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Should I keep my Financial Advisor?

Home Financial Advisors Should I keep my Financial Advisor?

  • Avatar NerdyNeurologist 
    Participant
    Status: Physician
    Posts: 13
    Joined: 10/21/2018

    I have had a Fee-only fiduciary financial advisor on a flat retainer fee model for last 3 years. I pay 5k/year, will soon increase to 6k/ yr. Wondering if it is a good idea to continue paying him or should I do it myself. I have read many financial books and follow Bogleheads and WCI forum. I feel comfortable managing my current investment asset allocation. I’m currently maxing my ORP, 403b, 457b. My total investment asset is around 250K. I have a mortgage for 180k and 2 car loans. Total net asset is 400k. My fear with going solo is
    1. Will I freak out and not stick to my asset allocation during a bear market
    2. Maybe my FA can fine tune some of my investments like doing Roth conversion or taxable investment and other subtalities that I may not be well versed with but my FA may be…

    Thanks for your opinion in advance
    Confused first time poster!

    #158782 Reply
    q-school q-school 
    Participant
    Status: Physician
    Posts: 2338
    Joined: 05/07/2017

    that’s a hefty fee for the size of your portfolio.  what about going less often?

    you are smart and have educated yourself.

    you aren’t going to have to fine tune investments for some time.  at this point brute force savings and simple investments should take care of things for the forseeable future.

    i think you just need us to tell you that you are going to be fine without them.  and you can always go back in a few years.

    you will be fine either way.

     

    #158882 Reply
    Vagabond MD Vagabond MD 
    Participant
    Status: Physician
    Posts: 3171
    Joined: 01/21/2016

    There’s more to a FA than investing in a portfolio. A doctor, monkey or computer can do that without much assistance. The FA should be helpful in setting your financial and life goals and making progress to achieving them. S/he should be helping you optimize your financial life and easing financial worry. If the FA is not serving these functions, perhaps it is time to move along.

    "Wealth is the slave of the wise man and the master of the fool.” -Seneca the Younger

    #158884 Reply
    CordMcNally CordMcNally 
    Participant
    Status: Physician
    Posts: 2139
    Joined: 01/03/2017

    It doesn’t sound like your financial advisor has done much besides managing your asset allocation, which a middle schooler could do. I agree that you’re paying a lot relative to your portfolio. I would go out on your own for now and then if questions or concerns come up, you can go back to the fiduciary, however, I would probably go to a different one because the current one’s fee schedule seems high.

    “But investing isn’t about beating others at their game. It’s about controlling yourself at your own game.”
    ― Benjamin Graham, The Intelligent Investor

    #158910 Reply
    Avatar Larry Ragman 
    Participant
    Status: Other Professional
    Posts: 490
    Joined: 08/30/2018

    Flat retainer of $5K? How much access do you have for the price? Before I let him or her go I would write down every financial question I have, get an answer from the advisor, then sit down to discuss until I was sure I understood the answers and how they applied to my situation. The advisor should have been having this conversation with you at least annually. If you like the answers then consider whether or not to stay for another year.

    While I would take the answers and then take a crack at implementing myself, it is a personal decision. I have a family member that is knowledgeable but just wants someone to discuss financial decisions with. Expensive advice, but to each his own. That said, at least make sure you are getting value for money.

    #158913 Reply
    Avatar NerdyNeurologist 
    Participant
    Status: Physician
    Posts: 13
    Joined: 10/21/2018

    I have had a Fee-only fiduciary financial advisor on a flat retainer fee model for last 3 years. I pay 5k/year, will soon increase to 6k/ yr. Wondering if it is a good idea to continue paying him or should I do it myself. I have read many financial books and follow Bogleheads and WCI forum. I feel comfortable managing my current investment asset allocation. I’m currently maxing my ORP, 403b, 457b. My total investment asset is around 250K. I have a mortgage for 180k and 2 car loans. Total net asset is 400k. My fear with going solo is
    1. Will I freak out and not stick to my asset allocation during a bear market
    2. Maybe my FA can fine tune some of my investments like doing Roth conversion or TLH in taxable investment and other subtalities that I may not be well versed with but my FA may be…

    Thanks for your opinion in advance
    Confused first time poster!

    #160181 Reply
    Avatar Peds 
    Participant
    Status: Physician
    Posts: 3618
    Joined: 01/08/2016

    I mean… You are paying 2-2.5% AUM…….

    I wouldn’t do that.

    #160182 Reply
    Liked by RocDoc, ENT Doc
    CordMcNally CordMcNally 
    Participant
    Status: Physician
    Posts: 2139
    Joined: 01/03/2017

    A very similar question was just asked: https://www.whitecoatinvestor.com/forums/topic/should-i-keep-my-financial-advisor/#post-158910

     

    Maybe some of those replies will apply to you.  😛

    “But investing isn’t about beating others at their game. It’s about controlling yourself at your own game.”
    ― Benjamin Graham, The Intelligent Investor

    #160185 Reply
    Avatar jacoavlu 
    Moderator
    Status: Physician, Small Business Owner
    Posts: 1852
    Joined: 03/01/2018

    what advise has your FA given you? What’s your portfolio look like?

     

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

    #160186 Reply
    Avatar NerdyNeurologist 
    Participant
    Status: Physician
    Posts: 13
    Joined: 10/21/2018

    Sorry I posted twice, didn’t realize the first one went through. I didn’t see it and didn’t get any emails about people replying…

    #160191 Reply
    Faithful Steward Faithful Steward 
    Participant
    Status: Financial Advisor, Small Business Owner
    Posts: 357
    Joined: 06/12/2017

    I think you need to sit down with your advisor and ask them to review with you, the services he/she has provided, besides investment oversight. If they have provided little more, then I think you’re paying way too much. However, if they are providing financial behavior assistance, tax planning, estate planning, asset protection, college planning (if you have kids), advice on any student loan debt (if you have any), and risk management, then they may be well worth what you’re paying.

    In the scheme of things, the investment advice an advisor provides contributes only a minor amount to the value they can provide. Any advisor who says they can improve your portfolio returns versus another advisor is – at best – guessing and possibly lying.

    Michael Peterson, CFP® | Faithful Steward Wealth Advisors
    http://www.fswealthadvisors.com | (717) 496-0900

    #160199 Reply
    Scott Salaske Scott Salaske 
    Participant
    Status: Financial Advisor
    Posts: 1
    Joined: 02/05/2018

    I agree more or less with the other comments above, but I would like to add my two cents. First, I agree with Dr. Dahle’s statement in one of his recent blog posts that the vast majority of investors should not be paying more than “four digits” in fees and costs for financial advice and/or investment management services. Next, investment management has become a commodity with all of the robo advisors and low-cost investment management options available to investors today.

    I’m a big believer that the simpler your financial life is, including your investments and asset allocation strategy the better off you’ll be financial. With that said, I do see value in hiring an advisor to simplify your financial life and hold you accountable, but most people don’t know why or recall why they have hired an advisor in the first place. This is a very fundamental question and without knowing the answer, it’s going to be very difficult to determine for the original poster to determine if they should go solo and self-manage their own portfolio or stick with an advisor (current one or a new one).

    Two of the most important reasons you should hire or keep an advisor is if you don’t have the time or desire to self-manage your own accounts and the most important reason is to protect you from yourself. What? Yes, we are all emotional and we are all susceptible to making decisions contrary to normal logical. Like selling when the market is going or went down. Having an advisor to act as a human circuit breaker between you and making an emotional decision is often times worth the fees you’re paying to an advisor (as long as it it’s less than 4 digits). Even the original poster acknowledges this may be a concern with the going solo route. Just my thoughts, thanks for reading.

    Scott Salaske, CEO of Firstmetric & host of the Seeking Wealth podcast.
    http://www.firstmetric.com | Low-cost fixed flat fee ($625/qtr.) index based investment advisory firm.

    #162877 Reply
    fatlittlepig fatlittlepig 
    Participant
    Status: Physician
    Posts: 674
    Joined: 01/26/2017
    Splash Refinancing Bonus

    I have had a Fee-only fiduciary financial advisor on a flat retainer fee model for last 3 years. I pay 5k/year, will soon increase to 6k/ yr. Wondering if it is a good idea to continue paying him or should I do it myself. I have read many financial books and follow Bogleheads and WCI forum. I feel comfortable managing my current investment asset allocation. I’m currently maxing my ORP, 403b, 457b. My total investment asset is around 250K. I have a mortgage for 180k and 2 car loans. Total net asset is 400k. My fear with going solo is
    1. Will I freak out and not stick to my asset allocation during a bear market
    2. Maybe my FA can fine tune some of my investments like doing Roth conversion or taxable investment and other subtalities that I may not be well versed with but my FA may be…

    Thanks for your opinion in advance
    Confused first time poster!

    Click to expand…

    LOL. You already know the answer but don’t want to admit it. it’s not just 6K a year, it’s 6K a year that could be compounding. Fatlittlepig would wave bye as fast as possible (my portfolio is > 10x yours and I pay less in fees)

    #162894 Reply
    Liked by snowcanyon
    Andrew Musbach Andrew Musbach 
    Participant
    Status: Financial Advisor, Small Business Owner
    Posts: 25
    Joined: 10/19/2017

    Sheesh @fatlittlepig, I may want to hire your financial advisor for that fee 🙂

    Andrew Musbach, CFP® | [email protected]
    MD Wealth Management, LLC | http://www.mdwmllc.com

    #162936 Reply
    jfoxcpacfp jfoxcpacfp 
    Moderator
    Status: Financial Advisor, Accountant, Small Business Owner
    Posts: 7329
    Joined: 01/09/2016

    I think you need to sit down with your advisor and ask them to review with you, the services he/she has provided, besides investment oversight. If they have provided little more, then I think you’re paying way too much. However, if they are providing financial behavior assistance, tax planning, estate planning, asset protection, college planning (if you have kids), advice on any student loan debt (if you have any), and risk management, then they may be well worth what you’re paying.

    In the scheme of things, the investment advice an advisor provides contributes only a minor amount to the value they can provide. Any advisor who says they can improve your portfolio returns versus another advisor is – at best – guessing and possibly lying.

    Click to expand…

    I might add, if you need to sit down with your financial advisor to find this out, one of you has been asleep at the wheel and it’s probably not the financial advisor.

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

    #162945 Reply
    Liked by Tim, MPMD

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