Anyone use a finicial planner before?

jenwiben1 · October 2013

We normally follow Dave Ramsey's principals when saving and addressing debt. My mother in-law passed away and we now have about a year's worth of our income coming to us. We are not sure what the best steps would be financially. We were thinking of meeting with a financial planner, but not sure how it works when you have one. How do they get paid etc?

hoffse · October 2013

Here's what investopedia has to say about how they get paid - they suggest an hourly fee-based planner over a commission-based planner or the DIY method:

http://www.investopedia.com/articles/basics/04/022704.asp

Frankly (and I do mean this in the nicest way possible), I would have difficulty finding value in a financial planner at this point in my life. They might be really useful for people who are just starting out or people who have so much money and are so busy that it's more cost-effective to pay somebody to take care of it for them... but H and I fall in neither of these categories.

The training required to become a financial adviser is a bachelor's degree and passing a certain certification exam. I think some firms also have their own internal exams. This could be hubris, but I feel like H and I are just as capable of reading financial literature and making these choices for ourselves without paying somebody to do it for us. Granted, I spend a lot of my time practicing tax law, so I stay fairly up-to-speed on that side of things for my job. I just have a hard time imagining a financial adviser picking a plan that works better for us than what we could come up with on our own. I hope that doesn't make me sound arrogant...

Keep in mind that when you buy mutual funds, etc. there is a small fee for some external manager to manage the fund. Those are worthwhile to us because those people spend all day every day watching the market and buying and selling assets in the fund to accommodate it. A small fee means we don't have to worry about it. But having somebody sit down with us and say, "you need X percent in stocks vs. X percent in bonds at your age... and oh, by the way, this kind of account is more tax advantaged than this other kind of account" is just not as useful for us.

Caveat: if you are talking about estate planning, that is a completely different ball of wax - depending on the size of the estate different tax provisions get triggered, and there are ways to plan around this. In that case a financial adviser or estate planner (usually an attorney) can be worthwhile.

Ultimately it's about your confidence in educating yourself, as well as the amount of money in play.

vlagrl29 · October 2013

The financial planner I use is in the fidelity office in our town. I have my IRA with fidelity and I stop in once or twice a year to talk to the guy about investing so I can learn what to do on my own and he doesn't charge anything.

I wouldn't pay for a financial investor. Not worth it to me. Although I do have half of my retirment managed by the fidelity management team. They take out 1.15% a year

hoffse · October 2013

I'll also give a plug for Fidelity - H and I both have retirement accounts there and like them a lot. Fidelity's contrafund has historically done really well, as has their low priced stock portfolio.

I've never spoken with their financial planners in-house because we just use morningstar to decide which funds we should be investing in - but when I do need help setting up an account, getting an account question answered, etc. their customer service reps are very knowledgeable and speedy. It's very nice to speak to somebody on the phone who understands exactly what you're trying to ask and who doesn't try to sell you something at the same time. H and I got married back in April, and we had a lot of paperwork to do on those accounts to change beneficiaries, make each other authorized traders, etc. They took care of it for us right away.

While this might not be helpful for you, OP (since you said you use Dave Ramsey's system), I also love their rewards credit card. I truly believe it's the best overall rewards card out there. I get 2% back on everything I purchase - no exclusions, no caps - and the rewards automatically get dumped in our retirement accounts. You can also link them to brokerage or college 529 accounts. Of course, you should pay them off in full each month, but if you're a person who doesn't carry a balance on credit cards (we are), then it's a fabulous card to have.

We also have a checking account with them - they pay our ATM fees, including foreign ATM fees, that have the star, cirrus, etc. logos. My Well's Fargo account, on the other hand, charges me to pull cash out overseas on top of whatever fee the ATM charges.

Finally, I really love their online platform - I can see everything on a single page. Since H and I are authorized traders on each other's accounts, I can also see his accounts too - so we both always know what our joint net worth is from our various Fidelity accounts put together.

I'm sure Vanguard, Schwab, etc. are also great - I just haven't used them. We've been so happy with Fidelity we have no interest in switching.

maple2 · October 2013

The fee structure for financial planners varies quite a bit. Some are paid based on commission, so they make money by getting people to invest their money in specific ways. Others are willing to work for an hourly rate, so you can set up a meeting with them and just pay them for their time. Depending on how much money you have to invest, you may also be eligible for free meetings with a financial planner. Fidelity, for example, has financial planners who meet with clients and provide whatever advice/assistance they want. The planners receive a base salary and bonuses are awarded based on customer satisfaction surveys.

There are definitely good books out there if you have the time and motivation to train yourself. In a similar situation to you, I found it helpful to talk to a financial planner to weigh the pros and cons of putting the money towards our mortgage, building up 529 plans, investing in tax advantaged retirement accounts, finding alternatives to IRAs and 401ks for long term investments that minimized our tax liabilities while still providing growth opportunities (basically money for retirement that couldn't be invested in a tax advantaged account), and investing in the market more generally (money that we might want before retirement but that was still a relatively long-term investment). Once we made the decisions about the right types of investments for our money, I felt comfortable researching mutual funds, 529s, etc. and making decisions about which specific ones I wanted to use for the money. I appreciated the financial planner's knowledge of the full range of investment options and the strength and limitations of each.

As others have said, your interests would best be served by finding a financial planner who will either advise you for "free" because you have enough $ to invest with his/her company or paying someone an hourly rate. If you work with someone who makes their money through commissions, you will get advice that is biased to serve their interests as well and you may end up paying them much more in the long run than you would if you just paid an hourly rate up front.

Ducktale · October 2013

I think many on this board are much more financially saavy than me, and probably most people. IMO, most could benefit from professional financial advice. We use a financial advisor. The requirements for his company is a 4 year degree in finances, 1 year of training at their headquarters, 1 year of training in an office, and then an extended amount of time under the "mentorship" of a senior financial advisor. They also have the entire company worth of financial advisors to assist and guide the individual advisors. With all of that, I do feel comfortable that they have more knowledge on investments than I could get from reading a book or doing my own research. Of course, I don't rely blindly on what he says, I do educate myself and do my own research as well and if I have questions I discuss with him.

GilliC · October 2013

For all of you DIY planning people, what books would you recommend for retirement planning? I've been considering a financial planner, because I'm a bit overwhelmed with everything. Because of my job, I've bounced between retirement plans such that I've paid into at least two pension schemes and a 401K, along with foreign social security. My savings are split between countries, and while I have limited tax liability in the US, I'm facing much higher taxes on capital gains and dividends.

With everything spread around so much, I have trouble getting a clear picture of what my retirement savings even look like, and the usual rhetoric around tax advantages doesn't necessarily apply. It all makes me extremely nervous. I would like to have a better handle on the total value and a better idea of how (and where) I should my savings moving forward so that I don't end up losing all of my retirement money to taxes.

I really try to do it myself, and I have a better-than-average handle on understanding the relevant US tax laws (earned income exclusion, foreign tax credit, etc). But while I understand the details, I'm having trouble getting a grip on the big picture and forming a future plan. Where would you suggest I start looking for more information and guidelines?

RDeMoss1622 · October 2013

Why not just follow Dave Ramsey's steps? Pay off all of your debts, set aside an emergency fund (of at least $1k to start), set aside 6 months salary, invest etc. See how many steps you can get through with these new funds!

hoffse · October 2013

GilliC, I don't know that I would DIY if my investments were subject to foreign tax laws. That sounds like asking for trouble to me. I know this is a blanket statement, but I would bet that most accountants and tax lawyers wouldn't know anything about this - let alone your average investment guy. Investment people tend to be trained more in the "big picture" investment approach than on specific tax planning strategies. They are, of course, trained on the big tax topics, but they won't necessarily know the ins and outs of those laws.

My firm keeps tax portfolios on foreign tax schemes, and while I love tax I avoid those like the plague. Some countries have bizarre cross-over rules with the US, and it's just a mess.

For your foreign accounts, I would seek professional help. You may be able to find an accountant or other tax professional who is better versed in that area than a standard financial adviser. In fact, a tax attorney (while expensive) might be good if you have specific legal questions - they can't give you financial planning advice (it's considered unethical), but they can help you understand what the rules are in the first place (ie: how tax is assessed, what triggers it, what rate, etc.) so that you can make more informed decisions about what to do. Also try the larger banks - we have people give presentations to my firm all the time who tell us they are not "bankers" but "wealth management professionals" who specialize in "large or complex personal wealth management strategies." I would categorize yours as complex.

As far as your domestic accounts go, we can help you if you can give us greater detail about your age, your earnings, your investments, their balances, etc. I would start a new thread for that. As far as DIY, I have done a few things. I have read some Dave Ramsey mostly to see what the hype was about - I suspect he's more useful for people who are horribly in debt than people who aren't. Frankly, he's a bit touchy-feely for me, and I prefer a more bottom-line approach. I've never quite gotten over his version of the debt snowball (smallest balance to largest, rather than highest interest rate to lowest). I have also read Smart Couples Finish Rich. It was pretty good at giving basic investment guidelines and strategies - and it's aimed at younger folks who are just starting out. For info on specific investments and reports on different types of investment strategies, I read Money magazine and the Financial Times. I also read Forbes online and Morningstar when H and I are considering buying into a new mutual fund, etc.. Finally, I read lots of op eds to see which things investment gurus think are worthwhile and how I should hedge against the inherent risk in all of them. H and I then make decisions about what our portfolio should look like, what we want to invest in, etc. No financial strategy is perfect, but it's worked quite well for us so far.

hoffse · October 2013

I should add: I watch Suze Orman like a champ because I love the way she says, "DENIED!" in her "Can I Afford It?" segment. It helps me keep perspective about things I "need" that are really just wants. Also? She makes those decisions based on the current state of the caller's finances - I've watched it for a couple years now, and I'm developing a sense of how to balance savings, retirement, and debt before I splurge on other purchases - because all of these things are completely relative depending on your age, income, and household size. She always tells the caller why she is denying them and which areas appear weak to her.

maple2 · October 2013

If you want to move beyond Dave Ramsey et al. and look at books focused more on just investing, here are some that have been suggested to me by a financial planner.

· The Intelligent Investor by Benjamin Graham

· Contrarian Investment Strategy by David Breman

· The Money Masters by John Train

· Technical Analysis of Stock Trends by Robert D Edwards and John Magee

· Secrets for Profiting in Bull and Bear Markets by Stan Weinstein

· The Nature of Risk by Justin Mamis

I also think a lot of investment companies have pretty good information on their websites that help you think about your risk tolerance and suggest an asset allocation mix that best fits your timeline and risk tolerance. We have just consolidated our investments with a single company (other than current employer retirement programs), which makes it so much easier to get a sense of where the money is and if our asset mix makes sense for us.

Wulfgar · October 2013

One thing I would suggest is if you just need help with what to do with this money go to an hourly personal financial adviser since he doesn't care who you put your money with, he will just make sure that you know the risk versus reward.

My wife's last job kept pushing her towards managed retirement accounts where the first person that she went through was "day trading" her account so her fees were roughly 7% of her account. The second group that they suggested wanted to sell us a ton of life insurance before they talked about investments. She now finally has her money into a better retirement account with a lot lower fees.

savvyduofp · October 2013

First off, I know I'm biased on this subject because I am a financial advisor. I will say that not everyone needs to work with an advisor. Some people love to read and research financial topics, and they do a great job of managing their own finances. Others don't have the time or the desire, and they could really benefit from some outside guidance.

However, be careful who you hire and be aware of how they get paid.

The majority of financial advisors are paid through a commission for selling you investment products. If you have $5,000 to invest, they will invest the money and earn a commission. There are other advisors who will charge you a flat fee or an hourly rate for financial advice. They are Registered Investment Advisors, and they are held to a fiduciary standard.

I'm not a member of Garrett Planning Network, but they have great advisors who have affordable rates. You can find a planner through their website: http://garrettplanningnetwork.com/search-for-advisors-by-clicking-on-a-state/

Anyone use a finicial planner before?

Re: Anyone use a finicial planner before?

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