Financial Advisor or not

[Green43]

The last "advisor" I had put my money in annuities that he got a huge commissions on, after 6 years and research on my part to figure out what he was doing, I fired him to his amazement and anger as he told me I would never make as much money as I would have with him.. What arrogance, there is way to great of an area for advisors to sell you something that benefits them more than you. Remember, they are in it to make money too. Agreed with above find a good fund with low maintenance costs and save paying someone to do it for you.

[krantcents]

Although I do not use a financial adviser, I am not opposed to having one. I would chose a fee only one and still question everything. It is important for the adviser to know your goals and plans as well as understanding the advice. This means a lot of research and questions!

[Snydley]

I had a terrible experience with a financial advisor. We lost 16K (because he had us invest in funds with high fees/high commissions for him, and he had us put a lot of money in whole life insurance, which we mostly lost when I realized our error and ended our accounts).

I read John Bogle's book and found this site, and we are up 10% in our retirement portfolio since (via index fund investing). There's no proof an advisor could EVER do any better, so why spend the money/put yourself at risk?

[LivingAlmostLarge]

pretty much everyone we know has a financial advisor. I'm not entirely convinced we need one and we have a decent amount of assets for our age. Big picture i think we are okay.

I think the most important thing you can do is make a budget and start saving. No financial advisor can help you more than you help yourself.

[disneysteve]

A Financial Advisor Gives You Access to Previously Unknown & Unavailable Investments.

Please tell us about these "unknown and unavailable" investments that advisors have access to. I'd love to hear more details.

[jIM_Ohio]

Please tell us about these "unknown and unavailable" investments that advisors have access to. I'd love to hear more details.

Steve, there are good examples here (even though your post might not have been aimed this way). Here are examples:

1) The Facebook IPO or similar- if you had an account with Merril before the IPO, you could solicit shares during the IPO. I was told by Cincy ML advisors that every client which wanted in the the IPO received some shares (maybe not as many as they wanted, but every order went at least partially filled).

2) Some investments require investors to be "accredited" and these investments are usually marketed to financial advisors, not to general public. The advisors know who has the networth to do these. Examples are master limited partnerships and other limited partnerships.

3) Some institutions have access to mutual funds which are cheaper than those sold to general public. I had access to a few when I worked for a larger firm.

[disneysteve]

Steve, there are good examples here (even though your post might not have been aimed this way). Here are examples:

1) The Facebook IPO or similar- if you had an account with Merril before the IPO, you could solicit shares during the IPO. I was told by Cincy ML advisors that every client which wanted in the the IPO received some shares (maybe not as many as they wanted, but every order went at least partially filled).

2) Some investments require investors to be "accredited" and these investments are usually marketed to financial advisors, not to general public. The advisors know who has the networth to do these. Examples are master limited partnerships and other limited partnerships.

3) Some institutions have access to mutual funds which are cheaper than those sold to general public. I had access to a few when I worked for a larger firm.

Thanks Jim. I knew there were some legit answers but I'm pretty sure that's not where the poster was going with the advice.

I'm curious about #3 on your list though. Considering how many widely available funds have ERs of 0.20% or less (Vanguard's S&P 500 fund charges 0.05%), how much lower could the fees be? And if there are any fees to the broker, wouldn't that override lower fund fees?

[jIM_Ohio]

Thanks Jim. I knew there were some legit answers but I'm pretty sure that's not where the poster was going with the advice.

I'm curious about #3 on your list though. Considering how many widely available funds have ERs of 0.20% or less (Vanguard's S&P 500 fund charges 0.05%), how much lower could the fees be? And if there are any fees to the broker, wouldn't that override lower fund fees?

It is possible for advisors to get individuals institutional shares (at lower expense ratios) when the individual does not meet the minimum (or the fund is closed to new investors) because the firm as a whole has met the minimum for that mutual fund.

[disneysteve]

It is possible for advisors to get individuals institutional shares (at lower expense ratios) when the individual does not meet the minimum (or the fund is closed to new investors) because the firm as a whole has met the minimum for that mutual fund.

That makes sense. Though if you are paying the advisor anything for that access, it may not be worth it.

[jIM_Ohio]

That makes sense. Though if you are paying the advisor anything for that access, it may not be worth it.

Paying an advisor for executing transactions can give some peace of mind, the real value is in the information received without having to do much research.

For example the time it will take you to research, fact check and validate your social security checks for you and your wife is about 10 hours, maybe 20.

You may just take the easy way out and do the "default" which saved you 9 hours, but might cost you $50k in lost benefits. If you thoroughly research the 8 options most married people have, it will take you 10-20 hours. Or you could hire someone to cut through the bull and explain how the options fit into your investment portfolio, retirement income plan and tax situation.

I could tell you claim and suspend can be very profitable. But for you to research it, fact check it and more is still 9-10 hours of work.

[greatm31]

My thinking is: if the financial advisor had access to super secretive investment ideas and vehicles, he or she would be out there making bank for themselves instead of "oh so graciously" sharing (for a fee) the secret knowledge with you!

Also beware that there's an incentive for financial advisors to make their jobs seem much more complicated than they really are (and do way more trades than they need to) just to make it seem impossible to do the job yourself!