I just can't decide whether to get a financial advisor or not

[Ralph]

I have been talking to one who wants me to convert a Fidelity 401k from an old employer to an IRA with Fidelity where they manage it for .7-.8% per year. This is about 1/4 of my total retirement saving - the rest is Vanguard IRA and 401k. So that would keep the fees down per his suggestion, and he said he would help with the Vanguard portion also. I am afraid that he will always be wanting to suck in more, which might be ok if he does well, but the total fees would just seem too high to me, but since I am not good with investing, I just left it in 500 index funds all these years, he should be able to make up for it with better performance and hopefully better risk management.

I wanted to try to find a fixed fee planner but have had no luck. Any advice?

[disneysteve]

That's an easy one. NO!

There is absolutely nothing an advisor can do that you can't do cheaper yourself. If you pay the advisor 0.8%/year you immediately put yourself in a hole that you can't ever climb out of. You would need to consistently beat the market by 0.8%/yr just to break even which is never going to happen.

He ABSOLUTELY can not beat the market so the "better performance" thing is a load of crap. You will always, always, always come out ahead of the advisor if you leave your money in that S&P 500 index fund.

There, that was simple.

If you have any other questions or want your portfolio reviewed by smart, experienced folks, just post here and we'll be happy to help.

[myrdale]

Somewhere out there, there is a financial planner who can probably help you earn 25% or more over your life time than you could on your own. There are also x10 more people who are glad to take your money and do what you could be doing yourself. It is my opinion you're better off managing it yourself.

It is also my opinion you should keep it as simple as possible. My overall line of thought is:

1) Contribute to your employer's 401(k) program at least to the match.
2) If Roth 401(k) is an option, go for that.
3) Contribute to a Roth IRA.
4) Max out the Roth IRA.
5) Put as much additional towards the employer 401(k) until both the IRA + 401(k) are 15% of your total earnings.
6) Roll over all of your old 401(k)s to your IRA / Roth IRA.
7) Convert as much as you can from regular to Roth (knowing you'll have to pay like 30% taxes).
8) In both the 401(k) and Roth IRA only invest in mutual funds that have performed well historically.
9) Figure out what sort of mix is most appropriate for you between small cap, large cap, international, bonds.

[Ralph]

Thanks! He thinks I am taking more risk than I need to, with something like 65-35 stocks vs fixed income. I am 68 and 3/4 and could retire at any time. Besides the 500 index, I am biased toward value which he says has not done as well as growth. I have never done bonds, just stuck with fairly low interest accounts for the non-stock part.

[kork13]

A financial advisor should do one thing: ADVISE. You should be the decision maker & the one taking action. If they're managing your investments, they're taking over. Those services can be nice & convenient ... But that convenience will be costly, and in most cases, it's dramatically overkill (excluding the ultra-wealthy with huge, complex portfolios to control). For most of us, a simple portfolio of basic index funds is perfectly good for of our needs. Keep your life simple -- stick with what you know & what you're already doing.

As Steve said, ask questions here, we're all happy to help ... gratis.

[Jluke]

Flat fee advisor discussions

https://www.bogleheads.org/forum/viewtopic.php?t=420395

and then within the thread linked above is this link

https://www.bogleheads.org/forum/viewtopic.php?t=360823

[disneysteve]

Thanks! He thinks I am taking more risk than I need to, with something like 65-35 stocks vs fixed income. I am 68 and 3/4 and could retire at any time. Besides the 500 index, I am biased toward value which he says has not done as well as growth. I have never done bonds, just stuck with fairly low interest accounts for the non-stock part.

Whether or not 65/35 is too aggressive is something only you can decide. Nobody else can tell you what your risk tolerance is or should be. It also depends on other factors like if you have a pension, if you're collecting Social Security, and how your income aligns with your expenses. Plus the fact that you're still working plays into it.

I would recommend getting some of that 35% cash into bonds, though. You can probably boost the return and, more importantly as rates are poised to start dropping, lock in a rate for at least a few years. Those low interest accounts are just going to start getting even lower next month when the Fed starts cutting rates. Buying bonds is quite easy with Vanguard or Fidelity.

[LivingAlmostLarge]

no to financial advisor

[myrdale]

The one exception I'd give to all the no's is if you can find someone who'd be willing to discuss what you have in a one off meeting.

You can look up financial advisors endorsed by Dave Ramsey in your local area. I looked into it about 3 years ago. There were 5 that I spoke to on the phone. I talked myself out of going in person. But if you can find one who'd be willing to analysis your situation without needing to sign a long term contract, it might be worth it.

If you're still working, ask your HR department if they can put you in contact with a rep for your 401(k). They might be willing to have a discussion with you also.

[disneysteve]

The one exception I'd give to all the no's is if you can find someone who'd be willing to discuss what you have in a one off meeting.

We have done just that. My wife has a cousin who we totally trust and respect who happens to be a CFP. We had a couple of meetings with him for him to review our portfolio, discuss our plans, and run some projections for us. I made it crystal clear at the start that we were not interested in having him manage our money in any way. We just wanted an independent set of eyes to make sure we were on track and to point out any glaring issues that we may have overlooked (there were none). I found it very useful and reassuring. Not that I doubted my own abilities but you don't know what you don't know. And I intend to meet with him again when it comes time to start thinking about when and how to claim Social Security as that's an area I am not well versed in but we are years away from that.

What you want is a fee-only Certified Financial Planner (CFP). Don't waste your time or money with any other alphabet of letters they have after their name. CFP is what you're looking for.

[Fishindude77]

I don't claim to be a stock or mutual fund expert, so we have a guy that handles our IRA investments and meet with him once or twice annually just for an update and to hear any suggestions he may have.
If that's a financial advisor then I guess we have one. He's done a good job for us. Have more money in those investments today than we started with and have been taking a monthly draw out of it for seven years. They get a small fee, but it's worth it to me to deal with an individual I know, and the advice thus far has been good.

Having said that, the majority of our net worth is tied up in real estate and a few other things which I handle myself.

[jenn_jenn]

As someone who has one, I wouldn’t recommend it for most. We have a niche situation so it makes sense for us (for now) but there really isn’t any secret formula or information they have that allows them to “outperform” the market. That is a bunch of baloney. It honestly seems more of a concierge service than anything - most folks are paying for the convenience.

It’s very easy to self manage through index funds. You don’t need to pay someone 1% of your assets to do that.

[disneysteve]

It honestly seems more of a concierge service than anything - most folks are paying for the convenience.

Not only are you paying for "convenience" but you're also getting sub-par portfolio performance as a result. You're literally paying more and getting less in return. It's ridiculous. If your goal is to grow wealth, stay far away from paid advisors unless you have some unique situation (like you do jenn_jennn) that actually warrants it.

There's a very good financial podcast I listen to (Afford Anything by Paula Pant) and they sometimes say that most people should just put 100% of their money into VTI and be done with it. If you're investing for the long term, that is the simplest possible way to go and will get you a great return over a few decades with very minimal expense.

[srblanco7]

I have been talking to one who wants me to convert a Fidelity 401k from an old employer to an IRA with Fidelity where they manage it for .7-.8% per year. This is about 1/4 of my total retirement saving - the rest is Vanguard IRA and 401k. So that would keep the fees down per his suggestion, and he said he would help with the Vanguard portion also. I am afraid that he will always be wanting to suck in more, which might be ok if he does well, but the total fees would just seem too high to me, but since I am not good with investing, I just left it in 500 index funds all these years, he should be able to make up for it with better performance and hopefully better risk management.

I wanted to try to find a fixed fee planner but have had no luck. Any advice?

To the extent that a financial advisor may make sense (for some), I'd think that the "value add" of their service would be related to financial planning (e.g., when to take social security, executing Roth conversions, planning for a special needs child, etc) rather than managing investments. This could be accomplished via a few meetings with an hourly financial planner rather than an AUM financial planner. Others have provided links on how to connect with an hourly financial planner.

My guess is that your read on the situation is correct - that is, "he will always be wanting to suck in more".

The Bogleheads message board provides plenty of examples of simplified "set if and forget it" investment portfolios (and those on this Board will certainly provide their thoughts as well). And, in my view, you've done nothing wrong with having left it in 500 Index Funds (in fact you've likely outperformed most financial advisors recommended portfolios).

[Ralph]

My suspicions were confirmed. He is indeed counting on luring me all the way in by supposedly doing well on the 1/4. So that makes me want to run away and try to find a lower cost advisor. No way am I paying 1% of my whole nest egg every year. But there are apparently plenty of people who do!

I agree with the posts here that what I need is guidance so I don’t do anything really stupid or even slightly stupid, given the enormous stakes! But I am thinking a fair fee is a couple thousand per year or couple of years. I am a little too nervous to do it all by myself. Still conflicted but I really appreciate all the responses, and I definitely need to get more serious about finding the best path forward. I have never been a money man so DIY scares me. But I also had an interesting thought. If I was never very good at this and will get less good with age as my memory and so forth degrades, if I am paying someone sharper than me, isn’t that potentially a little dangerous?