Need to hire a financial advisor

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jwblue
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Need to hire a financial advisor

Post by jwblue »

My mother insists on hiring a professional to manage her savings. It is not up for debate.

I know most people on this forum are biased towards Vanguard and so am I. Though a biased opinion is not necessarily incorrect.

We spoke with someone at Vanguard and liked him a lot. The .30% management fee is reasonable.

https://investor.vanguard.com/financial ... ial-advice

Schwab recently changed their pricing structure for their advisor services. It includes consulting with a CFP. The cost is a $300 initial fee plus $30.00 a month.

https://www.schwab.com/public/schwab/in ... t_advisory

After the first year the difference in fees would be about $2,700 a year.

Is it possible the Vanguard advisor could provide enough value to make up the $2,700 a year difference in fees?
Dottie57
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Re: Need to hire a financial advisor

Post by Dottie57 »

I think it more likely Vanguard will use low cost index funds.
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unclescrooge
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Re: Need to hire a financial advisor

Post by unclescrooge »

Dottie57 wrote: Tue Apr 09, 2019 12:44 pm I think it more likely Vanguard will use low cost index funds.
Schwab has a lot of low cost options as well.
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jwblue
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Re: Need to hire a financial advisor

Post by jwblue »

Dottie57 wrote: Tue Apr 09, 2019 12:44 pm I think it more likely Vanguard will use low cost index funds.
This is what the Schwab website says about the investments they use. Do ETFs end up costing more?
  • Schwab Intelligent Portfolios uses an advanced algorithm and the professional insight of the Charles Schwab Investment Advisory, Inc. (CSIA) team. You'll get a diversified portfolio composed of exchange-traded funds (ETFs), all handpicked by CSIA. Portfolios include up to 20 asset classes across stocks, fixed income, real estate, and commodities, as well as an FDIC-insured cash component—so they're truly diversified. After the ETFs are chosen, the experts at CSIA monitor their performance on an ongoing basis.
  • Invest in a portfolio of low-cost exchange-traded funds (ETFs).
    Just as if you'd invested on your own, you will pay the operating expenses on the ETFs in your portfolio, which includes Schwab ETFs™
Last edited by jwblue on Tue Apr 09, 2019 1:00 pm, edited 4 times in total.
Dottie57
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Re: Need to hire a financial advisor

Post by Dottie57 »

unclescrooge wrote: Tue Apr 09, 2019 12:46 pm
Dottie57 wrote: Tue Apr 09, 2019 12:44 pm I think it more likely Vanguard will use low cost index funds.
Schwab has a lot of low cost options as well.
It’s not the options but the advice given. Most FP’s I have had suggested options which paid them well. Not necessarily bad, but costly.
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BL
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Re: Need to hire a financial advisor

Post by BL »

I don't believe there is an incentive at Vanguard to sell higher-cost funds, so I would trust them to not try to sell costly funds or other products. I have read here that they tell you up front what investments they suggest if you decide to use them. Not sure if others do that up front. Also V. usually suggests up to 6 or so Admiral funds, not a big batch of them.
NotWhoYouThink
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Re: Need to hire a financial advisor

Post by NotWhoYouThink »

Is it important to her to have a person to talk to face-to-face? It may not matter to you , but if it matters to her Vanguard will not be a good option.
Jazzysoon
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Re: Need to hire a financial advisor

Post by Jazzysoon »

Does your mother want the convenience of a local office either to meet face to face, at least initially to build trust or to drop things off in person? I like that Fidelity has local offices and yesterday just dropped my 2018 HSA check at the local office. Last year I needed Medallion signature and it was easier & quicker doing it at local office. Schwab has offices across the country.
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Stinky
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Re: Need to hire a financial advisor

Post by Stinky »

jwblue wrote: Tue Apr 09, 2019 12:40 pm
We spoke with someone at Vanguard and liked him a lot. The .30% management fee is reasonable.
If your mother doesn’t need face-to-face meetings, it sounds like a good case for Vanguard.
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ruralavalon
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Re: Need to hire a financial advisor

Post by ruralavalon »

Stinky wrote: Tue Apr 09, 2019 1:16 pm
jwblue wrote: Tue Apr 09, 2019 12:40 pm
We spoke with someone at Vanguard and liked him a lot. The .30% management fee is reasonable.
If your mother doesn’t need face-to-face meetings, it sounds like a good case for Vanguard.
I agree.
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protagonist
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Re: Need to hire a financial advisor

Post by protagonist »

One approach:

Contact both "on behalf of your mother". Tell them about her financial situation and what she has to invest. Interview them both about what they would most recommend that she do with her money.

If one makes more sense to you than the other....for instance if one recommends low-cost index funds (which I doubt but you never know) and the other recommends investments with high management fees.....you will know which one to recommend.

You could also try Fidelity. I think if you invest a certain amount they provide a free advisor. I keep getting calls from one.
venkman
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Re: Need to hire a financial advisor

Post by venkman »

jwblue wrote: Tue Apr 09, 2019 12:51 pm
Dottie57 wrote: Tue Apr 09, 2019 12:44 pm I think it more likely Vanguard will use low cost index funds.
This is what the Schwab website says about the investments they use. Do ETFs end up costing more?
  • Schwab Intelligent Portfolios uses an advanced algorithm and the professional insight of the Charles Schwab Investment Advisory, Inc. (CSIA) team. You'll get a diversified portfolio composed of exchange-traded funds (ETFs), all handpicked by CSIA. Portfolios include up to 20 asset classes across stocks, fixed income, real estate, and commodities, as well as an FDIC-insured cash component—so they're truly diversified. After the ETFs are chosen, the experts at CSIA monitor their performance on an ongoing basis.
I'm 99% sure what this actually means is "Our Schwab team will put you in a complicated slice-and-dice portfolio that looks very impressive to a non-investing-expert. We will make sure you are so intimidated by the sheer complexity of your portfolio that you will never ever ever think you'd be able to manage it on your own. We'll probably also make unnecessary trades just for the sake of making trades, so it looks like we're actively managing your portfolio..."
palaheel
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Re: Need to hire a financial advisor

Post by palaheel »

Doesn't Schwab insist on holding some cash? I suspect that when the cash drag is factored in, the cost difference narrows.
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