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Does anyone have a financial advisor? How did you decide that you needed one?
Posted on 9/12/24 at 11:16 am
Posted on 9/12/24 at 11:16 am
A friend of ours approached and did the quick pitch, but I never really got the selling point from their end. More just questions on our current finances and a "let me get back to you on how we can help". As nice, competent, and credible as that friend is to us, I'm probably more qualified to be a financial advisor than they are.
I manage my family's finances and I work with a family CPA during tax season. I know I'm not perfect, but I'd generally rather do it myself rather than have someone else do it for me - and I'm not sure that the potential inaction or missteps that I may take is truly costing us more than what financial advisory services would.....But maybe I'm wrong and our friend just isn't great at selling.
Some background:
I'm about 40 years old and work for a B4 consulting company. My wife is a physician. We both earn about the same salaries, and we are doing everything we can to minimize our current tax burden. There are unfortunate limits to that since both of us are W2.
I don't consider us wealthy, but we are trying to build wealth. We both came from working class homes and neither of us have or will inherit anything.
We recently moved (in 2022) from a HCOL area to a LCOL area, and we've definitely felt the benefits of that with a reasonable mortgage, comfortable home, and generally not really "feeling" the impact of inflation as much as others in our community. That's been a huge benefit for us in every way except insurance costs (we moved to Louisiana).
We maximize our 401k although I'm slowing this down temporarily because it will take a few months to set this up with my new job (I've actually found a slower paced, remote role with the same pay). I'm trying to set up some side hustles and invest in rental properties, so the extra time will be a welcome change.
We set aside money for a 529 plan for both our kids, and both accounts seem to be growing reasonably well. We don't anticipate having more children.
We save a bit every year, although I always want to save more. This is entirely up to us and how draconian we are with spending cuts. I'm not as "frugal" as my parents, but I have always had that tendency to have a solid defense and we are very proud of our offense. I'm definitely more Thomas Stanley than Dave Ramsey.
What the heck do I need a financial advisor for (especially one that's linked to what I associate with an insurance company)? This doesn't smell quite right to me.
I'm also a little bummed that someone I perceived as a friend may see us more as a potential client.
I manage my family's finances and I work with a family CPA during tax season. I know I'm not perfect, but I'd generally rather do it myself rather than have someone else do it for me - and I'm not sure that the potential inaction or missteps that I may take is truly costing us more than what financial advisory services would.....But maybe I'm wrong and our friend just isn't great at selling.
Some background:
I'm about 40 years old and work for a B4 consulting company. My wife is a physician. We both earn about the same salaries, and we are doing everything we can to minimize our current tax burden. There are unfortunate limits to that since both of us are W2.
I don't consider us wealthy, but we are trying to build wealth. We both came from working class homes and neither of us have or will inherit anything.
We recently moved (in 2022) from a HCOL area to a LCOL area, and we've definitely felt the benefits of that with a reasonable mortgage, comfortable home, and generally not really "feeling" the impact of inflation as much as others in our community. That's been a huge benefit for us in every way except insurance costs (we moved to Louisiana).
We maximize our 401k although I'm slowing this down temporarily because it will take a few months to set this up with my new job (I've actually found a slower paced, remote role with the same pay). I'm trying to set up some side hustles and invest in rental properties, so the extra time will be a welcome change.
We set aside money for a 529 plan for both our kids, and both accounts seem to be growing reasonably well. We don't anticipate having more children.
We save a bit every year, although I always want to save more. This is entirely up to us and how draconian we are with spending cuts. I'm not as "frugal" as my parents, but I have always had that tendency to have a solid defense and we are very proud of our offense. I'm definitely more Thomas Stanley than Dave Ramsey.
What the heck do I need a financial advisor for (especially one that's linked to what I associate with an insurance company)? This doesn't smell quite right to me.
I'm also a little bummed that someone I perceived as a friend may see us more as a potential client.
This post was edited on 9/12/24 at 11:27 am
12
Posted on 9/12/24 at 11:22 am to dewster
You don't need a financial advisor, but you have put yourself in a great position for the future and seem to have all of your bases covered.
Go have some fun
Go have some fun
Posted on 9/12/24 at 11:25 am to dewster
I have one simply to diversify with non traditional stuff I dont understand as much. I dont need help picking a basic blend of mutual funds for growth over 30 years but I do need help with private equity stuff and other opportunities.
Posted on 9/12/24 at 11:28 am to dewster
You may not need a financial advisor, it could be as simple as that. Don't ghost your friend, that would be rude. It seems like he may be a bit new to the game if he didn't know how he could help after an initial meeting. I'm guessing a financial advisor could be an asset to you but if your spidey senses are going off over this guy trying to sell you some permanent insurance, than there is nothing wrong with saying you don't think you really need an advisor right now. Just be honest and say you don't feel like this is the right thing for you right now. The worst thing you could do is let him go do a bunch of work thinking he's got a deal coming and then telling him later. See what he comes up with and maybe it'll be good ideas. Maybe he comes back and says you need a $1m whole life policy and you buy some cheap term off of him (I don't know, just throwing something out that he may find).
Without knowing anything about you, I can say that normally when I meet with people they don't even know where their holes are. They are pretty easy to find if you know what you're doing. That would be my only red flag there.
Without knowing anything about you, I can say that normally when I meet with people they don't even know where their holes are. They are pretty easy to find if you know what you're doing. That would be my only red flag there.
Posted on 9/12/24 at 3:53 pm to dewster
I would not use a friend as a financial advisor. I would not do any business with a friend at all. Keep your business/finances separate from friends/family.
Personally I enjoy having a financial advisor, it is not a bad idea to have one. You can do it without one, like you can also do your taxes yourself and represent yourself in court.
Personally I enjoy having a financial advisor, it is not a bad idea to have one. You can do it without one, like you can also do your taxes yourself and represent yourself in court.
Posted on 9/12/24 at 10:09 pm to DarthRebel
I don’t think OP needs a FA.
I’m in a comparable situation as you. I’ll take calls or coffee occasionally. Rarely is there anything that is even remotely interesting. Last time was some private equity holdings with the ability to withdraw quarterly (instead of a long lock-up period). It was the most interesting diversification conversation I’ve had in the investing space. Now, on further inspection, some of the funds required multiple millions in investable assets to be eligible for the fund. I value liquidity too much for even quarterly distributions but it was an intriguing FA discussion nonetheless.
I’m in a comparable situation as you. I’ll take calls or coffee occasionally. Rarely is there anything that is even remotely interesting. Last time was some private equity holdings with the ability to withdraw quarterly (instead of a long lock-up period). It was the most interesting diversification conversation I’ve had in the investing space. Now, on further inspection, some of the funds required multiple millions in investable assets to be eligible for the fund. I value liquidity too much for even quarterly distributions but it was an intriguing FA discussion nonetheless.
Posted on 9/12/24 at 10:34 pm to lynxcat
quote:
I don’t think OP needs a FA. I’m in a comparable situation as you. I’ll take calls or coffee occasionally. Rarely is there anything that is even remotely interesting. Last time was some private equity holdings with the ability to withdraw quarterly (instead of a long lock-up period). It was the most interesting diversification conversation I’ve had in the investing space. Now, on further inspection, some of the funds required multiple millions in investable assets to be eligible for the fund. I value liquidity too much for even quarterly distributions but it was an intriguing FA discussion nonetheless.
I need one for sure
Wife rolled 401k’s to them but outside of that I don’t really send them anything but 700 a month to backdoor a Roth every year. I did get into private equity last year because of my wife’s job and I have no idea how that whole world works except I’m locked up for about 3.5 years until the chapter is over then I can pull out or reinvest.
I just enjoy having him to bounce ideas off of and our meetings so he gives an update on everything to make sure we are on track.
Posted on 9/12/24 at 11:31 pm to dewster
First, sounds like your friend is an insurance salesman and not a financial advisor. He may call himself a financial advisor, he may offer investments along with insurance. But if he's with an insurance company he's likely been trained to be like an insurance salesman. They sell product. They can be pushy. This would explain some of the weirdness with the approach, he likely doesn't know how to sell to a friend without being pushy and he had nothing more to offer you. I also wouldn't necessarily say he sees you as a client either - he probably sees you as a friend and wants and therefore may also be a good candidate for a client or that he can "Help". My rule of thumb, never hire a professional you can't hold accountable or fire. Some people can't do that with friends.
Second, there are plenty of people in your position (age, income levels, accumulation phase, etc.) that don't need an advisor. Some do, because they don't want to put the effort in or are prone to bad or emotional decisions. They may need help maximizing the best ways to save, both for today's tax code and their future selves. Doesn't sound like you need one for any of those reasons.
However, that flips at some point, maybe when the total value of your assets gets higher (a holy @#$# we have $X moment), or maybe when you're getting closer to retirement. Then it becomes more about managing risks and taxes, along with having a plan on how to proceed. Not everyone needs an advisor at that point, and you may fall into that camp, but a lot more people need one then than they did during the early and mid accumulation phase.
Just my two cents.
Second, there are plenty of people in your position (age, income levels, accumulation phase, etc.) that don't need an advisor. Some do, because they don't want to put the effort in or are prone to bad or emotional decisions. They may need help maximizing the best ways to save, both for today's tax code and their future selves. Doesn't sound like you need one for any of those reasons.
However, that flips at some point, maybe when the total value of your assets gets higher (a holy @#$# we have $X moment), or maybe when you're getting closer to retirement. Then it becomes more about managing risks and taxes, along with having a plan on how to proceed. Not everyone needs an advisor at that point, and you may fall into that camp, but a lot more people need one then than they did during the early and mid accumulation phase.
Just my two cents.
Posted on 9/13/24 at 8:27 am to dewster
I don't need one, but want one. So much so, I became one. But still; use one. Not because I need, but because I want.
Posted on 9/13/24 at 9:00 am to BestBanker
quote:
I don't need one, but want one. So much so, I became one. But still; use one. Not because I need, but because I want.
Sorry if I misread that or just didn’t understand. You became a FA, but you use one (other than yourself)?
Posted on 9/13/24 at 9:25 am to dewster
Just know yourself. I don’t need an advisor but my wife will if something happens to me. You may want to keep your friend in mind for possible future needs.
Posted on 9/13/24 at 9:39 am to Jag_Warrior
quote:
You became a FA, but you use one (other than yourself)?
Yes. My business partner, my cpa, my banker. I would never think I always have the correct information always.
Posted on 9/13/24 at 9:48 am to lynxcat
quote:
I don’t think OP needs a FA.
Maybe not, but I disagree based off their financial status. OP stated he makes the same as his wife, and his wife is a Physician. With that information and them also being their 40s, it is a safe assumption (still an assumption though) they are making north of $500,000. You are looking at a couple that is an actual top 1% or close to it. They can do it themselves, since honestly they have so much income coming in it would not matter, however a proper FA will earn them much more and set them up for a proper retirement with maximized tax savings.
To the OP - I would not work with your friends, however I would find a proper FA.
Posted on 9/13/24 at 10:06 am to BestBanker
quote:This is one person who is also your hired financial advisor? Or you’re saying you don’t pay for a financial advisor, you just use your available resources?
Yes. My business partner, my cpa, my banker.
Posted on 9/13/24 at 3:28 pm to BestBanker
This!
I wouldn’t get a CFP unless he/she is also your cpa.
Mine is a child hood friend I trust with my life.
CFP that is a CPA will be worth his weight in gold for you in retirement.
I wouldn’t get a CFP unless he/she is also your cpa.
Mine is a child hood friend I trust with my life.
CFP that is a CPA will be worth his weight in gold for you in retirement.
Posted on 9/13/24 at 8:59 pm to dewster
You are killing it in the world of monetary debasement. Buy at least one Bitcoin and forget about for when the world of fiat comes tumbling down.
Posted on 11/22/24 at 8:09 am to dewster
I wondered the same for years, but never hired one. It is a good decision for some, but to each their own. If you stay interested, you can continue to learn and make good decisions. Keeping your money working for you is key. If an advisor helps you do this, then use one. If you have the discipline on your own, then you are likely fine with what you are doing.
I am older than you. One thing I wish I had done differently is to put more money into Roth when I was your age. I always battled with the decision on lowering current year taxes (401k) vs tax free growth. I recommend you do some of both. At your age, Roth money could grow tax free for 30+ years. The diversification could be valuable to your future self. And your interest in real estate is a good diversification. I got into real estate at your age, and 20 years later am making more money that I thought I would. I find myself wishing for more tax diversification than I do now. And real estate investing is more than rentals. I started with rentals, but learned about spec houses (new construction) and commercial leases. Good luck.
I am older than you. One thing I wish I had done differently is to put more money into Roth when I was your age. I always battled with the decision on lowering current year taxes (401k) vs tax free growth. I recommend you do some of both. At your age, Roth money could grow tax free for 30+ years. The diversification could be valuable to your future self. And your interest in real estate is a good diversification. I got into real estate at your age, and 20 years later am making more money that I thought I would. I find myself wishing for more tax diversification than I do now. And real estate investing is more than rentals. I started with rentals, but learned about spec houses (new construction) and commercial leases. Good luck.
Posted on 11/22/24 at 8:17 am to dewster
Financial advisors are for financial idiots or those with extremely complicated situations. It's a target-rich environment for FAs.
This post was edited on 11/22/24 at 8:19 am
Posted on 11/22/24 at 11:48 am to RoyalWe
Workaholic doctors go from 8 figures to 9 figures without lifting an extra finger thanks to their FA’s. That’s the kind of situation where it makes sense
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