Financial Advisor???

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tvkansas
Posts: 1
Joined: Mon Feb 12, 2018 11:35 pm

Financial Advisor???

Post by tvkansas » Tue Feb 13, 2018 12:05 am

My wife and I recently met with a financial advisor from Waddell & Reed. We are both 50 years of age. I have about $1 million in a rollover IRA at Vanguard from a previous employer. My wife has a beneficiary IRA at a small bank which she received upon her father's death in the amount of $50k. In addition, we will have about $100k to $125k more in cash available in the next 60 days or less (from bonus payouts with our jobs as well as selling personal property). We have very little debt and

My rollover IRA with Vanguard and has done very well over time. I am comfortable with Vanguard and plan to keep it there. My wife is considering letting the Waddell & Reed FA manage her beneficiary IRA (moving it to WR). In additon, the FA discussed long term care insurance options which peaked my wife's interest.

I have to admit, I was skeptical. As we approached the conclusion of our meeting time, I was surprised when the FA began producing forms for us to sign. Was moving a little too fast for me to be comfortable (which also made me sore skeptical).

My questions:
1.) What is the general feeling about Waddell & Reed vs other Financial Advisors?
2.) What specific questions should we be asking to effectively understand and compare Financial Advisors?
3.) I welcome any specific ideas or coaching on options we should consider to invest and manage our money as we prepare for retirement.

Thanks in advance.

Rom1b
Posts: 36
Joined: Fri Jan 05, 2018 5:34 am
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Re: Financial Advisor???

Post by Rom1b » Tue Feb 13, 2018 7:52 am

Hi,

My recommendation: follow your gut feeling and do not sign anything, at least not at the 1st meeting!
If the guy pulls out a form at the 1st meeting, hes definitely pushing something into you..?

Some 'advisor' sold a life insurance to my mother recently; bad deal and Im still quite mad.

The great majority of Financial Advisors are biased and get bonus fees from whatever they sell. They do not advise, they sell. They're not helping the little private investors like you and I or John, but their motto is 'My Wallet 1st'.
Id stick to diversified funds and ETFs from vanguard and others if I were you. Low cost and diversified geographically and diversified in asset classes. Theres a lot of information on this site/forum thats worth going through (section Investment theory, 'sticky' posts on top).

If you're getting closer to retirement you may want to increase the 'bond' = less risky part of your investments. But you do not need a big firm or any pie-eating little middle man for that.

Still, if you have more details on what he sells: return per year, cost per year, risk ? - wed be glad to have a look (and laugh together?)

Good luck (in hopefully dumping the guy and telling him what you think!).
Last edited by Rom1b on Tue Feb 13, 2018 8:00 am, edited 3 times in total.
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JoeRetire
Posts: 1483
Joined: Tue Jan 16, 2018 2:44 pm

Re: Financial Advisor???

Post by JoeRetire » Tue Feb 13, 2018 7:57 am

Here are some questions you might consider asking:
https://www.edelmanfinancial.com/educat ... al-advisor

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Toons
Posts: 12925
Joined: Fri Nov 21, 2008 10:20 am
Location: Hills of Tennessee

Re: Financial Advisor???

Post by Toons » Tue Feb 13, 2018 7:58 am

The last thing I am going to do is "bash" someone who is trying to make a living.
Many people would rather pay for financial services.
That is fine.
There are many threads on the site relating to your question.

Here is a link to prior thread reagarding such.
viewtopic.php?t=170698


:happy
"One does not accumulate but eliminate. It is not daily increase but daily decrease. The height of cultivation always runs to simplicity" –Bruce Lee

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midareff
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Joined: Mon Nov 29, 2010 10:43 am
Location: Biscayne Bay, South Florida

Re: Financial Advisor???

Post by midareff » Tue Feb 13, 2018 8:23 am

Dealing with sales people taught me the ones who stay in sales know how to ask for the sale. That is what he was doing. I have been pitched by many but none of them can convince me they can produce enough risk adjusted alpha to cover their fees and recommended fund costs.. ... and that's the bottom line.

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Alexa9
Posts: 1487
Joined: Tue Aug 30, 2016 9:41 am

Re: Financial Advisor???

Post by Alexa9 » Tue Feb 13, 2018 8:31 am

If you need an adviser, you probably want a fiduciary fee only by the hour CFP/CPA to help you with complicated issues (like getting you and your wife on the same page for retirement planning) that isn't going to sell you annuities or insurance you don't need. With regards to asset allocation, you don't really much help. Vanguard Target Retirement Date or Lifestrategy Funds are a great starting point.

Jack FFR1846
Posts: 7613
Joined: Tue Dec 31, 2013 7:05 am

Re: Financial Advisor???

Post by Jack FFR1846 » Tue Feb 13, 2018 8:38 am

Sounds like they are very good at hiding very high fees. If your tolerance of "surprise" charges is very high, why not.

viewtopic.php?t=74936
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livesoft
Posts: 62250
Joined: Thu Mar 01, 2007 8:00 pm

Re: Financial Advisor???

Post by livesoft » Tue Feb 13, 2018 8:47 am

The general opinion of W&R and other financial advisors around here is that they are salesrep trying to make a living. They know how to sell things, but may know less than you about investing for retirement. Perhaps only 2 in 100 financial advisors will be truly helpful. The other 98 will cost you more money than if you had not done anything.

I recommend that you read books recommended by members of the bogleheads.org forum in order to prepare yourself for the sales pitches from sales people. One book to have your spouse read is Jane Bryant Quinn's "How to Make Your Money Last". You should read it as well.

Remember: This is for the rest of your lives and not like buying a car where sometimes folks read a few internet articles and talk to friends, then buy. This is for the rest of your lives, so it is like high school or college was for the rest of your lives.
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Rob5TCP
Posts: 3118
Joined: Tue Jun 05, 2007 7:34 pm
Location: New York, NY

Re: Financial Advisor???

Post by Rob5TCP » Tue Feb 13, 2018 8:54 am

They have been around a looonnnggg time. My Father used them, and many moons ago introduced his "advisor" to me. I ended up going with Janus in the 90's. The Waddell and Reed funds all had sales loads (back when my Father bought from them I think they were over 8%). Today their sales loads are 5.75% (for the fund I checked) and annual expense ratio for the fund was 1.13%. So you start almost 7% in the hole the moment you purchase.

http://financials.morningstar.com/fund/ ... ture=en_US

You would be almost 7% ahead if you used a Vanguard advisor. You should be aware, it would be over the phone and online and not in person.

Long term the % differences add up to a lot more than 7%.

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ruralavalon
Posts: 13704
Joined: Sat Feb 02, 2008 10:29 am
Location: Illinois

Re: Financial Advisor???

Post by ruralavalon » Tue Feb 13, 2018 9:13 am

Welcome to the forum :) .

tvkansas wrote:
Tue Feb 13, 2018 12:05 am
My wife and I recently met with a financial advisor from Waddell & Reed. We are both 50 years of age. I have about $1 million in a rollover IRA at Vanguard from a previous employer. My wife has a beneficiary IRA at a small bank which she received upon her father's death in the amount of $50k. In addition, we will have about $100k to $125k more in cash available in the next 60 days or less (from bonus payouts with our jobs as well as selling personal property). We have very little debt and

My rollover IRA with Vanguard and has done very well over time. I am comfortable with Vanguard and plan to keep it there. My wife is considering letting the Waddell & Reed FA manage her beneficiary IRA (moving it to WR). In additon, the FA discussed long term care insurance options which peaked my wife's interest.

I have to admit, I was skeptical. As we approached the conclusion of our meeting time, I was surprised when the FA began producing forms for us to sign. Was moving a little too fast for me to be comfortable (which also made me sore skeptical).

My questions:
1.) What is the general feeling about Waddell & Reed vs other Financial Advisors?
2.) What specific questions should we be asking to effectively understand and compare Financial Advisors?
3.) I welcome any specific ideas or coaching on options we should consider to invest and manage our money as we prepare for retirement.

Thanks in advance.
1) I have no experience with Waddell and Reed.

We did use a fee only planner to help up initially set up our investing plan, which I then managed myself. We were very satisfied with our fee only planner. To search for a fee only planner you could use:
a) www.garrettplanningnetwork.com; and
b) www.napfa.org.

2) You could ask:
a) is he a fiduciary?;
b) how is he compensated for his work and by whom?;
c) is he a financial planner or an asset manager?;
d) what exactly are the fees he charges? Are there any other fees or expenses you have to play?;
e) does he recommend use of funds with low expense ratio, like index funds?; and
f) look for someone who is a CFA or a CFP or a CPA.

3) I suggest moving her beneficiary IRA to Vanguard and opening any new account at Vanguard, and simply using their very broadly diversified, very low expense ratio index funds such as:
a) Vanguard Total Stock Market Index Fund Admiral Shares (VTSAX) ER 0.04%;
b) Vanguard Total International Stock Index Fund Admiral Shares (VTIAX) ER 0.11%; and
c) Vanguard Total Bond Market Index Fund Admiral Shares (VBTLX) ER 0.05%.

I also suggest reading one or two books on general investing. Please see the wiki article "Books: Recommendations and Reviews".

I suggest that you do some reading on the Bogleheads wiki, see the "Getting Started" link which I give below.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started

Tamalak
Posts: 535
Joined: Fri May 06, 2016 2:29 pm

Re: Financial Advisor???

Post by Tamalak » Tue Feb 13, 2018 10:37 am

Most financial advisors are scum. Run away. Do not use them. Educate yourself here. Your money isn't going anywhere :sharebeer

minskbelarus47
Posts: 157
Joined: Tue Nov 09, 2010 8:02 pm

Re: Financial Advisor???

Post by minskbelarus47 » Tue Feb 13, 2018 10:59 am

Just went through this with wife. I am not the sharpest pencil in the drawer, but others here are. I would:

Go through the Boglehead wiki, especially on asset allocation and what should be in taxable vs deferred accounts.

Buy Rick Ferri's book on asset allocation (very readable) and a book called Asset Allocation Demystified. Two very good books.

Decide on your allocation strategy. Rick has a good 60/40 allocation and start from there.

Yes you can do it yourself. Write your ISP.

good luck

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