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Financial Advisors
Hi - I'm sure this post will be full of questions, but I am wondering about financial advisors and how that process works, cost, etc.
Background on DH and I: I am 25, and DH will be 34 at the end of this month. We currently both have Roth 401Ks, and I have a roth IRA. Into his Roth 401K, DH contributes 8% (Pre-tax) and has a company match of 2%. He will be completely vested in his company match in another couple of years. Right now, he currently has roughly 4K. Into my Roth 401K, I contribute 4% (Pre-tax) have have a company match of 2%. Right now, I have roughly $5500 in my 401K. Into my Roth IRA, I contribute 2.34% (based of annual salary). Right now, I have roughly $2600 in my IRA. I realize this is not even close to maxing out my IRA. So, all in all, we (ourselves) contribute 12.34% of our annual income and then we have another 4% in company matches. We also have a rental property, that the ideal goal would be to keep that rental property and pay off that mortgage. Then when we sold that house later on in life, it would all be "profit".
Questions I have:
Your personal opinion - how do you think we're doing on retirement based on the percentage that we're contributing.
How do you go about finding a financial advisor? There are so many out there. How do we know who is the best financial advisor for us? We're in Indianapolis, IN, if any of you are around this area and have recommendations.
What companies are the best to go with? Someone on my month board mentioned Edward Jones. I know a lot of you recommend Vanguard for investments. Does Vanguard have financial advisors that meet with you?
What would the difference in the companies you chose for be? Don't they all do the same thing?
How much do financial advisors cost? A couple of people on my month board said that the meetings with their financial advisors did not cost anything. They said that the financial advisors are hoping you'll invest with them, and then they make a commission. Is that true for most of the financial advisors?
If your DH wasn't on board, how did you convince him this is something that really needs to be done? I'm going to ask him tonight how he would feel about meeting with a financial advisor...but I'm just afriad he's going to come back saying it's not necessary. (Which is why I'm asking all these questions...I want to have as much information as possible to present to him!)
Do you have any other recommendations/helpful information on investing for retirement and choosing a financial advisor.
Sorry this was so long, but you all have so much wonderful information and advice. Thanks again for your help!!
TTC since June 2012
Re: Financial Advisors
Opinion on how much you are contributing- our goal is always to keep it above 20% but I think 15% is considered great. You are really close to that- maybe take your raise next year (assuming you both get one) and contribute it to retirement. Then it's money you aren't missing because you never had it. I have done this for several years and eventually it adds up.
The financial advisor question I can't really answer. I met ours because he was in the lunch room at work waiting for one of his appointments, I noticed his name tag and sat down to talk with him. He has since been elevated in his company but will still personally deal with our accounts and meet with us about once a year. We are with Axa Equitable. One thing I really like about them is that they send out statements every time you contribute money- so you get to see how it's growing. I believe he is paid a yearly fee that comes from the account and it's really not much.
My husband is thankfully on board with meeting with our financial planner (he wants to retire early) so that hasn't been an issue for us. One thing I may try, especially if he is a numbers guy, is to show him growth over time. Normally accounts that are managed well do better, so over time your money may grow at 8% as opposed to 4%- find a retirement calculator online that allows you to play with the numbers. A financial advisor can also show you predictions of what you will have at retirement based on what you are saving now, which I know my husband found interesting.
I am 9 years younger than my husband too, and so I tend to be a bit more worried about this type of thing- especially with him wanting to retire early. I have to remind him every now and then that even if the $ would last until he is 90 or whatever, that doesn't mean it would last for me! Sitting down and looking at some of those predictions helped him realize that.
I have been thinking about the same thing so I'm glad you posted this question. I don't know anything about advisors but have been trying to decide if it would be worth it. My dad is good with the stock/bond thing so he's the one who set up H and I's retirement account choices. My aunt has a financial advisor and said I could use him but he makes commision off of them and I'm really not into that. I really just want someone to talk to and check-up on my portfolio to make sure that they are the right ones. I trust my dad but at the same time I hate bugging him. I don't even know how much we will need to retire. I usually check in with Fildelity 2X's per year but right now I'm set up with the Vanguard 2045 (yr of retirement) but I've been reading in Money magazine that this may not be a smart thing to do (too many fee's or something)...ugg it's soo annoying to pick all this crap out....at least I'm starting to care and hope not to live off the state like everyone does lol
I'm not sure if your doing good or not but you can compare to me:
Me- 30 yrs old, started a 401K at 23 and I have about $23,000 in there. I currently contribute 5% but just got a raise and will increasing that to 7%. My company matches the first 5% between .50 and $1. I dont have any other accounts and I can't afford to open another so I'm keeping it all in 1 place.
H- 30 yrs old. he's been with his company for 7 yrs and has only about $5,400 in there. I think he contributes 5% now but he will also be increasing this sometime this year. His company doesn't match this but they contribute to another kind of account, maybe a profit-sharing or employee stock account (I can't remember)
Overall, I think I'm doing ok, but I don't think hubby is lol, but we are working on it. I just started caring about all this money/financial/retirement stuff about a year ago so we are slowly progressing. No more goofing off! LOL
I just want to mention that your husband is contributing 10% total and you are contributing 8.34% total... if you add that is 18.34, but when you do percetages, you can not just add the percentages. You have to divide 18.34 between the 2 incomes. Meaning that you guys are contributing about 9.17% of your annual household income.
TTC since June 2012