Post # 16
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.
I’d have to disagree with this this because a financial advisor, at least how my family uses them, is not someone who sets you up on a budget and tells you that you’re spending too much money. They’re helping you with investments, retirement planning, estate planning, etc. I think the biggest benefit is with investments and helping your money grow.
Like I wrote in a previous post my grandparents were the first in my family to start using a financial planner WAY back in the day. They were perfectly capable managing their day to day finances and land purchases for investments but turned to a financial advisor to help manage the bigger picture and set them up for the long run. They have since passed and their advisor has said on more than one occasion that they were a textbook case on how to plan for retirement. My dad and brother have both started using the same guy, since before my grandparents passed.
Sure there are plenty of people who don’t need one, maybe if they are fine with the way they’re doing it or don’t have much interest in investing. Maybe they have a retirement plan through their job and that’s all they want. Maybe they love studying this kind of stuff and doing it themselves and are educated in the process. I’m certainly not capable to make my money work for me in the way a finanical planner does, but that doesn’t mean I’m uneducated in finances and need hand holding.
Anyone can have a camera and take photos at a wedding, but I still hope people hire me because as the professional I can do what they can’t.
Post # 17
- Wedding: August 2016 - World\'s Fair Pavilion
First, there are two big ways a Financial Advisor can help, 1) by managing your investments and taking a small(ish) annual fee based on the size of your portfolio, 2) creating a financial plan for a one-time fee. A lot of PPs seem to be offering advice based on a more limited idea of what a Financial Advisor has to offer.
My Fiancé and I did the latter, as we don’t quite meet the minimum asset requirement ($1 million). Our advisor was not affiliated with any funds (Fidelity, Morgan Stanley, etc.), and did not work off of commission. With help from our Financial Advisor, we:
- Settled on an ideal budget for our first home based on interest rates, our personal spending habits, and monthly income
- Switched from target retirement accounts to a more finessed mixture of stocks, bonds, and cash based on our age and financial goals
- Modeled career paths (i.e. retirement dates) based on possible life decisions (me becoming a Stay-At-Home Mom, Fiance changing jobs, having one child, having two children).
- Created transfer-on-death arrangements for all of our assets (cars, bank accounts, etc.)
- Explored improved insurance options (auto, homeowners, etc.)
- Received investment recommendations for stocks and savings
You don’t know what you don’t know. A Financial Advisor can help bring to light a lot of the ways in which you can become more financially savvy. We paid about $1k for our financial plan and intend to reconnect with our advisor when we’re closer to buying a home.
Post # 18
“I’m certainly not capable to make my money work for me in the way a finanical planner does, but that doesn’t mean I’m uneducated in finances and need hand holding.”
So I will say that this is just my personal opinion based on my limited life experience…but I’m willing to bet that you could totally handle investing your own money.
I will acknowledge that I have never had a fiancial advisor, so I am probably a bit more biased against them/don’t realize all the things they could do for me, but I think that there is so many resources out there for the DIY investor that you can now do so much on your own (in a way your grandparents never could have).
For example, because of ROBO investors, low cost online trading platforms, and index funds/ETF, you can now easily invest your own portfolio in a number of different ways. Because of all the great blog articles and books out there, you can easily school yourself in the basics. You can even pull off “intermediate” level manuvers such as completing a backdoor roth IRA prety darn easily on your own.
I may be overselling it because I AM someone who’s interested in personance finance and so have spent time learning about this stuff on my own…but I’m by no means an active stock trader. But I know enought to know that at this stage I don’t want to be. But planning for my retirment? No problem, I can totally do that on my own. Or deciding whether I need life insurance? I can handle that too.
Complex tax and estate planning or setting up a family trust? Ok, at that stage I’d be ready to bring on the professional.
Post # 19
I am one. Corporate not personal. Depending on the type of risk you are willing to take–you’ll need one or not.
Risk averse clients who prefer simple investments should just handle their own.
Risk taking clients should get one.
Post # 20
I’ve had one since I was 18 and I am very glad I do. We’re 23 now, about to buy our first home and they have been helpful throughout the entire process. Before I went with them, my grandfather wanted me to talk with a lady at edward jones. I did, however I decided to go with my guys and they are a fee only company. We are like family, they have watched me grow up and we plan to keep on growing old together. They have never told me what I can and can’t spend my money on and have shown me how to continue to prepare for retirement, although I haven’t even been in the workforce 6 months lol. My Fiance has a finance degree and dables with stocks in his free time and doesn’t need or want them, but I am very thankful I have them on my side. Although I know what is going on, I hate numbers and have zero interest in doing this on my own. They have a podcast if you ever want to check them out: http://www.money-guy.com.
Post # 21
I do not deny that a really good financial planner, who actually has the clients interest at heart, can be useful. But I think before anyone goes that route, they should start educating themselves. Then the financial planner’s advice becomes just that, advice, that you consider, not the words of some “expert” that you follow blindly.
Sometimes people do not want to educate themselves, and turn to a financial advisor to do it all for them. (Not saying that is you, but it is many people.)
In all honesty, you do not really need someone to manage your investments or recommend stocks. Once you know something about retirement planning, index funds, etc., the basic choices are not that hard to make.
Post # 22
It depends where you are, in Australia we have Certified Financial Planners who have to do a spearate masters level degree after their undergrad degree and have a higher code of ethics etc. If you’re in Au or there is a similar level where you are I would definitely recommend seeing one- make sure you see one that specialises in your areas of concern (they study specific units; retirement etc) so you can get a very detailed plan and get the best value for your money. While the fees can be steep they are generally tax deductible and more than pay for themselves in terms of value. Fees can be preferable to commissions as you know they are offering you the best plan for you and not a product that gives them a nice bonus.
Edit: While I agree with some of the above re eduction- if you are working full time and have some life you can’t really study and make the same choices a full time advisor has access to. You may not realise the implications a choice has on other areas. People working in finance, banking and even other financial advisors will go and see a financial advisor that specialises in the area they need help in.
Post # 23
Great points everyone, I’m really getting a clearer picture of both sides of the story hearing from people that don’t use advisors and those that do. At first with the prior responses I was leaning towards not thinking of getting one soon, and to just think about it when we have a more “complicated” financial situation such as retirement accounts to manage and investments. But now with the last few posts, especially craftandclover’s personal experience on how they were helped by a financial advisors I’m on the fence again. I think our situation is very similar in that I would like to have a professional create those “paths” for us to have better control of our future. However, I already create something similar (but maybe not so detailed) myself on spreadsheets, so my concern is not knowing whether a financial advisor will do something basic like I already am, or something much more detailed that will be more beneficial.
Post # 24
I guess I am mostly looking for advice rather than the calculations and paperwork part. For example, I know how much exactly we’re spending a month, but I still don’t know if we should go for a “safe” mortgage with a low amount for a fixer-upper, or with a more aggressive mortgage (a bit of a tighter budget but still doable) on a better home that we can really see ourselves in for many years. That is one of the many questions I have.
Post # 25
I had one, but key in deciding to get one AND choosing one is how much in assets are you going to be asking them to manage and what are their fees going to be? Because in our case, we weren’t having her managing millions of dollars so the fees were significant, and we opted to move to a less hands-on approach. You can look at Fidelity or Vanguard, which has options for some financial mangagement or will allow you to do it all yourself.
I also think that it sort of depends on how interested you are in this stuff–ie, some of it amounts to delegating. Some people are really active about managing their investmnets; we’re less into it over here (which is why we have a portfolio, but we invest more of ourselves in real estate).