Do You Use A Financial Advisor?

[iheartscience]

megumic's emergency fund thread got me thinking about finances and possibly going to a financial advisor. I've thought about it before but haven't gotten further than that. Do you go to a financial advisor? Why or why not?

And if you do use a financial advisor, how did you find one? Through your bank? A personal recommendation? And what did he or she help you with? Your investment portfolio, budget, retirement plan, all of the above?

Thank you in advance!

 

[chemgirl]

We have a financial adviser to help us with our investments and retirement plan. Its handy and motivating to have projections of what our savings will become in the future. I'm not sure how we have him or where he came from, lol. He was advising DH before we were married so we just continued with that. He really goes above what I thought financial services entailed. For example, he'll bring over any documents to sign and explain them to us in our home if we can't make it to the office. At first it creeped me out, but it really makes things easier.

 

[Bella_mezzo]

We have one for our investments and retirement plan (but he's a relative, so...), but not one for the comprehensive big picture...

 

[Dancing Fire]

megumic's emergency fund thread got me thinking about finances and possibly going to a financial advisor. I've thought about it before but haven't gotten further than that. Do you go to a financial advisor? Why or why not?
And if you do use a financial advisor, how did you find one? Through your bank? A personal recommendation? And what did he or she help you with? Your investment portfolio, budget, retirement plan, all of the above?

Thank you in advance!

nope,b/c i don't need to pay someone to lose my money. i feel better doing it myself. thing2,if you wanna get rich...just do the opposite of what i purchase in stock.

 

[Jennifer W]

I used to, but when I was at law school I was forced (very much against my will) to take a course in financial services and accountancy. I ended up enjoying it and doing an extra qualification, so technically I could register with the FSA and work as a financial advisor.

DH uses someone else though, so that should probably give you an idea of my skill level.

I think it's smart to get independent advice, even if it's just someone looking over your financial plans for the short, medium and long term to say maybe focus on X a bit more, or Y would be more tax efficient or whatever. A fresh eye can be helpful if nothing else. I'd be wary of free financial advice, because as with most things, it's worth what you pay for it.

 

[iLander]

We have used advisors a few times and been extremely dissatisfied every time. This is what I learned:

A brokerage house offers a free advisor who is paid a commission for pushing certain mutual funds or stocks. Stay away. We've worked with 3 of these guys and their picks were no better than our own.

Our bank offered a free service (Bank of America) and we used them twice.

First time we lost $14,000 in 2 months because they put our funds in a bond fund. The bond fund decreased in value because the stock market went up. We would have been better off in straight bonds that pay out over time which is what we asked for, but they steered us into a fund saying it was safer. It wasn't.

Second time, during the RE boom, the BOA adviser tried to steer us into GMAC mortgage bonds, paying 10%. We never made 10% in our whole lives, so we were suspicious and backed off. He actually said to us "People aren't going to walk away from their houses". You know how that turned out. We went for CD's, but they're not paying anything right now.

The only way to use an advisor is find a "fee-only" guy, that charges you by the hour, makes recommendations and then leaves you with a plan. Unfortunately, I've never found one that looks trustworthy.

Your best bet is to just find high dividend stock that you know and trust, use a stock screener: http://screen.yahoo.com/stocks.html and keep it for many years. OR just buy an index fund for the Dow or the S&P 500. If you look at some of the charts (yahoo finance) for stocks, they pretty much follow the dow over the years.

We're currently looking at municipal bonds or corporate bonds to buy and hold. NEVER buy a variable annuity, they are tricky and duplicitous, stay away. I read Peter Lynch's book Beating the Street years ago, and he said never invest in anything you don't understand. That is SO true. He has a lot of good info in there, give that a read.

So that's my advice. For what it's worth, but all the lessons were learned the hard way.

 

[diamondringlover]

I do not, I dont have enough money to worry about it lol....I use to have one years ago, but it seemed like a waste of money to me, so we took what little money we had out and invested ourselves...needless say that didnt go well

 

[lizzyann]

I agree with Ilander to get a fee based financial planner that charges by the hour. The "free" ones that come from companies that sell insurance, ira's etc basically push their products so they can get a commission. I met with one of these free ones once and I felt as though I learned nothing from them other than which products they sell... My accountant recently gave me a referral to a fee based planner in our area that he highly recommended and I plan on meeting with him at some point this year.

 

[iheartscience]

chemgirl-ha that would seem a bit creepy at first! He sounds great, though...now to figure out how to find one of my own!

bella-I don't have any family members in the business, sadly! Although I do have an aunt who is from here-I bet she would know someone.

DF-ha will do! Just tell me what you buy and I'll buy the opposite! We actually have done very well with our stocks but I think we need to diversify our portfolio.

Jennifer-ha! I actually have a fairly good grasp of finances but I could use help getting to the next level, if that makes any sense. My husband is absolutely no good at all with finances (he's the artistic one ) so it's all on me. Which is fine-I'm bossy anyway!

iLander-awesome, thank you for that explanation! That makes perfect sense. Now to find someone who charges by the hour that I trust! I'm going to ask my aunt in the area if she knows anyone. And I will stay far away from Bank of America! That's our bank too, although I have USAA insurance and I know they offer financial planning services. But I'm sure it's similar to what BoA offers.

diamond-ha, see I'm hoping to avoid that by using a planner!

lizzyann-if only we had an accountant! I do our taxes myself, but I'm going to hire someone next year because we just sold our house and my head hurts just from thinking about doing them myself.

Thanks everyone!

 

[HollyS]

Yes, I use the financial advisor that administers our 401K for Oppenheimer Funds. He just helped me set up a Beneficiary IRA for my Dad's retirement proceeds. Twice a year we go over my 401K and look for ways to diversify and protect what I've already made.

 

[TooPatient]

My disclaimer: I am not a registered person. Anything I post here has nothing to do with my bosses or the company they work for. This is strictly my opinion based on my observations.

Okay:
In case my little disclaimer didn't give it away, I work for registered investment guys. I've been here for several (4? 5?) years now and have learned a lot from the research I do (regulations, yields, etc) and what they do. They are commissions-based and work for an independent broker-dealer.

Every person's situation is different. I think the guys here are GREAT for some people and not really needed for others. The people who benefit from them are the ones with larger accounts and people who want to trade more often or deal in slightly risky areas (more later on "risk"). For people who are more conservative and want to buy some stocks/bonds/mf's and hold them for a longer time, it might make more sense to do it themselves (people who like to research their options and stick with "safe" stocks can just as easily pay $5 for each of their few trades and save a lot of money by not paying commissions or fees).


If a professional is right for your situation, consider:

Fees vs. commissions -- I have seen "fee based" accounts that easily pay more in fees than they would have with a guy on commissions.
With fee based accounts, there is usually at least one fee that is "optional" (not required by the clearing firm) that the advisor chooses to charge and is able to waive at his discretion. (ask about waiving specific fees when you see notice of an upcoming charge).
In a commissions account, you want to make trades as efficiently as possible BUT you don't want to give the impression that you don't want to do trades because the advisor will call you if he sees something that he thinks would be beneficial for you to buy/sell.

Look for "independent broker-dealers" -- these are companies that don't have their own products so there will be less pressure to limit yourself to a few select funds. They do however have fund companies that contact the advisors, so you also need to make sure the advisor looks at other options too and doesn't just stick with the people who call the office.


Things to watch for with your advisor that you may want to discuss or find a new advisor:
"diversity" is good but it is NOT buying small amounts of 20+ mutual funds in each account (with a fee paid to the advisor for each purchase...)
Lots of buy/sell/buy/sell/buy.... unless that is the strategy you had discussed (if you are paying commissions on trades, this can add up fast and eliminate any money made)



Cool things to know when setting up an account:
-You can set up an individual (non-retirement) account and have beneficiaries on it so your family doesn't have to go through a big mess if something happens to you --- these are called "Transfer On Death" accounts.
-If you start with cash and then invest, you can see about getting into a higher yielding money market fund before starting to invest. There are different mmf's with minimum opening balances required (like we have one for 100,000+ and another for 500,000+) that often have higher yields than those without a minimum -- and you don't usually have to keep that cash balance, once it is set up you are in that fund until you choose to change
-There is checkwriting available for non-retirement accounts and also for certain retirement accounts (great if you have to take an RMD)

 

[Dancing Fire]

DF-ha will do! Just tell me what you buy and I'll buy the opposite! We actually have done very well with our stocks but I think we need to diversify our portfolio.

yep,i'm the only financial advisor you ever need. i've been selling short on AMZN and NFLX..the two stock kept on going up everyday.. ..if the Dow hits 13,000... "sell all your stocks and MFs"

 

[Pandora II]

Yes.

We've used the same one for around 12 years. DH found her via a friend.

She's been worth her weight in gold. She's found us fantastic mortgage deals, insurance policies and general investment advice. We always go to her before making a big financial decisions even if we change our minds and don't go through with them.

DH says the only time he has lost money on investments is when he has ignored her advice!

 

[icekid]

Yes.

He does our life insurance, is helping manage our retirement savings, house fund, and probably most importantly at the moment- my same occupation disability insurance. Thus, if for some reason I can no longer work as a physician, they cannot make me go flip burgers somewhere.

 

[iheartscience]

HollyS-thanks for the info! I'm actually about to start a new job and I'm going to look into finding a financial advisor that way.

TooPatient-wow, thank you so much for all the information! I'm going to have to print out your post when I go talk to someone! Are you going to school for investment stuff, too?

DF-have any Apple stock?

Pandora-I'm definitely going to ask around. I think word of mouth is probably the best way to find someone.

icekid-interesting, I've never heard of that type of disability! Is it common for physicians to have?

Thanks again everyone!

 

[Dancing Fire]

DF-have any Apple stock?

you think i'm that smart?... i have 6 apples in my frig..does that count?..

 

[iheartscience]

DF-have any Apple stock?

you think i'm that smart?... i have 6 apples in my frig..does that count?..

HA! I was hoping there was one good one in the bunch! And your apples sound delicious but I don't think they're worth nearly as much as AAPL!

 

[Phoenix]

I tried to use a FA but have found that most of them either know much less than I do or just want us to invest in the most high-risk (and not necessarily high return) investments. Since I have a Master degree in Finance and have worked in this industry for many years, I reckon I'm our best FA/ Fund Manager!

We invest mostly real estate, some stocks, currencies, mutual funds and high-yield offshore savings accounts (the latter is part of our emergency fund; we try to keep a relatively lower amount in cash since cash in Singapore earns next-to-nothing interest).

I've done quite well with my/ our investments over the past 17 years (paid for my diamond addiction ) and am actually quite proud of the calculated risks I/ we have taken and the consequent returns. There were a couple of higher-risk investments I wanted us to take but DH pooh-pooh'ed the idea. Turns out we'd have made a killing!! Ah well, hindsight is always 20-20, isn't it?!

 

[icekid]

icekid-interesting, I've never heard of that type of disability! Is it common for physicians to have?

Thanks again everyone!

Yes- doctors who are on top of their finances, anyway. It's unclear to me whether this is prevalent in other relatively well-paying fields, though.

 

[Jennifer W]

It's quite common in the UK. DH has it (architect) and I had it before I went back to school. It's actually more popular with people in trades here, where they have high earnings.

 

[charbie]

DH and I have an advisor. My husband knew him casually, and when we got married, we decided we wanted to be on the fast(er) track to retirement, so we met with him.
He has been great. He set us up with some retirement accounts, knowing we were really only starting out with minimal $50/month IRAs a piece. He will be there for us as we grow out funds and want to invest more. I felt no pressure, and while I know he doesn't make money unless we do, I know he has our best intrest in mind.

Id recommend meeting with someone for a consultation, just to get an idea of what is out there. The sooner/younger you do these things, the more you'll make

 

[TooPatient]

HollyS-thanks for the info! I'm actually about to start a new job and I'm going to look into finding a financial advisor that way.

TooPatient-wow, thank you so much for all the information! I'm going to have to print out your post when I go talk to someone! Are you going to school for investment stuff, too?

DF-have any Apple stock?

Pandora-I'm definitely going to ask around. I think word of mouth is probably the best way to find someone.

icekid-interesting, I've never heard of that type of disability! Is it common for physicians to have?

Thanks again everyone!

When I first started in the office, I thought about it -- especially since the guys are older and more than hinted that if I did they'd hand me a bunch of their clients as they prepared to retire. Now that I've been there for some years I wouldn't even consider it. Other than the constantly changing regulations within a broker-dealer, through the SEC, state level, etc (which are all a pain to deal with and a dis-honest person wouldn't be stopped anyway), I've seen more and more people drift towards managing their own accounts. There are a lot of resources available on the internet that make it possible for people to manage quite well on their own (this isn't for everyone obviously).

 

[bethany58]

It is really hard to achieve financial freedom especially in times of financial crisis. I guess there is a debt contagion that is spreading across our country and there is a possibility that we are infected. Lots of people are now looking for enough information that could help them on how they are going to meet their ends despite the present situation that we have.

 

[phoenixgirl]

TooPatient, you don't think you'd have to buy the guys out? If you got the clients without buying the book, so to speak, I'd be very tempted! My husband will be needing to buy his senior's partner book at some point (like a dentist buying a practice).

To answer the question, well, my husband is one, so yes, I use one , but I used one before I got married and DH become one too. I'm personally not the kind of person who could read up on investing and make smart choices. I really have no idea what my husband is talking about when he tries to explain financial things to me. It all started with asking my micro-econ professor to explain the deficit to me . . . I was like, "But, um, I don't get it . . . how can we spend money that . . . doesn't . . . exist???" Never got a satisfactory answer on that one.

I do think it's important to find the right person. I've heard enough horror stories of my husband encountering a new client who had been put into really inappropriate (but, of course, high-commission paying) positions, sometimes by someone who isn't even registered (so maybe they can sell a particular insurance product or something but they couldn't get you invested in mutual funds or the like). I would ask friends for a recommendation. The better/more established advisors are less likely to have the time or motivation to take new clients who tend to have smaller accounts, so going with a friend's advisor may get you in the door, whereas otherwise they'd send you down the hall to the new guy's office. Also, the designation "CFP" (certified financial planner) is someone who has extra credentials on the planning side versus straight investing, so that might be something to look for too.

 

[partgypsy]

Compared to most of you here I make peanuts and so what I feel comfortable with do with my money is pretty run of the mill (I am happy with what are called "couch potato" portfolios) so it wouldn't pay for me to use a financial advisor. Personally I think a financial advisor is useful if you want to diversify into non run of the mill investments, have inheritance questions, or tax avoidance (optimization?) questions, none of which I have. The only time I had a financial advisor was for a year or so right after college when I didn't have anything through work and wanted to try mutual funds. I was a nerd so working for a year and 1/2 making 21K a year, was able to save 7K during that time. But, I took it out when I moved for grad school.

Having someone look at the big picture is kind of enticing. I also have questions how to best save for college for my kids, but not enough to search one out.

My husband's parents have an accountant/financial advisor but don't know if he is by the hour or commission-based.

 

[canuk-gal]

icekid-interesting, I've never heard of that type of disability! Is it common for physicians to have?

Thanks again everyone!

Yes- doctors who are on top of their finances, anyway. It's unclear to me whether this is prevalent in other relatively well-paying fields, though.

Yes--common I mean. BIL (dentist had it), husband (engineer) has it.

cheers--Sharon

 

[missy]

icekid-interesting, I've never heard of that type of disability! Is it common for physicians to have?

Thanks again everyone!

Yes- doctors who are on top of their finances, anyway. It's unclear to me whether this is prevalent in other relatively well-paying fields, though.

Yes--common I mean. BIL (dentist had it), husband (engineer) has it.

cheers--Sharon

I agree. I think disability insurance is an important insurance and recommend anyone who doesn't have it to look into it to see if it is practical for them. Some people get it through their job and others (like me) who are independent consultants pay for it on their own through an insurance broker. If for whatever reason you become disabled it could save you a lot of extra heartache. Let's say g-d forbid something happens that affects your ability to do your job and you can no longer earn a living for yourself. This insurance will pay you a certain percentage of your previous earnings for life so you can make your mortgage payments and other living expenses.

To answer the original question we do have financial advisers. I have been consulting with my 2 advisers since I started investing on my own and since my dh and I married we both use them. My dh also has an adviser who we use for smaller investments. We don't blindly follow their advice but they do make great suggestions (and some not so great that we choose not to take) and assist us in making the best decisions regarding our finances.

 

[Dancing Fire]

no need to pay a financial advisor, just do the opposite of what i do in the stock market...

 

[ame]

We do. We've used the one through the bank before, as well as StifelNicolas locally but we were not feeling like our advisor was "on top of things". Like when the huge crash happened, they waited to call my MIL about anything being moved, and she lost 6 figures and they were like "yea we just didn't get to it". Unacceptable. We moved our stuff to Edward Jones about two years ago. It's been ok. I don't think DH likes the person we are with much though. He doesn't like when people like...want to be his friend in this instance. And she likes to chat and get to know people. DH lives under rock.

 

[Dancing Fire]

We do. We've used the one through the bank before, as well as StifelNicolas locally but we were not feeling like our advisor was "on top of things". Like when the huge crash happened, they waited to call my MIL about anything being moved, and she lost 6 figures and they were like "yea we just didn't get to it". Unacceptable. We moved our stuff to Edward Jones about two years ago. It's been ok. I don't think DH likes the person we are with much though. He doesn't like when people like...want to be his friend in this instance. And she likes to chat and get to know people. DH lives under rock.

that's what i meant about FA,cuz when they lose it ain't their $$$s.