How do I find a good local Financial Adviser?

Non-investing personal finance issues including insurance, credit, real estate, taxes, employment and legal issues such as trusts and wills.
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Woody999
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How do I find a good local Financial Adviser?

Post by Woody999 »

I'm 40, my wife is 33 and we have a 1 year old. We owe $100k on a $450 house and have about $70k in other debt. We have about ~70k in emergency funds and about $400k in retirement savings. We have a combined salary of ~$250k/yr.

I'd like to meet with a financial adviser to see if there's anything we need to tweak in our retirement savings, college savings, life insurance plans, estate planning, etc. All while being very sensitive to our tax situation. I'm not looking to meet someone that will just try to sell me stuff after I spend a considerable amount of time showing them our financial state. I don't want to be sold on whole life insurance, their company's mutual funds that have high fees, or some other gimmick that makes said financial adviser more money while screwing my family out of higher returns. I'd rather pay a healthy flat fee before they see my finances, then open up our financial records, and have them give me an analysis/suggestions (preferably written) on changes we should make. I would like it to be understood that it's a one time visit even though I may return later (or may not) if they truly do not try to sell me their products, etc.

How do I find this person in my community? :D

Thanks!
Last edited by Woody999 on Wed Apr 15, 2015 12:06 pm, edited 4 times in total.
investor
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Re: How do I find a good local Financial Adviser?

Post by investor »

I am wondering if Vanguard would do that ? Very interested in the forum comments that will be given.

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CABob
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Re: How do I find a good local Financial Adviser?

Post by CABob »

Bob
dhodson
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Re: How do I find a good local Financial Adviser?

Post by dhodson »

I'd read the recommended books and then look in the mirror.
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powermega
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Re: How do I find a good local Financial Adviser?

Post by powermega »

You want to talk to a Fee Only financial planner. As the name implies they only receive compensation directly from you. They do not get compensation from commissions, kickbacks or other indirect compensation as a result of your relationship with the planner.

NAFPA website, for an industry association for fee-only planners

The Garrett Network is an affiliation of fee-only planners. Member advisors are encouraged to be members of the NAFPA too.
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Jack FFR1846
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Re: How do I find a good local Financial Adviser?

Post by Jack FFR1846 »

Is there a good reason why you cannot do this yourself?

Nothing you asked about requires a rocket scientist. You can easily break your request into several questions and learn about the topics one by one. Read the appropriate wiki on each subject and proceed.

I was in your shoes only a few years ago and met with several advisors and maybe I was just unlucky, but they were all worthless. No, worse than worthless because their advice was always bad and self serving. I know there are good advisors out there but for me, its like picking the next winning stock

I started with a spreadsheet listing all of my investments, er and type of fund. It was simple enough to add them all and calculate present asset allocation. For me, actually writing the er was eye opening.

Next, I decided what I felt I wanted for an AA. I do age minus 10 in bonds and 70/30 US stock/ international stock funds.

I then sold to buy out of the high er funds into index funds.

I had a ton of accounts. Old 401k, 403b, ira etc. We simplified by moving these.

College: print out a fafsa form including all of the tables. Go through it and understand what reduces your aid and what does not. (Hint: fully fund retirement accounts). But also research CSS.

What do you need for insurance (term)? Remember that life is there in case an earner can't earn anymore. I have seen people insure their kids. Why?
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Topic Author
Woody999
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Re: How do I find a good local Financial Adviser?

Post by Woody999 »

Jack FFR1846 wrote:Is there a good reason why you cannot do this yourself?

Nothing you asked about requires a rocket scientist.
Thanks for your reply but I asked how to find a financial planner that met my criteria...that's it. I didn't ask about retirement saving, life ins, etc.

I feel like I'm a fairly well informed financial savvy person due to reading books, this forum, etc. but I'm not a financial adviser/planner. I don't want to spend tons of time becoming as knowledgeable as a financial adviser just for my own financial well being. I don't have the time. I think it's important to become financial savvy and I've developed my own plan that I think is pretty good but I would like a review, and advice from someone that has put more time into these things that I have.

I guess a thorough professional 2nd opinion is what I'm after without trying to sell me gimmicks that I wont fall for anyways.
DTSC
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Re: How do I find a good local Financial Adviser?

Post by DTSC »

Woody999 wrote:
Jack FFR1846 wrote:Is there a good reason why you cannot do this yourself?

Nothing you asked about requires a rocket scientist.
Thanks for your reply but I asked how to find a financial planner that met my criteria...that's it. I didn't ask about retirement saving, life ins, etc.

I feel like I'm a fairly well informed financial savvy person due to reading books, this forum, etc. but I'm not a financial adviser/planner. I don't want to spend tons of time becoming as knowledgeable as a financial adviser just for my own financial well being. I don't have the time. I think it's important to become financial savvy and I've developed my own plan that I think is pretty good but I would like a review, and advice from someone that has put more time into these things that I have.

I guess a thorough professional 2nd opinion is what I'm after without trying to sell me gimmicks that I wont fall for anyways.
I've had 2 financial advisers and I've done a better job of managing my money than they have. IMHO, you have to become almost as knowledgeable as a financial adviser - so you know if they are blowing smoke!

If you want a second opinion, why don't you post your info and questions here - the price is right! And there's absolutely no potential for conflict of interest. You might get a good 3rd or 4th opinion too.
dhodson
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Re: How do I find a good local Financial Adviser?

Post by dhodson »

Woody999 wrote:
Jack FFR1846 wrote:Is there a good reason why you cannot do this yourself?

Nothing you asked about requires a rocket scientist.
Thanks for your reply but I asked how to find a financial planner that met my criteria...that's it. I didn't ask about retirement saving, life ins, etc.

I feel like I'm a fairly well informed financial savvy person due to reading books, this forum, etc. but I'm not a financial adviser/planner. I don't want to spend tons of time becoming as knowledgeable as a financial adviser just for my own financial well being. I don't have the time. I think it's important to become financial savvy and I've developed my own plan that I think is pretty good but I would like a review, and advice from someone that has put more time into these things that I have.

I guess a thorough professional 2nd opinion is what I'm after without trying to sell me gimmicks that I wont fall for anyways.
It doesn't take much time since really it isn't that complicated. I have experience similar to the other posters. In fact, I spent considerably more time fixing what recommended financial advisors did to me then ill ever spend on those issues. If you want one then id use the Garrett mentioned above for a second opinion. Many if not most advisors spend considerable time on acquiring clients or selling then they do anything else IMO.
sawhorse
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Re: How do I find a good local Financial Adviser?

Post by sawhorse »

dhodson wrote: It doesn't take much time since really it isn't that complicated. I have experience similar to the other posters. In fact, I spent considerably more time fixing what recommended financial advisors did to me then ill ever spend on those issues. If you want one then id use the Garrett mentioned above for a second opinion. Many if not most advisers spend considerable time on acquiring clients or selling then they do anything else IMO.
Quite true. However, there are situations in which I feel professional advice is very important, mainly situations that involve legal issues such as tax law, estate planning, asset protection, etc.

Do you have a CPA that you trust? Perhaps you can start by asking them if they know advisers who would take an account your size. A lot of them require $1 million. When you make the initial contact, make it clear that you are looking for a fiduciary adviser who will not directly invest anything for you.

For the people that say you should do it all yourself, I certainly think that, with the help of a community like this, you can do it all yourself and probably do as good or even better than with a professional adviser. However, Woody999 may have other interests, and it's not worth his time to learn it all himself. An ethical, honest, knowledgeable fiduciary adviser may be a much better use of his time.
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Rob5TCP
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Re: How do I find a good local Financial Adviser?

Post by Rob5TCP »

Most fee only advisers want a % of AUM (assets under management). There are a handful of advisers that work on a straight hourly basis.
Finding one near you may take some time. I believe Alan Roth (who posts here periodically) is hourly fee only, but he works predominantly online and with phone consultations.

The simple reason is advisers make a lot more money with AUM or fee based products than they do on an hourly.
sawhorse
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Re: How do I find a good local Financial Adviser?

Post by sawhorse »

Rob5TCP wrote:Most fee only advisers want a % of AUM (assets under management). There are a handful of advisers that work on a straight hourly basis.
Finding one near you may take some time. I believe Alan Roth (who posts here periodically) is hourly fee only, but he works predominantly online and with phone consultations.

The simple reason is advisers make a lot more money with AUM or fee based products than they do on an hourly.
I don't know if the AUM model is so bad, though, for planners that solely manage your investments. When your investments are good, they gain financially. When your investments are lousy, they lose financially. As long as they aren't getting financial incentives to put you in bad funds, then it works in your favor, at least in theory.
sawhorse
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Re: How do I find a good local Financial Adviser?

Post by sawhorse »

Woody999, among your list of concerns, estate planning--I count wills and life insurance as estate planning--is probably the one for which professional help can add the most value over trying to do it yourself. Because estate planning depends in part on state law, people on this board will be of limited help. Frankly, investing may be the area in which financial planners are of least help.

Even before estate planning, though, I would prioritize disability insurance and asset protection. In looking for disability insurance, perhaps consult with a general insurance attorney or a disability insurance specialist. Disability insurance is worthless if you have to fight for years to get the insurance company to pay. These insurance attorneys can tell you which companies are better to deal with in their experience. If you have disability insurance through your employer, they can evaluate the quality of that. For asset protection, you will want to consult about umbrella liability policies and using retirement accounts for legal protection. Again, the specifics depend on the state.

After disability insurance, asset protection, and estate planning (including life insurance, living wills, and regular wills), I would try to determine a moderately long term estimate of financial needs before retirement. This should include paying for your child's education, expenses you may incur to take care of elderly relatives, etc.

Only after all this would I address investments.

So to summarize, here is what I would do. Everything should be on a flat fee or hourly basis.

1. Meet with financial planner but limit your conversation to specific estate planning goals, insurance needs, and asset protection needs. I suggest meeting at least twice because you'll want time to think about the decisions after the initial meeting. You will want to come away with very specific plans to carry out--exactly how much insurance to get, the details of your will, etc.

If your financial planner i) is not knowledgeable about relevant legal matters and ii) cannot thoroughly tell you what specific things need to be considered and what specific decisions need to be made--not what you should choose but what things you need to think about and come up with a plan for--then find someone else. The greatest potential value of financial planners, for someone like you who seems not to have a budgeting and spending problem, comes from legal knowledge and ability to get down to details. A good financial planner should address non-obvious considerations. For example, when discussing estate planning, a good financial planner should ask about potential inheritances from your parents or other family members. They should ask you to consider things like heirlooms or other non-monetary items that are difficult to value, and how you want to treat them in your will.

2a. Take asset protection measures such as purchasing liability insurance and creating or adjusting accounts (e.g., trusts, moving money into ERISA-protected accounts) for legal protection. You may need to consult with an attorney for more complex things like trusts.

2b. If your employer disability insurance (if you have it) is inadequate, purchase disability insurance policy after consulting with insurance attorney about what companies are more ethical in paying claims and what specific language is used by insurance companies to weasel their way out of claims.

3. Legally establish estate plans including living wills and regular wills. Life insurance may come into play her. This step may require an attorney especially if setting up trusts for your child is part of the plan.

4. Meet again with financial planner to estimate moderately long term expenses such as paying for college and taking care of elderly relatives or parents as well as possible inheritances. Develop a strategy with taxes in mind. This may require asking about your parents' finances and estate plans if they are willing to share it.

5. Think about specific investments. This should be lower priority than the things I mentioned. In the meantime, use a Boglehead portfolio and/or a robo-advisor.

Don't be surprised if this takes a lot longer than you expect. The devil is in the details. You also want to spend enough time thinking over all these decisions you need to make. That may be uncomfortable because people don't want to think about things like what happens to their child if they die.

Check in with your financial planner periodically. Meet at least annually or when a major event occurs such as having another child, so you can update your will and take other actions.
vested1
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Re: How do I find a good local Financial Adviser?

Post by vested1 »

powermega wrote:You want to talk to a Fee Only financial planner. As the name implies they only receive compensation directly from you. They do not get compensation from commissions, kickbacks or other indirect compensation as a result of your relationship with the planner.

NAFPA website, for an industry association for fee-only planners

The Garrett Network is an affiliation of fee-only planners. Member advisors are encouraged to be members of the NAFPA too.
While this is a better plan than paying an ongoing percentage of your portfolio, there are some slick talkers out there who claim to be fee only but have other products up their sleeve that will pay them fees that aren't so noticeable. Think variable annuities, which were being hawked by a "fee only" advisor I heard speaking lately. Not saying that the ones you suggested would do such a thing but caution is advised.
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neurosphere
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Re: How do I find a good local Financial Adviser?

Post by neurosphere »

vested1 wrote:...there are some slick talkers out there who claim to be fee only but have other products up their sleeve that will pay them fees that aren't so noticeable. Think variable annuities, which were being hawked by a "fee only" advisor I heard speaking lately. Not saying that the ones you suggested would do such a thing but caution is advised.
The nice thing is that every advisor is required to file a "Form ADV" which is supposed to explicitly list the services they provide and the means of compensation. So one is not obligated to wait until meeting with such a "slick talker" and only finding out after the fact that they make their money in ways other than hourly or AUM. Check out an advisor in advance.

Go here to start: http://www.adviserinfo.sec.gov/IAPD/Con ... earch.aspx

Note that sometimes the information you want will be listed under the individual, while other times it will be listed under the firm. For example, I'm not even searchable as an individual, but searching my firm has all the relevant information related to me and my firm.**

The information you want is formatted in a strange way. "Part 1" of the "Form ADV" (which has sub-parts A and B) is basically a multiple choice and fill-in-the-blank format, listing such things as assets under management, number of clients of various kinds, various disclosures, etc. But you want to make sure you ALSO check the left menu to get the "Part 2" (A and B) of the ADV (also called "brochures"), which is a free-text "plain language" version of similar but non-overlapping information. Be careful, because there is wide leeway in the language allowed in the Part 2, and at times it can sound like an advertising document. But the information is supposed to be "factual" and list all of the modes of compensation. Some of the documents are quite long, some of it is in legalese, but everyone should read every page of the ADV Part 2 brochures prior to hiring any advisor. That way, there are no surprises!

Neurosphere

** FYI, the version of my ADV currently available on-line is outdated until NY State approves my latest annual revision. Otherwise I would make it available as an example. As an hourly-only planner, my pending ADV is about as simple and as short as it gets.
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livesoft
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Re: How do I find a good local Financial Adviser?

Post by livesoft »

The OP doesn't really want any investment advice at all. They can do that themselves. Vanguard only really offers investment advice.

The OP wants financial planning in all areas except investment planning: Insurance, Estate, Wills, College savings, Taxes, etc. Unfortunately, the OP used the term "Financial Adviser" when they meant something quite different.
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Doubleeagle4me
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Re: How do I find a good local Financial Adviser?

Post by Doubleeagle4me »

Go to a Schwab office. Good start. They offer free advice. Couldn't hurt.
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Re: How do I find a good local Financial Adviser?

Post by Biffer »

livesoft wrote:The OP wants financial planning in all areas except investment planning: Insurance, Estate, Wills, College savings, Taxes, etc. Unfortunately, the OP used the term "Financial Adviser" when they meant something quite different.
If my mind hadn't been hopelessly muddled by the funny rules on terminology for professionals in the financial industry, I might have thought that "Financial Adviser" (i.e., "financial" + "adviser") was highly descriptive of what the OP is seeking.
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Re: How do I find a good local Financial Adviser?

Post by neurosphere »

Biffer wrote:
livesoft wrote:The OP wants financial planning in all areas except investment planning: Insurance, Estate, Wills, College savings, Taxes, etc. Unfortunately, the OP used the term "Financial Adviser" when they meant something quite different.
If my mind hadn't been hopelessly muddled by the funny rules on terminology for professionals in the financial industry, I might have thought that "Financial Adviser" (i.e., "financial" + "adviser") was highly descriptive of what the OP is seeking.
Investment advisor vs financial planner vs financial advisor. It does indeed get confusing.

In my opinion, "financial planner" is the most accurate title for what the OP is seeking, followed by "financial advisor". An "investment advisor" is certainly not what the OP wants. Although many "investment advisors" (or advisers) claim to provide the services the OP is looking for. Unfortunately, it's not until the assets are under their management that a client finds out that planning services are rudimentary or non-existent.
If you have to ask "Is a Target Date fund right for me?", the answer is "Yes" (even in taxable accounts).
livesoft
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Re: How do I find a good local Financial Adviser?

Post by livesoft »

The OP is looking for the person that Schwab and Vanguard tell one to find when they say "We cannot answer that. You have to consult your Tax Advisor."

Here is a thread about finding a tax advisor: http://www.bogleheads.org/forum/viewtop ... 2&t=130189
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Re: How do I find a good local Financial Adviser?

Post by livesoft »

Here is an amusing advert from the CFP board: https://www.youtube.com/watch?v=Afufjv_6-t4
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