Thanks for the responses so far! For now I am in the camp of “it’s worth it” but at some point that could change. I definitely think I “could” manage things on my own - I probably know more about the market and investing than the average person - but I don’t “want” to do it right now. I was checking the portfolios a while ago to see the returns over a long span (5 and 10 years) and both have achieved more-or-less the same return, or at least are in the same ballpark (the one with the more active/engaging FA has done a little better).
For me, it is worth it since I don’t want to have to think about my investments. We meet him once a year and sign a form asking what mix of stocks, bonds, liquid investments we want (my choice has somewhat more stocks than my wife’s–and I have had better returns). He is a broker and makes trades without any commission, so he has no incentive to churn. All in all, he is worth the 1%. If he went up to 2%, I would just change to an index fund.
Another he does without fees is change C$ to US$ and vice versa. This made a serious difference when I borrowed US&400,000 from my son in order to buy our condo 6 months before we sold our house.
My dad always had money here and there but nothing really serious. When he died I had to help mom figure out where “here and there” was and come up with a plan for dealing with all the different accounts, which included retirement accounts, which mom was getting letters about having to draw from (since she was 71 and he was 72 when he died).
I am the sort of person who lives just above paycheck-to-paycheck so I don’t have any investment accounts and don’t understand it all.
My brother recommended us a lady who is friends with his inlaws and gave them financial advice. She came over and gave us some tips, for free. She is not a licensed financial advisor, but is in the financial sector.
She didn’t give us bad tips but it’s not like she sat down and did anything for us. I just took some notes. I still had to do all the stuff. With me not being informed and mom being half out of her mind with age/post-surgery meds, it’s been rough.
I don’t even know what her money is doing right now. We took some money out of a HYSA and put it in to Vanguard and signed up for their robo advisor and that’s about it.
I wish she would just get a damn financial advisor, but also I am afraid to pick the wrong person or wrong type of person and get screwed.
I wish I had “a guy” mom could pay once a year to look things over. If anyone knows of that guy or gal who can help me in Ohio, I’d be grateful.
It’s part of what gives me pause. It’s one thing to be different based on knowledge of the client’s specific circumstances, goals, preferences, and tolerance for volatility, but why should we accept any of one of them as “expert” with this sort of variety among “experts”?
Obviously, those on a shoestring have a different situation, but I think more people who have money should think like this. I’m aware of a situation where someone who is 50 is really struggling to buy a house, after starting over due to a divorce. His father has about a million in savings, which he doesn’t touch, because between two pensions and SS he doesn’t need to. Oh, and the father is 82. He’s saving the million so he can leave it to his kids. I keep trying to tell him that the money will do much more for his son now than in 10 more years, and he should help him out. But in his mind, growing the million so it’s even more later is somehow more better. And based on his health, I think the father has at least 10 years left in him.
Yeah - but there are likely multiple ways to get a good result. For example, the one guy is pushing annuities. Another guy says don’t go with annuities, because you lose potential flexibility. But I wonder how much flexibility I need?
I’m not sure it is all that different, tho, from talking with a doctor, lawyer, or even a contractor - about something you know little about. You have 2 guys giving you 2 different opinions, so you seek a 3d opinion, hoping to get consensus and, instead, you get a third different opinion!
I’m convinced there is no one BEST decision for anyone. Only the decision each person decides is good enough for themself. Good luck.
The first thing you want to ask yourself is why you want to beat the market. Long term the market returns 6-7%. If you can meet your goals with that rate of return, why take the risk of trying to beat it, and paying 1% on top of that? I am perfectly happy getting market returns and not paying a fee for it.
Are you a Fed? If so, I have found that Haws Federal Advisors post some very informative videos on YouTube regarding Federal retirement.
I’ve got a Schwab CFP who has made me shit-tons of money. He doesn’t take commission, Schwab just pays him based on how much money is his purview across all clients. He invested me in low-fee stuff over all those years. I think he told me once that he manages over $1B.
I started in 2013 with $1.2M. I now have ~$3m. He’s a gem. PM me if you want contact, he’s awesome. I’ve shared contact info with several members over the years, and they’ve been happy.
Famously, Buffet once made a $1 million bet that the S&P 500 index fund would beat ANY manager over a 10 year period. A Hedge Fund manager took the bet. He got KILLED. Buffett’s index fund play beat ALL his managers by a factor of 5.
Recently someone suggested that Buffett had lucky timing. He said he’ll happily do double or nothing right now. Nobody took him up on the offer.
I don’t want to be a jerk, but that’s a CAGR of 8.7%
The S&P 500 returns 10.5% /yr over the long term, with dividend reinvestment.
ETA: I should be fair and note that an all stock portfolio may not be appropriate for you, and so 8.7% IS pretty good if the portfolio includes some lower risk investments.
The 1% AUM fee is sneaky because you don’t really feel the pain of spending the money. But if I were to pay an advisor that much to manage my money, then that advisor fee would become my biggest monthly expense, exceeding my mortgage and car payments combined. No thanks.
Yeah - that’s the kind of analysis I hate. So easy to always say, “What if…” Presumably most people won’t be 100% in stocks, so straight comparison to S&P 500 is imperfect.
Yeah, my thinking is if paying a guy 1% relieves me of thinking about it and provides for my comfort and security, I don’t need to be more aggressive. Of course, you keep hoping you don’t make some huge, avoidable, costly mistake…
Thanks. I’ll check them out. But things are shaping up to be pretty well in hand
VERY MUCH a concern of mine. My kids are all in their 30s, with mortgages, kids, etc. One thing I ask my guy is how much I can gift now, and what effect it will have on my overall picture. The 1% gives me a resource I can ask any such questions. For me, it is worth it.
Look, I have strong opinions about this, but it’s also kind of a hobby of mine. I like it, and I find it interesting. But I’d never shit on someone who takes a different view, so I hope I wasn’t too aggressive. Just not for me.
It’s like house cleaners and dry cleaners. Sweeping and mopping and ironing are absolute hell to me. I hate those chores with the intensity of a thousand suns. So I don’t do them. [I pay someone; I don’t leave my laundry unwashed and my floors filthy]. But I WILL NOT pay someone to paint, or do basic repairs. Just different pain points and priorities.
But you don’t need to pay a guy 1% to get market returns, all you need to do is to buy either S&P 500 or total market mutual funds or ETFs. Then rather than sending 1% to your guy, send 1% to your kids. Same cost, but your kids get the money.
Nothing you posted was in the least offensive to me. I did not intend to suggest otherwise. (BTW - I’d rather clean YOUR toilet than research investments! ;))
We recently had a plumber in to fix a minor leak. Yeah, we probably coulda done it, but we didn’t own the correct wrench or fresh dope, weren’t dying to spend much time under the sink, and sure didn’t want to mess up and crack the sink. So the guy came in and fixed it in maybe 10-20 minutes. SInce we had paid for an hour, we had him tighten up some fancy shower fixtures I never woulda been able to figure out. For us, $170 very well spent.
IMO, the most important thing is thta we share opinions/experiences so we can each make our own decisions. Moreover, we should all appreciate how fortunate we are that we are in th eposition to even be debating such things!
About 6 years ago, I moved a large chunk of an old 401k to the wealth management group of my primary bank to two different IRA accounts, split evenly. One account is actively managed by one of the financial advisors at the bank, the other account, I manage.
The advisor managed account is primarily comprised of select equity investments. The account I manage is comprised soley of various funds, primarily indexed funds. So far the account I manage is ahead, by quite a bit.
Based upon that small anecdotal bit of data. I should manage all of my own money!
Yeah, right. The bet started on 1/1/2008. Shortly thereafter, the market began tanking, and Buffett lost 37% of his initial investment in the first year. But by 2015, he was so far ahead of the hedge fund guy that he conceded.
Back on topic: I’ve been successfully managing my own money forever (I’m now 71). But I’m tired of it and have now made the decision to let my Fidelity account team manage my ~2m portfolio, about half of which is in an IRA. I’ll report back in 12 months to see if paying the fee is worth it.
