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Started By
Message
Do I need a financial advisor?
Posted on 2/17/23 at 3:05 pm
Posted on 2/17/23 at 3:05 pm
Sorry if this topic has been beat to death, just wanting some honest opinions. I work and the wife stays home, 43 with two kids. I currently max out a Roth 401k annually, employer deposits 6% of salary into a Fidelity's target account , and I deposit 10% of my salary into the employer sponsored account as well. I do work for a private company and I hope to get an offer to buy into their private fund soon, but for now let's say that is not an option.
We only own the house we live no, no other properties. I do not play with stocks.
In your opinion, should I look into what Fidelity has to offer at a minimum, hire someone else, or I do not need an advisor?
thanks
We only own the house we live no, no other properties. I do not play with stocks.
In your opinion, should I look into what Fidelity has to offer at a minimum, hire someone else, or I do not need an advisor?
thanks
15
Posted on 2/17/23 at 3:24 pm to lsuCJ5
You don't need one IMO.
Posted on 2/17/23 at 3:30 pm to lsuCJ5
Only you know you and your complete financial situation and goals. On a scale of 1-10, (1 being lowest level, 10 highest) rank your level of financial acumen and experience. IMO, the lower the score, the more likely it is that you could use outside assistance.
Posted on 2/17/23 at 5:03 pm to lsuCJ5
Have you considered funding Roth IRAs for you and spouse? Use backdoor Roth if you're over the income limit. Assuming you prefer Roth over traditional since thats what you're doing in 401k. If in a higher bracket now than in retirement consider switching 401k to traditional.
Posted on 2/17/23 at 5:07 pm to TorchtheFlyingTiger
I'd look at Fidelity, Schwab or Vanguard. My preference is low expense index funds/ETFs rather than paying an advisor. If your situation isnt complex and you trust yourself not to panic sell self management is feasible. If you need a coach to restrain you from jumping out of market at bottom an advisor could be worthwhile but costly. Could also use a.roboadvisor or target date funds to rebalance for you.
Posted on 2/18/23 at 9:14 am to lsuCJ5
This post was edited on 3/18/23 at 9:18 am
Posted on 2/18/23 at 9:21 am to lsuCJ5
At face value of your post, you do not need a financial advisor.
You need to assess your financial objectives, risk tolerance and knowledge/interest in financial matters. To me, yours is pretty straightforward.
Recommend you read up on Vanguard's 3 fund strategy, reflect on above, and use that as blueprint (in place of Financial Advisor). At most you need a robo-advisor that will allocate resources in a nano second and not give real advice, that is unnecessary and not worth the 1-2% huge cost to your portfolio for a FA giving it.
You need to assess your financial objectives, risk tolerance and knowledge/interest in financial matters. To me, yours is pretty straightforward.
Recommend you read up on Vanguard's 3 fund strategy, reflect on above, and use that as blueprint (in place of Financial Advisor). At most you need a robo-advisor that will allocate resources in a nano second and not give real advice, that is unnecessary and not worth the 1-2% huge cost to your portfolio for a FA giving it.
This post was edited on 2/18/23 at 9:23 am
Posted on 2/18/23 at 9:32 am to lsuCJ5
quote:
I do work for a private company and I hope to get an offer to buy into their private fund soon, but for now let's say that is not an option.
Please explain this to me.
Your response may lead me one way or another on your OP question.
This post was edited on 2/18/23 at 9:33 am
Posted on 2/18/23 at 9:52 am to lsuCJ5
You don’t know what you don’t know. See if you can line up some consults and find out if you have any blind spots.
Posted on 2/18/23 at 10:03 am to lsuCJ5
Use Fidelity’s retirement planning tool. It’s really good. Gives you a good picture with some different options. If that doesn’t work enough for you, then I’d consider a financial advisor
Posted on 2/18/23 at 10:13 am to lsuCJ5
You need to educate yourself first. Investing really isn’t very difficult.
I would recommend finding a couple basic retirement investing books first, read them for a month or so. Many of them are great and start very basic. You will most likely realize you don’t need help.
If you do that and end up lost or wanting help, by all means do it.
I would recommend finding a couple basic retirement investing books first, read them for a month or so. Many of them are great and start very basic. You will most likely realize you don’t need help.
If you do that and end up lost or wanting help, by all means do it.
Posted on 2/18/23 at 11:01 am to lsuCJ5
Not until you’re 65, retired with 2-3 million+ and have NO idea how to manage that sum of money, or, if the thought of managing that kind of sum overwhelms you.
Growing the nest egg is the easy part. What to do after is much more intimidating.
Growing the nest egg is the easy part. What to do after is much more intimidating.
Posted on 2/18/23 at 12:27 pm to bayoubengals88
quote:
Growing the nest egg is the easy part. What to do after is much more intimidating.
Yeah
My brother is an independent advisor.
My 401k can often beat him with the up years.
It is the down years where I really see the value.
In an up year, I'm maybe 1% better. 2% at best.
In a down cycle, his worst years are down 3 or 4%. I'm where ever the market it.
I don't pretend to time the market. So I'm comfortable with my 401k. But if I was retired, I'd be with an advisor in a heartbeat. I'm not an investor. I'm pretty much riding the waves of indexes.
Posted on 2/19/23 at 7:04 am to lsuCJ5
Couple of major things to think about -
Do have enough knowledge/ability to learn to feel comfortable making investment/risk/tax decisions?
Will you emotionally react to your account being down (through normal market swings) enough to potentially unintentionally make a bad/harmful decision?
There are plenty of people who can do their own thing with a Fidelity/Schwab/TD account. There are also plenty of people who do their own thing who shouldn't because they are hurting themselves. And then there are also plenty of people who are happier letting someone else do it for a fee. Figure out which one you are. And sometimes, over time, which one you are changes. I.E happy to make a decision on investments when its $100,000 but when you're about to retire, selling/withdrawals become a bigger deal and you don't trust your instincts as much for your $2.5m, so you are happier seeking advice.
If you hire someone, make sure they are telling you what they get paid, very clearly.
Do have enough knowledge/ability to learn to feel comfortable making investment/risk/tax decisions?
Will you emotionally react to your account being down (through normal market swings) enough to potentially unintentionally make a bad/harmful decision?
There are plenty of people who can do their own thing with a Fidelity/Schwab/TD account. There are also plenty of people who do their own thing who shouldn't because they are hurting themselves. And then there are also plenty of people who are happier letting someone else do it for a fee. Figure out which one you are. And sometimes, over time, which one you are changes. I.E happy to make a decision on investments when its $100,000 but when you're about to retire, selling/withdrawals become a bigger deal and you don't trust your instincts as much for your $2.5m, so you are happier seeking advice.
If you hire someone, make sure they are telling you what they get paid, very clearly.
Posted on 2/19/23 at 1:33 pm to lsuCJ5
Looks like:
1) you have a plan and stick to it
2) you have an asset allocation that you’re sticking to
3) you know the value of owning part of your company
This is probably a minimum of 80% of the battle, and probably closer to 95.
Do you know:
1) when you’ll be ready to retire?
2) how you’ll pay for retirement?
If yes/yes, you’ll likely not see a ton of benefit from an advisor. You may do a little better or worse with one, but it’s unlikely to be responsible for a lifestyle bump/decline.
Now, if I were in your shoes and worried about not knowing what I didn’t know, I’d consider hiring a fee-only fiduciary advisor for a one-time look/plan at your scenario. Probably going to cost a couple grand once with no ongoing cost unless you want to have them lay eyes again vs a small percentage year on year with a “traditional” AUM model. While there are reputable AUM advisors, a large number of them (looking at you, Northwestern Mutual, but others aren’t necessarily exempt) focus more on selling you products for commission instead of good advice. Perhaps they really believe in what they’re selling. I don’t. And most financial bloggers and bogleheads also do not.
If either seems steep, the bogleheads are a fantastically conservative nuts/bolts group that will have thought out most the questions you’d have already. If that’s a little too daunting, there’s courses like this (Fire your Financial Advisor by Jim Dahle- you can take up to 25% of the course over 7 days and return it if you already know what you’re doing. May be worth the cost of buying to see what sort of deficits you have. He says it’s designed to even help you work with an advisor if you don’t have a plan. I haven’t taken it and don’t really plan to).
Any which way, sounds like you’re kicking arse at life thus far. Take a step back and appreciate that you’re doing a whole lot better than most folks. Congrats.
1) you have a plan and stick to it
2) you have an asset allocation that you’re sticking to
3) you know the value of owning part of your company
This is probably a minimum of 80% of the battle, and probably closer to 95.
Do you know:
1) when you’ll be ready to retire?
2) how you’ll pay for retirement?
If yes/yes, you’ll likely not see a ton of benefit from an advisor. You may do a little better or worse with one, but it’s unlikely to be responsible for a lifestyle bump/decline.
Now, if I were in your shoes and worried about not knowing what I didn’t know, I’d consider hiring a fee-only fiduciary advisor for a one-time look/plan at your scenario. Probably going to cost a couple grand once with no ongoing cost unless you want to have them lay eyes again vs a small percentage year on year with a “traditional” AUM model. While there are reputable AUM advisors, a large number of them (looking at you, Northwestern Mutual, but others aren’t necessarily exempt) focus more on selling you products for commission instead of good advice. Perhaps they really believe in what they’re selling. I don’t. And most financial bloggers and bogleheads also do not.
If either seems steep, the bogleheads are a fantastically conservative nuts/bolts group that will have thought out most the questions you’d have already. If that’s a little too daunting, there’s courses like this (Fire your Financial Advisor by Jim Dahle- you can take up to 25% of the course over 7 days and return it if you already know what you’re doing. May be worth the cost of buying to see what sort of deficits you have. He says it’s designed to even help you work with an advisor if you don’t have a plan. I haven’t taken it and don’t really plan to).
Any which way, sounds like you’re kicking arse at life thus far. Take a step back and appreciate that you’re doing a whole lot better than most folks. Congrats.
Posted on 2/19/23 at 2:31 pm to lsuCJ5
Most 401K plans offer free advice as part of their service. Check that first. You sound like you’re doing fine though.
Posted on 2/19/23 at 3:26 pm to lsuCJ5
Well what you need at your age is a financial plan. What’s your lifestyle and when would you like to retire? Are you saving enough annual to have a sustainable portfolio during retirement. Do you have the plan protected with some term insurance? Finally are you saving in the most efficient way.
It’s possible to figure that out on your own but if you use an Advisor use a fee only RIA rather than brokers and others that will push commissioned projects like annuities and whole life insurance.
It’s possible to figure that out on your own but if you use an Advisor use a fee only RIA rather than brokers and others that will push commissioned projects like annuities and whole life insurance.
This post was edited on 2/19/23 at 3:28 pm
Posted on 2/20/23 at 6:31 am to meansonny
quote:
I do work for a private company and I hope to get an offer to buy into their private fund soon, but for now let's say that is not an option.
Please explain this to me.
Your response may lead me one way or another on your OP question.
I work for a employee owned company that pays dividends to their share holders. I have to have someone nominate me in order to buy in. Typically the buy in is offered at year 4 of employment and I am currently at year 2. They do offer 1% loan to buy in once the offer is made. Everyone I talk to says the return is typically 30% or so per year. This is a waiting game until I am offered the buy in.
My 401K plan is a target date fund, so it is adjusted according to the market. I will look into what Fidelity has to offer at a minimum. But I do have my own goals in place such as my house will be paid for once I decide to retire at 65 or so.
I appreciate the input so far.
Posted on 2/20/23 at 1:28 pm to lsuCJ5
Your company has people that it's their job to manage that.
In my experience, those folks are better at managing investments than I am.
My 401k has done great...My personal brokerage not so much.
Suggestion is just set it and forget it.
In my experience, those folks are better at managing investments than I am.
My 401k has done great...My personal brokerage not so much.
Suggestion is just set it and forget it.
Posted on 2/20/23 at 6:48 pm to lsuCJ5
quote:
My 401K plan is a target date fund, so it is adjusted according to the market.
Correction, your 401k adjusts according to the year. Zero effs are given regarding market environment.
As an advisor I’m clearly biased, but generally if you can handle your finances, save a bunch, follow a plan, communicate clearly with interested parties (wife, CPA, attorney, business partners etc), and you are informed enough to adjust over time, maybe you don’t need an advisor.
My bias is the responses you’re getting from MT show a clear lack of understanding of what an advisor would do. For example, point out that’s an asset allocation strategy in your 401k, not management based on shifting dynamics in the economy.
As others have said, find someone local. If you find a good one at a broker such as the fidelity guy on the 401k… he/she will realize how good they are and how much money they can make not working for fidelity and leave and you’ll be dealing with the next guy/gal paid to answer that call.
Good luck!
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