Do I need a financial advisor?

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BikeRider
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Joined: Fri Nov 16, 2018 1:20 pm

Do I need a financial advisor?

Post by BikeRider » Fri Nov 16, 2018 2:13 pm

I work nights and I need to sleep. I searched for a while but thought I'd just post. Then off to bed.

First post. Thank your for adding me.

I'm 53. I don't have any plans to retire. I like to work but lets say I'll start slowing down at 65 or later.

I have a 401k where I work which I'll continue to contribute to. Worth about $5k. I'll start investing in a Roth also.
I have a previous 401k worth $100k at Merrill Lynch (managed account) I don't think it is doing as well as it should and it has fees.
I have $27k at Valic (my previous company's 401k) which is my immediate concern. This needs to be rolled over. I need to schedule a meeting with a Valic advisor. I've already spoken to one advisor but we haven't met yet.

My mother recently passed. I think my inheritance will be between $80 - $150k. I'll know in a few weeks or less. I have $40k in cash in the bank (short term).

I make about $70k per year and am raising my 14 year old daughter alone. There is no savings for college but I hope to pay for most or all of her first 4 years.

Once I receive my inheritance I'm paying off the house. That's a goal and I don't think I can be talked out of it. Value of the home at payoff should be about $280k. My only other debt is that I will owe my ex $50k in 4 years when our daughter goes to college or if I sell the house.

My questions. I've always been a Do It Yourselfer with everything. I've ignored my finances and I want to be more active. Should I really consider an advisor?

I think I'd be better off just opening a Vanguard account and first moving the Valic 401k into it (immediately) with a goal of moving the Merrill Lynch money in as soon as possible (very very soon).

With the house paid off I'll have a remainder of $40k to $110K in cash plus I'll be adding to that each month since I no longer have a mortgage. It isn't that I want cash laying around it's just that I need to establish a strategy as I quickly ramp up my investing knowledge.

Am I nuts? Should I just go ahead and hire an advisor and at the same time open an Vanguard account? Contribute to the Vanguard account as I learn and rollover after I have established the fund selection.

I've been meaning to do this for 20 years. I just want to avoid fees.

delamer
Posts: 6457
Joined: Tue Feb 08, 2011 6:13 pm

Re: Do I need a financial advisor?

Post by delamer » Fri Nov 16, 2018 2:38 pm

No, you don’t need an advisor.

There are all-in-one funds that are inexpensive and basically do the investing for you.

Target Date Retirement funds change their allocation over time as you get closer to retirement to be more conservative: https://www.bogleheads.org/wiki/Target_date_funds

Less stocks, more bonds nearer retirement.

Vanguard also has LifeStrategy funds: https://investor.vanguard.com/mutual-fu ... estrategy/#/

These are all-in-one funds that maintain a constant allocation over time. You choose which risk level you are comfortable with.

For general background on how Bogleheads invest, this has good information: https://www.bogleheads.org/wiki/Getting_started

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BL
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Re: Do I need a financial advisor?

Post by BL » Fri Nov 16, 2018 3:01 pm

delamer wrote:
Fri Nov 16, 2018 2:38 pm
No, you don’t need an advisor.

There are all-in-one funds that are inexpensive and basically do the investing for you.

Target Date Retirement funds change their allocation over time as you get closer to retirement to be more conservative: https://www.bogleheads.org/wiki/Target_date_funds

Less stocks, more bonds nearer retirement.

Vanguard also has LifeStrategy funds: https://investor.vanguard.com/mutual-fu ... estrategy/#/

These are all-in-one funds that maintain a constant allocation over time. You choose which risk level you are comfortable with.

For general background on how Bogleheads invest, this has good information: https://www.bogleheads.org/wiki/Getting_started
+1
Or if you want to start with "training wheels", consider adviser at Vanguard PAS. Ask them what they could do for you and then decide. They will set you up and manage for 0.3%/year and put you into 5-8 low-cost (low-ER) index funds. You could quit in a year or so if you wished and handle it on your own.
Advantage: handle it for you with very low-cost funds and no 1% fees or selling expensive funds or annuities. Disadvantage: a single fund might be still cheaper.

Yes, have V do the hard work of arranging the move there and you will just have to sign papers, etc. You may not even have to talk to ML or the other. They will charge you for closing each account.

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ruralavalon
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Location: Illinois

Re: Do I need a financial advisor?

Post by ruralavalon » Fri Nov 16, 2018 3:06 pm

Welcome to the forum :) .

Condolences on the loss of your mother.

BikeRider wrote:
Fri Nov 16, 2018 2:13 pm
I work nights and I need to sleep. I searched for a while but thought I'd just post. Then off to bed.

First post. Thank your for adding me.

I'm 53. I don't have any plans to retire. I like to work but lets say I'll start slowing down at 65 or later.

I have a 401k where I work which I'll continue to contribute to. Worth about $5k. I'll start investing in a Roth also.
I have a previous 401k worth $100k at Merrill Lynch (managed account) I don't think it is doing as well as it should and it has fees.
I have $27k at Valic (my previous company's 401k) which is my immediate concern. This needs to be rolled over. I need to schedule a meeting with a Valic advisor. I've already spoken to one advisor but we haven't met yet.

My mother recently passed. I think my inheritance will be between $80 - $150k. I'll know in a few weeks or less. I have $40k in cash in the bank (short term).

I make about $70k per year and am raising my 14 year old daughter alone. There is no savings for college but I hope to pay for most or all of her first 4 years.

Once I receive my inheritance I'm paying off the house. That's a goal and I don't think I can be talked out of it. Value of the home at payoff should be about $280k. My only other debt is that I will owe my ex $50k in 4 years when our daughter goes to college or if I sell the house.

My questions. I've always been a Do It Yourselfer with everything. I've ignored my finances and I want to be more active. Should I really consider an advisor?

I think I'd be better off just opening a Vanguard account and first moving the Valic 401k into it (immediately) with a goal of moving the Merrill Lynch money in as soon as possible (very very soon).

With the house paid off I'll have a remainder of $40k to $110K in cash plus I'll be adding to that each month since I no longer have a mortgage. It isn't that I want cash laying around it's just that I need to establish a strategy as I quickly ramp up my investing knowledge.

Am I nuts? Should I just go ahead and hire an advisor and at the same time open an Vanguard account? Contribute to the Vanguard account as I learn and rollover after I have established the fund selection.

I've been meaning to do this for 20 years. I just want to avoid fees.
Additional information??
A little more information will be helpful

What is the interest rate on your mortgage note?

Do you have any other debt? If so what types, amounts and interest rates?

What is your tax bracket, both federal and state?

Hew much do you contribute annually to your current 40k?

Could you also please list the funds offered in the current 401k, and separately in each of the old 401ks, giving fund names, tickers and expense ratios? Please see this for information needed and format: "Asking Portfolio Questions".

Do the old 401ks require an account maintenance fee? If so what is it?

Will your current 401k accept a rollover from the old 401ks?

You can simply add this to your original post using the edit button (the pencil icon near the upper right corner of your post), it helps a lot if all of your information is in one place.


Rollover of old 401ks??
It depends almost entirely on expenses and funds offered, information not provided in your post. There are three basic choices.

1) If the funds offered in the old 401k are good with low expense ratios, and there is no account maintenance fee charged for keeping the account there or only a small fee, then it may be best to leave the old 401k where it is.

2) If the new 401k offers better funds with lower expense ratios, and will accept a rollover from the old 401k, then it may be best to roll the old 401k over into the new 401k.

3) If neither 401k offers good funds with low expense ratios then it may be best to roll the old 401k over to an IRA at a low cost provider like Vanguard or Fidelity.

Wiki article, 401k, ”Rollover to IRA".

Additional considerations include:

1) the convenience of having one fewer account to keep track and manage, if you move the old 401k into the new plan or an IRA;

2) depending on your state, a 401k plan may have greater protection from creditors than does an IRA;

3) a rollover to an IRA may impede ability to do a Backdoor Roth IRA for higher income individuals, and

4) a 401k allows distributions penalty free starting at age 55 if no longer employed, and has other provisions for withdrawals earlier than age 59.5. Wiki article, 401k, "Move to new 401k".



Hire an advisor??
I believe that you can probably manage without an advisor.

Here is a guide to help in deciding if you want or need an advisor: "The great paradox of using an advisor is that you must know some basics in order to evaluate the advice, and once you do, you also know enough to consider doing your own management." "Chapter 10 – On Your Own or Hire an Advisor".

1) You could post your financial details on this forum for ideas on investments and financial planning. Please see this for format: "Asking Portfolio Questions".

2) Vanguard offers a Personal Advisory Service, Fidelity and Schwab offer a similar service.

3) Harry Sit, who sometimes posts here, offers a service thru his blog to help people locate an advisor in their locality. "Advice-Only Search and Screening".

4) Two links for finding an advisor:
http://www.napfa.org/consumer/index.asp
http://www.garrettplanningnetwork.com/

. . . . .

I suggest that you read one or two books on general investing. Wiki article, "Books: recommendations and reviews". When I first stated managing my own investments, I found this tutorial very helpful in learning investing terminology/jargon and some of the investing basics. Morningstar, "Investing Classroom". Also take a look at the Boglehead’s wiki, the "getting started" link I give below.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started

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djpeteski
Posts: 693
Joined: Fri Mar 31, 2017 9:07 am

Re: Do I need a financial advisor?

Post by djpeteski » Fri Nov 16, 2018 3:15 pm

BikeRider wrote:
Fri Nov 16, 2018 2:13 pm
Once I receive my inheritance I'm paying off the house. That's a goal and I don't think I can be talked out of it. Value of the home at payoff should be about $280k. My only other debt is that I will owe my ex $50k in 4 years when our daughter goes to college or if I sell the house.
So every time you open a door or your feet feel the grass of a paid off house you can fondly remember your mother. Yes, pay off the house sir.

:sharebeer

Tal-
Posts: 371
Joined: Fri Apr 22, 2016 10:41 pm

Re: Do I need a financial advisor?

Post by Tal- » Fri Nov 16, 2018 3:32 pm

I'll dissent a bit on this one. I think you could benefit from an financial adviser.

You're facing several big questions with big outcomes. Making an informed decision on these is pretty dang important, and having an expert to work with may have merit. If you go this route, just be mindful of fees!

I could be talked into you going it alone, but only if you greatly increased your knowledge. You may not need a financial advisor, but you do need to be making informed decisions...

Let us know where you land.
Debt is to personal finance as a knife is to cooking.

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RootSki
Posts: 110
Joined: Mon Feb 20, 2017 11:52 am

Re: Do I need a financial advisor?

Post by RootSki » Fri Nov 16, 2018 3:40 pm

Gather information strategies here. Bogleheads are the masters of avoiding investment fees and very good at sharing information.

Learn as much as you can. The wiki is awesome. Read it twice.

After 2-4 weeks of heavy learning, then ask your self if you need (vs. want) a financial advisor. I'd never use one, but I know you want one who is hourly, not continuously taking a % of your "Assets Under Management" (AUM).

daheld
Posts: 364
Joined: Wed Sep 13, 2017 8:14 am

Re: Do I need a financial advisor?

Post by daheld » Fri Nov 16, 2018 4:10 pm

Tal- wrote:
Fri Nov 16, 2018 3:32 pm
I'll dissent a bit on this one. I think you could benefit from an financial adviser.

You're facing several big questions with big outcomes. Making an informed decision on these is pretty dang important, and having an expert to work with may have merit. If you go this route, just be mindful of fees!

I could be talked into you going it alone, but only if you greatly increased your knowledge. You may not need a financial advisor, but you do need to be making informed decisions...

Let us know where you land.
Ditto. I would encourage you to investigate Vanguard Personal Advisor Services.

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patrick013
Posts: 2433
Joined: Mon Jul 13, 2015 7:49 pm

Re: Do I need a financial advisor?

Post by patrick013 » Fri Nov 16, 2018 4:13 pm

BikeRider wrote:
Fri Nov 16, 2018 2:13 pm

I have a 401k where I work which I'll continue to contribute to. Worth about $5k. I'll start investing in a Roth also.

..........................................

I've been meaning to do this for 20 years. I just want to avoid fees.
If you read the Boglehead Guide you're not supposed to need an Advisor
(see the wiki)

*******************************

Investment Priorities

Tax-efficient Fund Placement

3 reasons to invest in a Roth IRA

Mega Backdoor Roth: Convert Within Plan or Out to Roth IRA?

*******************************

500 index, Mid-cap index, Small-cap index are my fav's BTW.
age in bonds, buy-and-hold, 10 year business cycle

Ben Mathew
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Location: Seattle
Contact:

Re: Do I need a financial advisor?

Post by Ben Mathew » Fri Nov 16, 2018 5:55 pm

You don't need an advisor. Educate yourself, consolidate your accounts, and invest in low cost index funds. If you can, make a spreadsheet model of your financial plan. If not use, a financial calculator.

Paying off the house is a financially sound move.

You're a bit behind on savings. Make sure you have enough for retirement before you decide how much you can spend on college tuition.

nix4me
Posts: 61
Joined: Sat Oct 13, 2018 9:32 am

Re: Do I need a financial advisor?

Post by nix4me » Fri Nov 16, 2018 8:06 pm

Think about what would put a smile on your mother's face before you spend the money.

Paying off a home, funding daughters college - might just = big smiles!

Its not always a mathematical decision.... But i do agree that retirement should be considered as well.

Mr.BB
Posts: 649
Joined: Sun May 08, 2016 10:10 am

Re: Do I need a financial advisor?

Post by Mr.BB » Fri Nov 16, 2018 9:50 pm

Do you have an emergency fund? If you do not, you should consider taking $10,000-$15,000 and putting it into a money market or some type of account (that you could easily access without penalty), for life's unexpected emergencies. FYI we belong to Alliant Credit Union and can earn 1.9% on a basic supplemental savings account (and they are really good about increasing the saving rate as interest rates have gone up).
"We are what we repeatedly do. Excellence, then, is not an act, but a habit."

BikeRider
Posts: 2
Joined: Fri Nov 16, 2018 1:20 pm

Re: Do I need a financial advisor?

Post by BikeRider » Fri Nov 16, 2018 11:02 pm

Working tonight. When I get home if I have any energy left I'll edit the original post as asked. On top of the fees that Merrill Lynch charges their monthly information is too confusing. Thanks for the help so far. I think you all can finally help me get this part of my life in order. Yes, I'm behind on saving but 2 divorces will do that to you. LIfe goes on.

Thx

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