during exceptional situations (like 2008) is probably a worthwhile expense. But for run-of-the-mill bull markets followed by generic recessions (in other words, the "usual" pattern of markets), I think doing it yourself is sufficient.

[kv968]

Our taxes are somewhat complicated. We have all of the usual stuff - two primary incomes, mortgage, property taxes, etc. - but we also have various investments with gains and losses, my self-employment income from surveys and ebay, charitable stuff, etc. I'm sure if I really worked on it, I could figure it all out but I'm really not interested or willing to spend the time or take the chance of missing something or making a mistake.

Steve, that doesn't sound too complicated and something like Turbo Tax would be able to take care of it. Although if you're getting a good deal with your cousin and don't feel like entering in all the info, I don't blame you for going that route.

The thing I like about Turbo Tax is I just download my 1099's from Scottrade and that's it. I check to make sure it's right but it saves me a lot of time.

The other thing I really like is I have PDF files for past returns that I just store on my computer which I can access quickly without having to file and dig them out if I need them.