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?Hire a fee-based FA temporarily for less than fee-only

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  • Avatar Snag75 
    Participant
    Status: Physician
    Posts: 179
    Joined: 12/09/2018
    Earnest refinancing bonus

    So I’m new to this game (and sadly, about 10-15yrs too late) and am in the the midst of a lot of changes to my financial plans for various reasons (mostly that I have stability and extra income for the first time since having my kids, also getting more savvy about mistakes made in the past).  I had another thread here where I asked several questions and got several answers re: what my new FA was suggesting to me.  In the meantime I’ve done more research and reading (mostly WCI!) and come to get a broader picture of what I might want to be looking for.

    My understanding is that this FA is NOT fiduciary (do not see in our agreement and not part of the NAPFA) and is fee-based, charging 1% advisor fees and 0.2% program fees for housing and managing my rollover IRA fund of <$150K (the rest of my funds are elsewhere and managed by me, but that’s my largest pot). His services are full spectrum, has advised on my other accounts, been very available for time sensitive decisions, done a lot of research on his own re: my situation, and we haven’t even had time to meet for the full on analysis of everything.  My understanding of the plan is to enter all my stuff into some program he has and project what each might do for me in the future, thereby figuring out where I might need to reallocate, etc. (in the meantime we’re still dealing with other time sensitive investing/insurance decisions).  I really needed to do this years ago, but just always overrun with another crisis or another so inertia kept with with a FA who really didn’t do much for years besides take his fees after giving me bad investing advice, so this really feels like a step up to me.

    However I also understand how active management may not be what I need as the advice and planning.  I’m approaching mid-40s and feeling very behind, so really looking to figure out all my game plans as my kids approach being “half done”(!), while trying to catch up from several years where I really couldn’t save and other less-than-ideal planning/saving strategies.

    In comparing what his fees would be compared to a fee-only advisor, however, it’s seeming relatively reasonable, given that we’ve already spent hours on the phone (and even longer with texts and emails) trying to lay the groundwork to sort all this out.  I do feel I need this right now, and I like that he has access to “specialists” at his firm to clarify questions and what-not without me having to set up appts with 5 different people when I have many moving parts happening at the same time.

    I’m considering just staying with him while I get all this sorted out, paying the AUM fees for a year or so (I think would come to ~$1500?), and then when I feel comfortable with my plan considering making a change?  I don’t mean to be deceptive, but I don’t want to pay $1500+ every year if I’m not in need of a lot of help (and then there’s the “active management” strategy that is still a question mark).

    I understand this forum is full of DIYers, but I’m not there yet, and am using this time to learn a lot and figure out my options and a reasonable plan with someone who can look at my big picture — it’s almost like managing my IRA is “on the side”. 😛

     

    Thanks in advance!

    #173246 Reply
    Avatar Dont_know_mind 
    Participant
    Status: Physician
    Posts: 815
    Joined: 11/21/2017

    I read some of the last thread.
    You seem to have an irresistible affinity for bad financial planners.
    If it didn’t have a such a potentially bad effect on your finances it would be funny. This will probably affect you and your children.
    As politely as it can be said – I think you are deluding yourself !
    Wake up !
    If you are not a DIYer, and need the handholding, can you not ring Johanna Fox or one of the lower cost/fee only/non dodgy financial planners on WCI ???

    #173249 Reply
    hatton1 hatton1 
    Participant
    Status: Physician
    Posts: 2917
    Joined: 01/11/2016

    I know I told you to go with one of the fee only fiduciary planners like Johanna on the last thread.  Why are you spending hours on the phone with a person who this entire forum has told you is not looking out for you?  The other option would be to go to Vanguards Personal Advisory service.  The AUM there is 0.3.  I do not understand why you keep asking the same questions and ignoring good advice.

    #173260 Reply
    Avatar Panscan 
    Participant
    Status: Resident
    Posts: 725
    Joined: 03/18/2017

    What scenarios or questions do you have that are so complicated that you need specialists? Everything about this sounds like BS.

    #173264 Reply
    Avatar Panscan 
    Participant
    Status: Resident
    Posts: 725
    Joined: 03/18/2017

    The concept of an investment being time sensitive seems like a huge red flag. It’s similar to “pass the bill and read it later.” the market and its consistent 9% returns will always be there. Having a scarcity mindset of a once in a lifetime opportunity or whatever seems like a road to failure and more often than not a horrible investment.

    #173265 Reply
    Liked by Hank
    Avatar jacoavlu 
    Moderator
    Status: Physician, Small Business Owner
    Posts: 1843
    Joined: 03/01/2018

    OP, do you know what you’re invested in now? What is your stock:bond allocation across your portfolio as a whole? And how about in the managed IRA? What specific investments do you hold in the IRA, in what proportions? What are their underlying expense ratios?

    The Finance Buff's solo 401k contribution spreadsheet: https://goo.gl/6cZKVA

    #173366 Reply
    Liked by Peds
    Avatar Tim 
    Participant
    Status: Accountant
    Posts: 2107
    Joined: 09/18/2018

    “Specialists” ?
    He Joe, what specials you got today? Took the bait, AGAIN! 10% beautiful.

    You can sit down or phone with Fidelity or Vanguard for free. New accounts matter. If you want a capital gains investment zone generation skipping annuity the shields from creditors with downside guarantee and triple leveraged options, they can solve your problems easily. No.

    Your problems aren’t unique. Your procrastination is a roadblock. One hour max to solve 90% of the land mines. Unless you keep info back, supplement with clarifying info that YOU withheld, and then changed your mind and need time to decide. The last 10% takes a lot more work. Withdrawal symptoms maybe?

    #173384 Reply
    Liked by snowcanyon
    Avatar snowcanyon 
    Participant
    Status: Physician
    Posts: 418
    Joined: 10/22/2018

    Agreed with Tim and Hatton1. But I think you need to ask yourself, to prevent similar issues in the future, WHY you become so attached to these shysters. Is it the attention? The flattery? Are you lonely? They seem to filling some emotional need, and I worry that this will continue in the future.

    #173409 Reply
    Liked by octopus85, hatton1
    Avatar Snag75 
    Participant
    Status: Physician
    Posts: 179
    Joined: 12/09/2018

    Jesus.  Maybe I need to ask myself why I keep posing questions here.  I love how savvy and willing to help you guys are, but if I wanted a constant barrage of uninformed judgy advice I would spend more time in parenting forums.  Sorry, I don’t mean to be negative, but I thought I was making the situation clear enough, but maybe not.

    I spent a long time looking into options for fee-only planners, in addition to reviewing the agreement with this new FA, AND considering what do I really need and when, AND considering where I can get advice elsewhere (this latter part is relatively new to me, but refreshing!).

    I need to do a significant revamp, not necessarily of my allocations (which probably just needed a little tweaking), but my plans of where to focus my saving given what my likelihood of needing X,Y,Z in the future.  My situation is unlikely like any of yours for a variety of reasons, but mostly is that I don’t have gobs of income coming in, not much saved, and do not expect a significant increase in the forseeable future.  Of course there are variables, but this is the most stable my life has been since residency which ended 14yrs ago.

    I do not think that this FA is a shyster, but he is biased toward his own system of course (just as many here are biased toward DIY), and may not really be aware of other ways to do things (I don’t know because I don’t know enough myself!).  I read about financial planners yesterday and it seems that many could use them, and there can be significant discussions/decisions about the big picture that are valuable to other docs like me, but the fees charged vary a lot.  I don’t want to pay $250-500/hr for someone to help me with a comprehensive plan, because I have a lot of decisions and strategies to consider for all the variables and sources for retirement funds I’ve got going on and I will feel like I’m wasting my money spending thousands on making a plan like this.  But after the plan is made, then an “as needed” (or low retainer for simple advice here and there) seems more reasonable.

    Given the money in the FA’s possession now and his 1% fee, I would be paying ~$1400 for unlimited financial planning services for this upcoming year.  I haven’t found anyone state that one could get lower than that fee, and based on what I’ve researched for other local fee-only financial planners in my area, I’m kind of doubting I can get that much bang for my buck.

    However, I still have to consider how the money in the account his firm manages is being managed (and discuss more about their more active strategy), AND I will likely be double and triple checking any and all advice given to me (as I have been doing here, and as I should have done with my first FA) to make sure I know the full story and about other options/pitfalls, etc. This is less a concern to me in the short term as these other time-sensitive decisions I need to make (and yes, there is such thing as time sensitive decisions in financial planning, not necessarily related to investing but many other moving parts to my financial picture).

    Ideally one could trust their financial planner implicitly, but I don’t think I could ever do that again, esp not at this stage when I want to feel comfortable with every decision.  So seems the best I can get is someone to discuss concerns and decisions with, help with research and tools to figure out a strategy, and then do my own research on the side before final decisions.  I want a decent amount of help to strategize (which his firm’s services include), but don’t want to pay too much.  Also, if I am going to purchase more products, I may want to do that on my own too vs via his firm (again, would have to do my own research).

    So does $1400 (well, less now that the market keeps dropping!) for a year of comprehensive financial planning help seem reasonable?  After I have a plan in place that I’m comfortable I will have to decide on moving out from under him.  I’m hoping to hear from those who are/use financial planners re: this.

    I guess the last piece is seeing if someone else could review the allocations and strategies that are currently in place via his plan, to be sure I’m not missing something bad about his strategies — this stuff I really know nothing about, though from my reading it seems long-term index funds that you don’t touch have been working better than anything else these days.  Any gracious volunteers for that level of assistance in helping me with the checks and balances? 🙂

    Thanks again for your help, and sorry if I seem snarky, but really am just trying to get advice on this particular situation which I know is hard to describe fully in this medium. 😛

     

    #173442 Reply
    Avatar Peds 
    Participant
    Status: Physician
    Posts: 3604
    Joined: 01/08/2016

    Jesus.  Maybe I need to ask myself why I keep posing questions here.  I love how savvy and willing to help you guys are, but if I wanted a constant barrage of uninformed judgy advice I would spend more time in parenting forums.  Sorry, I don’t mean to be negative, but I thought I was making the situation clear enough, but maybe not.

    Click to expand…

    no you made it pretty clear.

    someone is ripping you off. the whole 1% AUM idea is dangerous for your long term financial health. on top of that the products, loads, and costs of the funds you might be in isnt likely helping.

    but you didnt post any of that, so we have to assume its not great.

    you also dont know what you are doing based off your posts. thats fine. we all started in the same place as well.

     

    keep posting and youll find out just how easy this stuff is.

    #173450 Reply
    Avatar Peds 
    Participant
    Status: Physician
    Posts: 3604
    Joined: 01/08/2016

    so to start on the right foot:

    what accounts do you have, what are their current allocations, what funds do you have available, what is your goal allocation, what is your saving rate, etc etc etc….

    #173452 Reply
    Liked by Tim
    Avatar adventure 
    Participant
    Status: Spouse
    Posts: 1117
    Joined: 10/24/2016

    can you not ring Johanna Fox or one of the lower cost/fee only/non dodgy financial planners on WCI ???

    Click to expand…

    Do this please.

     

    My situation is unlikely like any of yours for a variety of reasons, but mostly is that I don’t have gobs of income coming in, not much saved, and do not expect a significant increase in the forseeable future.

    Click to expand…

    Do you breathe? Then the situation is close enough. Your income vs mine vs his vs hers is irrelevant. Having a sound plan is relevant.

    #173453 Reply
    Avatar jacoavlu 
    Moderator
    Status: Physician, Small Business Owner
    Posts: 1843
    Joined: 03/01/2018

    OP: What are you asking, precisely? How would you like for us to help you?

    I provided in your other thread, my opinion of simple next steps that you should take. Actionable, no-harm-done advice that will instantly save you money.

    If you don’t want to take the next-step advice. Above, I asked questions I feel pertinent in helping you understand your current situation. Answering my questions will help us better advise you.

    To your Thread-title question the answer is emphatically, “No.”

    No one here feels like your current advisor is going to do you any good in the short term nor in the long term.

    The Finance Buff's solo 401k contribution spreadsheet: https://goo.gl/6cZKVA

    #173454 Reply
    Liked by Tim, Peds
    q-school q-school 
    Participant
    Status: Physician
    Posts: 2336
    Joined: 05/07/2017

    i’m not sure what percent of posters here have a FA.  let’s say < 20%.  i think it’s probably even less than that.  so, as you surmise, this may not be the right place to ask the focused question you are asking here.  i didn’t read your other thread, so i may have no idea what i’m talking about.

    however, i am one of the minority posters who has a FA.  they are 1% AUM.  i’ve had them for twenty years.  in the early years they weren’t making much.  in the later years they started making more.  i assessed their work periodically and had an idea when the value shifted.  as the accounts grew larger and larger, and my time and energy and comfort grew, i started shifting money away from them and managing myself.  it’s not necessarily all or none.  most of the people here are going to die with a huge estate.  if they die with a slightly smaller estate with the help of an advisor (which is not a fact imo) , that may or many not be painful to them.  i think on this board there is a lot of hope for optimal efficiency with investments.  however, my observations are a few big mistakes can take a long time to recover from.  slow and steady investing is going to win a lot of races.  in our doctor lunch room, index fund investing is a lonely lonely path.

    money is a tool.  if you don’t like managing money, or don’t care to, or don’t want to, then you pay someone to do it for you.  same as lawncare or personal trainer or whatever.

    it is my personal opinion that we will never know whether someone is better off with or without an advisor.  some people are not DIY.  some people perceive value where others do not.  that’s fine.  i would not offer you the advice that a FA would hurt you or help you.  i would ask you to reflect on whether you trust the advice from intelligent people being offered here.  if you don’t trust that’s fine, but you are going to get the same responses time and again here.  i suspect as you follow your journey to financial wisdom, if you come back here annually and reread the questions you pose, and the responses, you will see the answers as more and more reasonable every year.

    i don’t think anyone intended to financial-shame you.  🙂

    good luck to you.

     

     

    #173479 Reply
    jfoxcpacfp jfoxcpacfp 
    Moderator
    Status: Financial Advisor, Accountant, Small Business Owner
    Posts: 7315
    Joined: 01/09/2016
    o does $1400 (well, less now that the market keeps dropping!) for a year of comprehensive financial planning help seem reasonable?  After I have a plan in place that I’m comfortable I will have to decide on moving out from under him.  I’m hoping to hear from those who are/use financial planners re: this.

    Click to expand…

    hi, @snag75 – you’re not going to get a year of comprehensive financial planning help for that rate from anybody but a novice. I do not want to sound snarky, either, but we don’t even break even the first year charging $5k + a $1k setup fee for the lowest tier of service.

    I recommend that you first check out Garrett Planning Network. All advisors are fee-only (not fee-based) and they all bill by the hour. You might have better luck there finding someone to do a minimal amount of work + some educating. I’d definitely recommend that over someone who claims to offer “comprehensive” planning at cut-rate prices. I tried cut-rate prices in the beginning and soon realized that I was not content limiting services so drastically, it’s just not how we do things.

    What you’re being offered is typical of AUM advisers (most, not all) and you will not get much for $1,400 or you will be working with someone who is just not experienced enough to understand the complexities of working with physicians and you’ll end up having to teach him/her (as you’ve already done).

    You have 3 choices:

    1. Get a bargain
    2. Get good value
    3. DIY

    You can combine DIY with either #1 or #2, but if your priority is #1, you will exclude #2.

    Johanna Fox Turner, CPA, CFP, Fox Wealth Mgmt & Fox CPAs ~ 270-247-0555
    https://fox-cpas.com/for-doctors-only/

    #173482 Reply

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