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New grad - Is it worth getting a financial advisor? (Fee only or AUM?)

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  • ZZZ
    replied
    No.

    Leave a comment:


  • MSooner
    replied
    We have one. We found her on this site/NAPFA database. The group actually had a great program for those in training that was cheap and she gave us a deal to keep going from there (because of course capturing that doctor money early is a smart move on their part!) The actual "planning" part of the advising has been worth it. We are in a much better position than we were before we started and I feel better knowing we have an actual plan put together by a professional.

    I don't know that we will be with them forever, but at this point in life (finishing up training, bunch of young kids, just a lot going on) neither of us have the time and/or inclination to make sure we aren't screwing up the details. That person is probably never going to be my husband (he's not financially illiterate--it just isn't who he is) and I'm just not up for it right now. Someday...maybe. Many of these planners offer hourly/one time financial planning fees to help you build a plan or evaluate an existing one. That might be a good option for you.

    Leave a comment:


  • The White Coat Investor
    replied










    I don’t think I want to invest the time to learn the ins and outs of investing.  My plan has always been to have a financial advisor.
    Click to expand…


    Then hire an advisor. Make sure you’re getting good advice at a fair price. A fair price is a four figure amount per year. If you don’t want to pay that much, chances are you’ll get bad advice. Most AUM charging advisors are either also selling you stuff like disability insurance for commissions or have a minimum amount of assets before they’ll take you or have a minimum fee that is….wait for it….a four figure amount per year.

    If you want to try to game it by using Vanguard for a few years and then hiring someone for $4K a year, that’s fine, but realize that Vanguard is not going to do the same quality of financial planning work you’ll get from those on my recommended list of advisors. They’re just going to get you into a reasonable collection of low cost Vanguard index funds and rebalance it for you. You’re not going to get student loan advice, budget advice, life insurance advice etc.
    Click to expand…


    After reading all of the responses and doing a little more research I am leaning more towards doing it myself.  I have looked at your asset allocation article and might try to imitate that.  What are your thoughts on this portfolio for a 28 year old who is just beginning to invest:

    Stocks: 80%

    US Stocks: 55%

    1. Total US stock market: 35%

    2. Small market value stocks: 20%


    International Stocks: 25%

    1. Total international: 19%

    2. International small: 6%


    Bonds: 13%

    1. G fund: 6.5%

    2. TIPS: 6.5%


    Real estate: 7%

    1. REIT: 100%


    Click to expand...


    That's not crazy (looks like mine used to.) But I doubt you have access to the TSP G Fund.

    Leave a comment:


  • AR
    replied










    I don’t think I want to invest the time to learn the ins and outs of investing.  My plan has always been to have a financial advisor.
    Click to expand…


    Then hire an advisor. Make sure you’re getting good advice at a fair price. A fair price is a four figure amount per year. If you don’t want to pay that much, chances are you’ll get bad advice. Most AUM charging advisors are either also selling you stuff like disability insurance for commissions or have a minimum amount of assets before they’ll take you or have a minimum fee that is….wait for it….a four figure amount per year.

    If you want to try to game it by using Vanguard for a few years and then hiring someone for $4K a year, that’s fine, but realize that Vanguard is not going to do the same quality of financial planning work you’ll get from those on my recommended list of advisors. They’re just going to get you into a reasonable collection of low cost Vanguard index funds and rebalance it for you. You’re not going to get student loan advice, budget advice, life insurance advice etc.
    Click to expand…


    After reading all of the responses and doing a little more research I am leaning more towards doing it myself.  I have looked at your asset allocation article and might try to imitate that.  What are your thoughts on this portfolio for a 28 year old who is just beginning to invest:

    Stocks: 80%

    US Stocks: 55%

    1. Total US stock market: 35%

    2. Small market value stocks: 20%


    International Stocks: 25%

    1. Total international: 19%

    2. International small: 6%


    Bonds: 13%

    1. G fund: 6.5%

    2. TIPS: 6.5%


    Real estate: 7%

    1. REIT: 100%


    Click to expand...


    Look at that.  First try and will almost certainly outperform anything an advisor recommends minus fees.

    Any suggestions that you get for improvement from other posters are going to be  relatively minor tweaks and/or personal preference.  You can obsess over those types of details as little or as much as you want.

    Leave a comment:


  • Peds
    replied
    no tips.

    Leave a comment:


  • jacoavlu
    replied
    That is perfectly fine and you could do a lot worse. But. Why US small value and why Intl small? You have to be able to articulate why, to make it acceptable. I could give you reasons why you shouldn’t. You go first.

    Leave a comment:


  • DDStigers
    replied







    I don’t think I want to invest the time to learn the ins and outs of investing.  My plan has always been to have a financial advisor.
    Click to expand…


    Then hire an advisor. Make sure you’re getting good advice at a fair price. A fair price is a four figure amount per year. If you don’t want to pay that much, chances are you’ll get bad advice. Most AUM charging advisors are either also selling you stuff like disability insurance for commissions or have a minimum amount of assets before they’ll take you or have a minimum fee that is….wait for it….a four figure amount per year.

    If you want to try to game it by using Vanguard for a few years and then hiring someone for $4K a year, that’s fine, but realize that Vanguard is not going to do the same quality of financial planning work you’ll get from those on my recommended list of advisors. They’re just going to get you into a reasonable collection of low cost Vanguard index funds and rebalance it for you. You’re not going to get student loan advice, budget advice, life insurance advice etc.
    Click to expand...


    After reading all of the responses and doing a little more research I am leaning more towards doing it myself.  I have looked at your asset allocation article and might try to imitate that.  What are your thoughts on this portfolio for a 28 year old who is just beginning to invest:

    Stocks: 80%

    US Stocks: 55%

    1. Total US stock market: 35%

    2. Small market value stocks: 20%


    International Stocks: 25%

    1. Total international: 19%

    2. International small: 6%


    Bonds: 13%

    1. G fund: 6.5%

    2. TIPS: 6.5%


    Real estate: 7%

    1. REIT: 100%

    Leave a comment:


  • 02Sats
    replied
    Never. 3 fund portfolio-then go live and enjoy life

    Leave a comment:


  • DDStigers
    replied







    Asset allocation.  Choosing the right investments.  Once I own my own practice I will be spending most of my time running that and don’t want to spend extra work and time researching the best investments.
    Click to expand…


    If that’s all you want, then just do what jacovalu says:

     




    Asset allocation. Age in bond or age minus 10 or 20 in bonds. Depends on your risk tolerance. The remainder in equities, with 30-40% of that international. Three funds. Use Vanguard. That’s it.
    Click to expand…


    That will almost certainly outperform anything an advisor will put you in especially after fees are taken into account.  That’s literally all there is to it.  That’s why everyone is telling you to do it yourself.

    As far as the “I don’t want to spend all my time researching the best investments” is concerned.  How long do you think all the do it yourselfers on here spend doing that?  If it’s not clear yet, the answer is roughly zero time. (I’m not referring to real estate investments or other non-stock/bond investments here, but it’s not like your financial planner is going to do any of the work related to that either)

    That’s why for the two things you listed, having an advisor is like lighting money on fire. It’s actually worse. Most likely what will happen is you will pay a lot of money to get worse returns than what you would get if you just followed the free jacovalu advice.  You would probably come out ahead if you just lit $4k on fire and then followed jacovalu’s plan.

    I suppose if you are *very* lucky the advisor will come up with a plan that gets slightly better returns, but once you account for the fees, then you’re back to underperforming the simple plan that jacovalu gave you.
    Click to expand...


    Thanks for the advice. I think I'm going to do it on my own for now.  At what point do I look into a more complex portfolio like some listed here?: https://www.whitecoatinvestor.com/150-portfolios-better-than-yours/

    Leave a comment:


  • AR
    replied




    Asset allocation.  Choosing the right investments.  Once I own my own practice I will be spending most of my time running that and don’t want to spend extra work and time researching the best investments.
    Click to expand...


    If that's all you want, then just do what jacovalu says:

     




    Asset allocation. Age in bond or age minus 10 or 20 in bonds. Depends on your risk tolerance. The remainder in equities, with 30-40% of that international. Three funds. Use Vanguard. That’s it.
    Click to expand...


    That will almost certainly outperform anything an advisor will put you in especially after fees are taken into account.  That's literally all there is to it.  That's why everyone is telling you to do it yourself.

    As far as the "I don't want to spend all my time researching the best investments" is concerned.  How long do you think all the do it yourselfers on here spend doing that?  If it's not clear yet, the answer is roughly zero time. (I'm not referring to real estate investments or other non-stock/bond investments here, but it's not like your financial planner is going to do any of the work related to that either)

    That's why for the two things you listed, having an advisor is like lighting money on fire. It's actually worse. Most likely what will happen is you will pay a lot of money to get worse returns than what you would get if you just followed the free jacovalu advice.  You would probably come out ahead if you just lit $4k on fire and then followed jacovalu's plan.

    I suppose if you are *very* lucky the advisor will come up with a plan that gets slightly better returns, but once you account for the fees, then you're back to underperforming the simple plan that jacovalu gave you.

    Leave a comment:


  • artemis
    replied




    You’re not going to get student loan advice, budget advice, life insurance advice etc.
    Click to expand...


    THAT'S the advice that is worth paying for, OP.  Note that it is NOT "investment advice."  It's about planning your financial life, not about what specific investments you should put your money into.  And you can get that advice at a reasonable price by using one of the advisers recommended here on the WCI website.  Once you're set up with the right budget advice, insurance plans, student loan payoff plans, etc., you'll be golden for the next several decades.  It will be time to consider another session when it comes time to figure out estate planning and investment drawdown strategies for retirement, but that's a way off.

    As for asset allocation:  if you want to keep it super simple, use either a target date fund or a fund like Vanguard Wellington which has a fixed stock:bond ratio for your retirement account.  Make sure the expense ratio on the fund is low (if you go with Vanguard, it will be, so no worries there).  All you have to do is toss the money in every year and leave it alone (no matter what the market may be doing).  You'll also want to build up some savings outside of a retirement account, kept in cash, to cover emergency expenses.  As your income grows and your school loans shrink, you might also want to open up a taxable investment account; you can fund it with exactly the same sort of funds you use in your retirement accounts.  Toss the money into that taxable investment account whenever you have some funds to invest, then leave it alone.  That's it, that's all the planning you need.

    Leave a comment:


  • The White Coat Investor
    replied




    I don’t think I want to invest the time to learn the ins and outs of investing.  My plan has always been to have a financial advisor.
    Click to expand...


    Then hire an advisor. Make sure you're getting good advice at a fair price. A fair price is a four figure amount per year. If you don't want to pay that much, chances are you'll get bad advice. Most AUM charging advisors are either also selling you stuff like disability insurance for commissions or have a minimum amount of assets before they'll take you or have a minimum fee that is....wait for it....a four figure amount per year.

    If you want to try to game it by using Vanguard for a few years and then hiring someone for $4K a year, that's fine, but realize that Vanguard is not going to do the same quality of financial planning work you'll get from those on my recommended list of advisors. They're just going to get you into a reasonable collection of low cost Vanguard index funds and rebalance it for you. You're not going to get student loan advice, budget advice, life insurance advice etc.

    Leave a comment:


  • Tim
    replied
    OP,
    At your stage, savings rate is critical.
    20-50% , tax advantaged preferable.

    @Kambam gave to sound advice, “If you are under 40 you can just pick just 2 index funds – 60% US stock and 40% international stock. That is it. “

    You are overthinking this, “ins and outs” will cost you wealth in fees and missed opportunities. Stay invested in your simple low cost funds and you “win”. Almost any other scenario will “stink” . Don’t try to out think Mr Market, it’s more risk and never been proven as a sustainable strategy. No portfolio is better, because the fire is unknown. Take 2 aspirin and call back in 20 years!
    Your symptoms are that you will be wealthy if you use 60/40 and rebalance once a year.

    No need to send a check, you know the answer. Keep it simple and save. That is your plan, correct?

    Leave a comment:


  • Kamban
    replied




    Asset allocation. Choosing the right investments. Once I own my own practice I will be spending most of my time running that and don’t want to spend extra work and time researching the best investments.
    Click to expand...


    First thing - don't panic. Basic investing is easy. The FA will try and sound as if it is hard and that you cannot do it. Their pitch - you take care of teeth and I will take care of money, as we are both professionals in our fields. The surest way to lose money. If they don't use smoke and mirrors why would you use them. Not all FA are like that and maybe if you have a good portfolio it might be worth spending $4K for a financial check. Not when your total investments is 25K.

    Start the 401K even if there is no match. Later you can roll it over to your next employer. Use backdoor Roth. Whatever is left is put in a simple 3 or 2 fund portfolio. If you are under 40 you can just pick just 2 index funds - 60% US stock and 40% international stock. That is it. Just keep adding to it every year and soon you will be very comfortable with it. Don't get into real estate or other exotic things at this point.

     

    Leave a comment:


  • uteomfs
    replied
    If you want a financial advisor and the stress of doing it on your own is more than you want, then by all means hire one. I dont think you can put a price on stress reduction and spending your time doing the things you want to do. You will have enough on your plate being a new dentist. Trust me, you will have sleepless nights worrying about your cases, your skills and have you done the right thing for your patient. As my practice grew and I became less overwhelmed with the day to day of running it, I made a decision to learn more and I really enjoy learning about finance and alternative options, so I spend a ton of time on it. That, and I bought a Whole Life Policy and have tried to right that wrong for 3 years now.

    All that being said, you more than owe it to yourself to spend some time learning the basics of financial planning. At a minimum enough to hold a conversation with your advisor so you can map out your goals together and not be confused.

    And, if an advisor tries to sell you Insurance as an investment, run like ************************. Good luck!

    Leave a comment:

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