Post # 1
My SO and I have quite a few plans for our future, and although we have been good at saving even before we were together 5yrs ago, for the past year is when we have done the most strict savings and created more “serious/specific” plans for us.
We want to make the best decisions with our money, and I am curious as to how a financial advisor would benefit us, if at all in our situation. I have a good budget plan for us, I do all of our household “accounting” and make sure our money is being well spent and we are saving the most we possibly can so I would not want to seek guidance for that. We are not in debt, only use credit cards monthly and pay them off monthly to keep maintaining good credit. I am not exactly sure what specific ways they helps or all the services they offer, so I don’t know what I would be looking for, I am just curous.
We have never invested in stocks, but that is something we possibly would be interested in.
Basically a very short summary of some of our future plans is 1. Buy a house (1/3 of our savings would go towards down payment, closing costs, and furniture/repairs plus home emergency fund) 2. Replace one of our cars (about 1/4 of our savings) 3. Have our wedding 4. Have a child through ivf with a surrogate (I can’t carry). 5. Open our small restaurant (more of a long term goal, maybe in 5+yrs).
We’re slowly working out way through the goals, but I wonder if there’s a better order we could do it in that’s more efficient, if investing is for us and what type, etc. If we use most of our savings for the home, car, and wedding, it will take quite a long time to save enough for the surrogacy and it makes me sad, but we need the house first. Would a financial advisor create a specific plan for our long term restaurant goal in regards to specific finances? Would he/she be able to recommend us if giving a larger down payment to have a bit lower mortgage will benefit us more than just keeping those thousands of dollars and investing elsewhere? Those are just a few questions I have in my mind.
I would like to know the experiences of others to get an idea of it before I start looking around to speak to one, because there are sooo many in my area it’s going to be a tough time-consuming job to research the right one.
Post # 2
Yes, a finanical advisor can be a great asset. The key is doing your research, getting referrals, and choosing someone you feel confident in. My grandparents used the same financial advisor for many many years, and he really helped guide them to where they were set after retirement age (and until their death, they have since passed). My dad uses the same advisor, and a few years ago my brother also started using him.
Darling Husband and I own a home already, and I own a business (self employeed) and haven’t started using him because until this point we really didn’t have a lot of extra to put into it. We’re now to a point we’d like to start putting our extra income to work.
A financial advisor is really going to be looking more long-term when it comes to your finances. They can help guide you through the process of spending your money on the things you mentioned (like buying a house, etc) but really it’s about retirement and investments.
Post # 3
Congratualations. It sounds like through saving and sound financial decisions and planning, you are way ahead of a lot of people living high, living paycheck to paycheck.
As for the worth of a financial advisor, the answer is complicated. Many, many times it is a mistake to hire a so-called advisor. Many of them work on commission and will steer you toward investments with a high kickback to them, but are bad for you. There are a few independent advisors who purport to work for the clients’ interest, but many people do not know the difference.
Before you consider hiring any advisor, realize that in order to be financially successful, you absolutely must become knowledgeable enough to be able to make important financial decisions without someone else’s input and to judge the quality of any advice you do get.
A great place to start is a book called Personal Finance for Dummies.
This book will help answer some of the questions you have about stocks. Do you or your husband already contribute to 401K plans through work? If so, you already own stocks. In addition, you can and should open retirement plans on your own. Search the Internet and learn what a Roth IRA is and a traditional IRA.
My advice is educate yourself first. I think the self-discipline that you have already demonstrated bodes well for the future. I read something once that stuck in my mind and rings true based on what I have seen. It said that one factor is the factor above all others that determines how financially successful you will be:
CAN YOU SAVE MONEY?
Post # 4
I have a financial advisor who basically handles my investments. We meet once a year to go over the past years performance and to discuss what he plans to do next. He usually buys (I don’t even know what it’s called) but you hold them for a year or something until it matures. As you can tell, I’m no expert in investments and keeping up with the market and stuff and as much as I like money and watching it grow, I have no interest in trying to be an expert in the market… that’s what he’s for imo. I dont think financial advisors aren’t there to help save money, they’re there to help you grow what you have saved and to punch numbers and project future earnings based on what you do. However, the number one rule of thumb imo is never invest/gamble what you can’t afford to lose. So they can help you look at your goals and recommend some investments to you based on how much risk you can take. I would definitely not invest in indivudual stocks though, they’re much too volitile if you need the money soon for anything. There are a ton of other funds, bonds, etc to invest in that would be safer… which the financial advisor could tell you about.
Post # 5
Mine wasn’t, but he worked on commission and essentially duped me into buying expensive whole life insurance that I didn’t need because he made it sound like a guaranteed investment (without explaining that all that money I was paying in was going toward premiums–I essentially lost $500 a month on what could maybe, in 40+ years, show a small return). He misled me and got annoyed when I wanted to read through my contracts before signing them. I ended up pulling everything out before it got any worse, and I plan to start over with somebody who has my best interests at heart and who takes the time to explain everything to me. If you can find a fee-only advisor, that is one of the best options. Make sure they are upfront with you about how they are getting paid (mine was not), and even though all will wave “fiduciary responsibility” in your face, different advisors take this to heart in different ways.
Post # 6
You should look into Betterment and Weatherfront. “Robo” advising is much much cheaper, with the same or better returns. Its independant and automatically adjusts to do “tax loss harvesting”. I know its nice to have a human to answer questions, but you pay for that human (and sometimes they dont have your best interests at heart) and you can just google and research most of your questions yourself. I think the Robo advisor is great for a beginner. If you become wealthy (million + invested) , then its time to look into a traditional advisor IMO.
Post # 7
Yes, the whole life insurance is not a good investment, but many “advisors” steer people into them.
OP, In addition to Personal Finance for Dummie, let me also recommend the line of books written by Suze Orman.
Post # 8
They can be very useful but make sure you get one that you pay a fee to (instead of working on commissions) and make sure they are your FIDUCIARY. Use that word specifically when you call around to see who you will choose. That means that they MUST do what is in YOUR best interest. Period.
I’ve been on the fence about paying for one myself so for now I’m continuing to save and investing the excess in index funds. Index funds give you a cross section of the market (either stocks or bonds) and have very low fees since they aren’t actively managed.
Post # 9
I’m not sure where you live, but I am actually a junior investment advisor in Canada, and in this country your financial advisor will always make a predetermined percentage off your total holdings. Which means that it’s in their best interest to earn you the most money possible. Their pay doesn’t go up unless your portfolio does.
If you live elsewhere, I’m not sure how things are regulated, but in Canada we are VERY strongly held to high standards. If an IA gives advice contrary to a client’s pre-discussed risk tolerance or financial goals, we can be sued. If a client asks us to do something, we must do it.
That being said, we study for years so that we know the ins and outs of not only the investment industry, but also tax planning. Some types of investment accounts are taxed differently, so IAs can advise you on how to minimize overall taxes based on your income and portfolio.
I realize I’m totally biased, but I always think it’s a good idea to have a financial advisor. Not only does it save you from doing a lot of the work yourself, but it can also save you a lot of stress. Someone else takes care of the details for you!
Post # 10
I don’t think a financial advisor adds much value to something you could do yourself. It comes down to whether or not you want to manage your investments yourself as well as they type of investments you’re interested in to a certain extent.
Post # 11
My Fiance and I are considering getting a managed account. We don’t really want to pay a fee or commission and would rather just manage our own money, but our workplaces impose significant limitations on equity trading for one’s own account, so we are kind of pushed into it. If you don’t have any restrictions, I think you can do some research and put together a basic portfolio of equities, mutual funds, and ETFs for yourself for free and grow your knowledge from there.
Post # 12
It really depends on the financial advisor. My fi works in the financial field (but not in personal finance) and sees the good and the bad. Without going into specifics, my fi recently did some work for people we know and found out that their financial advisor’s “advice” was costing them easily 10,000/yr in other ways.
Post # 13
I am a financial advisor (although I work in public finance as opposed to personal).
Trust me, most people need one.
Post # 14
But like any other industry, there are some people that are good at their job and some that are horrible.
Post # 15
My personal opinion…
You don’t need a financial advisor.
If you are responsible with money and have the ability and time to do a little research here and there, you can EASILY manage your own affiars financially. I’d be more likey to engage an accountant before I engaged a fiancial planner, myself.
If you want to make a more informed decision, I’d recomend a bit of reading before handing anything over to an advisor. I’d check out books such as “your money: the missing manual” and “The little book of common sense investing” to get a handle on the basics. There are also plenty of great blogs out there. These days there are some really fantastic low fee investing options if you are ready to get into the stock market as well.
I think that financial advisors are useful for people who either 1) are unable to make good financial decisions without someone holding their hand, or 2) have really complicated financial scenarios and therefore need the help of a dedicated expert.