What is a reasonable fee charged by financial planners?

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MBL
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What is a reasonable fee charged by financial planners?

Post by MBL » Tue Sep 18, 2018 4:00 pm

I am looking for a financial planner and have no idea how to judge whether a quoted hourly fee is reasonable. What are your experiences? I am located in the southeast U.S.

livesoft
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Re: What is a reasonable fee charged by financial planners?

Post by livesoft » Tue Sep 18, 2018 4:27 pm

My experiences come from reading what people have reported at bogleheads.org. Quite a lot of people have paid money and gotten information and advice that was worthless, so any amount of money paid was wasted.

So the first order of business would be to determine if the service is going to worth paying for. Unfortunately, there is almost no way to figure out ahead of time if the work provided will be legitimate and useable. Do financial planners in your area offer a money-back guarantee?
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WhyNotUs
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Re: What is a reasonable fee charged by financial planners?

Post by WhyNotUs » Tue Sep 18, 2018 4:46 pm

In my limited experience there is a flat annual fee and an hourly fee for meetings. My only experience was for a niece who inherited quite a bit of money. She ultimately rejected my proposed direction but I did the homework. These are 8 year old numbers from a HCOL area based on my recollection. $2,500 flat fee the first year + $250 hr.

The idea was only to use the service for year one to address some tax issues, set up retirement accounts, set up target retirement accounts and then let it ride. The accounts would have qualified for a free consult with VG but the age of my niece and some unusual tax considerations made a local planner a better choice.

She ended just spending it all instead so it did not matter :happy
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MBL
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Re: What is a reasonable fee charged by financial planners?

Post by MBL » Tue Sep 18, 2018 4:56 pm

I have one quote for $175/hr. I am about to pull the trigger on taking interest-only distributions from my TIAA TRAD account and would just feel more comfortable getting a professional to take a look at my highly detailed retirement plan, which is an Excel spreadsheet projecting income out 35 years from various sources based on assumptions about social security claiming strategy for myself and husband as well as projected RMDs at age 70. I guess just looking for a second opinion on my planning work. I am really concerned about the tax torpedo at age 70 and may broach the topic of using this window of opportunity to do some Roth conversions with some (or all) of my variable TIAA funds.

retiredjg
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Re: What is a reasonable fee charged by financial planners?

Post by retiredjg » Tue Sep 18, 2018 5:04 pm

Two things come to mind.

A poster here provides a service to help people find an advice only financial advisor that may fit your needs. You would pay a small feel for his service. See this link. https://adviceonlyfinancial.com


You could post your financial picture here and get opinions from the people on the forum. See the link at the bottom of this message for how to do that. The closer you follow the format, the easier it is to help you.

Doing either or both of these will likely help you understand your needs and your choices better than you understand them now.

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TinyElvis
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Re: What is a reasonable fee charged by financial planners?

Post by TinyElvis » Tue Sep 18, 2018 5:26 pm

I am in the Nashville area. My financial planner charges $275 per hour. We review my portfolio annually.

CRTR
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Re: What is a reasonable fee charged by financial planners?

Post by CRTR » Tue Sep 18, 2018 5:50 pm

As you can imagine, there are limitless methods for charging people for financial advice. I lean towards the fee for service/advice model as opposed to the assets under management (AUM) based fee. In the former, most planners charge by the hour or a flat fee for a given job ($2500 for comprehensive financial plan, for example). Personally, I'm a little leary of the hourly method . . . I don't want to have to pay more just because someone is inefficient. In the latter, they usually bundle financial planning with ongoing investment management. They charge a % (0.25-2%) of your portfolio value. It sounds like a fee for service arrangement is most appropriate for you needs.
Whether the fee is reasonable or not depends on what you hope to get out of it. From what you mentioned, it sounds like you're looking for a full, comprehensive financial plan, which includes (but is not limited to) answering some specific questions you have. In California, the charge for this type of plan typically runs ~$2500 (+/- $500). My preference would be to go for an planner with this sort of fee arrangement. If you go with someone that charges hourly, make sure to get a maximum charge agreement or estimate before going ahead. Most advisers I know out here charge $200-400/hour.

Ron Scott
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Re: What is a reasonable fee charged by financial planners?

Post by Ron Scott » Wed Sep 19, 2018 12:05 pm

MBL wrote:
Tue Sep 18, 2018 4:00 pm
I am looking for a financial planner and have no idea how to judge whether a quoted hourly fee is reasonable. What are your experiences? I am located in the southeast U.S.
I't shard to give advice here unless I know what exactly you'd like such a financial advisor to do. There are many cookie cutter advisors who want to sell you an "overall plan", including managing your money.

But you might have specific needs than can be handled differently.

What are you looking for?
Retirement is a game best played by those prepared for more volatility in the future than has been seen in the past. The solution is not to predict investment losses but to prepare for them.

MBL
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Re: What is a reasonable fee charged by financial planners?

Post by MBL » Wed Sep 19, 2018 12:32 pm

I already have my plan in Excel but am running into its limitations for determining optimazation strategies on such things as when to take SS, when to turn on distributions of several retirement accounts, and possible need to do Roth conversion. Trying to avoid tax torpedo at age 70.

Dottie57
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Re: What is a reasonable fee charged by financial planners?

Post by Dottie57 » Wed Sep 19, 2018 12:33 pm

I have a friend who used a financial planner after receiving a windfall. She found it very useful. The planner forced her to delve into how she spent money, and to look at her debts honestly. The planner helped her prioritize debt vs investing. How to defer taxes - maxing her deferred comp and using part of windfall to live on. Also the planner helped her realize an earlier retirement should not be taken - financially bad idea. ( she has a friend who kept pressing for early retirement).

All in all the money was well spent. She spent somewhere between 1500-2500. The planner charged by the hour. I believe the end result was a written plan.
Last edited by Dottie57 on Wed Sep 19, 2018 3:13 pm, edited 1 time in total.

ncgenx
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Re: What is a reasonable fee charged by financial planners?

Post by ncgenx » Wed Sep 19, 2018 1:04 pm

MBL wrote:
Tue Sep 18, 2018 4:00 pm
I am looking for a financial planner and have no idea how to judge whether a quoted hourly fee is reasonable. What are your experiences? I am located in the southeast U.S.
Located in North Carolina. The 3rd CFP that I got the most value out of charges $225 an hour. Although he usually prefers to do the initial services as a la carte where you meet and together determine what you are wanting to get out of his services. He has an estimator that has check boxes for each desired service. I wanted a few things.
1. To know If I am on track.

Most books talk about numbers and such for people starting out the journey. I had money all over the place and I had no idea if I was saving enough or not.

2. Assistance with simplifying my portfolio and coming up with a financial plan going forward.

As mentioned above I had money all over the place. I had 4 different brokerages. I had around 60 stocks. And a mixture of Bond Funds and Mutual Funds. I wanted to combine ALL my various accounts and be balanced. I could have done this if I had enough free time on my own, but I just don't have the time to do that. I'm studying 30-40 hours a week in addition to my job for a certification so yea I just couldn't get that done.

3. Review of Insurances

Make sure I was covered adequately. Including Long Term, Short Term, etc.

4. Answer around 50 questions I had based on the reading I have done.

Based on the readings there was a bunch of questions I had and he answered all of them.

5. Determine how I should split my Roth/Traditional and the impact of how I have it balanced.

He actually provided 3 scenarios. 1 how I am now. Then 100% Roth and 100% Traditional going forward and seeing end numbers at the age of 100.

He also provided a notebook binder with numerous things. A game plan essentially, A summary of his concerns, he broke down ALL my current investments including HSA, IRA's, 401k, and Brokerages including dividing them up into Small/Med/large Cap, Domestic, International, and bonds. Took me from 4 pages of investments to a single page.

He quoted me $2250 I believe for all of that and needed a $500 deposit to get started. Worth every penny for me because of the following three things.

1. I don't have the time to do this. Based on Work and Certification Studies.
2. I don't have work experience and have not done this kind of thing before. I would not be efficient at it.
3. I needed someone that could be Objective about it. I had a VERY hard time consolidating everything, but having that objective person made it a LOT easier for me.

Here is his link to his prices as an example. https://sycamorefinancialplanning.com/s ... 1152343750

ncgenx
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Re: What is a reasonable fee charged by financial planners?

Post by ncgenx » Wed Sep 19, 2018 1:15 pm

As far as the first two planners I saw. The first one was a "mixed" CFP as he called it. It was my first time thinking of using a CFP, and boy am I glad I didn't go with him. Alarm bells went off when he tried to sell me an Annuity. I was 39 at the time. Single, no kids.

The second planner was an okay guy, but I paid him like $1800 and he only met me twice and gave me an excel document and word document with no header or anything. It was not bad advice. I just was not impressed with what $1800 got me. I also had never used one before so had no idea what to look for. Luckily I found the third person mentioned in my previous post.

Based on these two experiences major points would be

1. DO NOT USE anyone but a FEE ONLY planner!!!!

2. Ask for a sample of what they deliver.

3. Look into what all CFP's can provide. And figure out what you want and what you need. Know that BEFORE you meet with of them.

Be sure to research them on all the standard sites
https://www.finra.org/
Would also recommend this
https://clark.com/personal-finance-cred ... ions-fees/
I would personally recommend someone that is part of this if possible. Based on what Chuck told me they screen the CFP's before they let them become members.
https://www.garrettplanningnetwork.com/

bloom2708
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Re: What is a reasonable fee charged by financial planners?

Post by bloom2708 » Wed Sep 19, 2018 1:21 pm

As your questions here. $0

Use the Asking Portfolio Questions format:

viewtopic.php?t=6212

Let's say you meet for an hour or 2. How much can a financial advisor know about you in 1 or 2 hours after the "get to know you" banter is over?

If you can find someone not selling something, then the will need to be paid again and again for advice going forward.

You stumbled in here. Do the work and do it yourself. You know you better than anyone. There is nothing that can't be researched or asked or delved into and there is never a fee. There are previous threads on virtually all topics.

1 to 3 broad based market index funds. 401ks, Rollover IRAs, Roth IRAs can be updated without tax consequence. Only taxable investments with gains/losses will need to be researched for re-arranging/simplifying.

:dollar :moneybag :dollar
"We are not here to please, but to provoke thoughtfulness." --Unknown Boglehead

retiredjg
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Re: What is a reasonable fee charged by financial planners?

Post by retiredjg » Wed Sep 19, 2018 1:23 pm

ncgenx wrote:
Wed Sep 19, 2018 1:15 pm
1. DO NOT USE anyone but a FEE ONLY planner!!!!
Yes, but....one has to be careful with this term - fee only planner - because it can also refer to a planner that charges nothing but an AUM (assets under management) fee. And that is obviously NOT what you are suggesting.

I don't know of a better term. I guess that is why thefinancebuff (link above in an earlier post) adopted the term "advice only" planner.

ncgenx
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Re: What is a reasonable fee charged by financial planners?

Post by ncgenx » Wed Sep 19, 2018 1:29 pm

That's a good point. Well at the very least fiduciary and preferably one that does not sell products. Ask all the questions to determine if the advice has a financial incentive from any of the decisions they recommend. Just easier to say "Fee Only" :)

livesoft
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Re: What is a reasonable fee charged by financial planners?

Post by livesoft » Wed Sep 19, 2018 1:59 pm

TIAA offers free-of-charge wealth managers to help with the decisions that the OP is asking about. So my new question: Did you contact TIAA for help?

viewtopic.php?t=208571
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MBL
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Re: What is a reasonable fee charged by financial planners?

Post by MBL » Wed Sep 19, 2018 7:16 pm

Yes I have used my TIAA Wealth MGR rep, and he is great. But he does not address non TIAA pieces of the puzzle such as social security and holdings we have outside TIAA.

livesoft
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Re: What is a reasonable fee charged by financial planners?

Post by livesoft » Wed Sep 19, 2018 7:23 pm

Maybe he can refer you to someone who does that kind of work and/or suggest what one should pay for that?
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FOGU
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Re: What is a reasonable fee charged by financial planners?

Post by FOGU » Wed Sep 19, 2018 7:30 pm

You stumbled in here. Do the work and do it yourself. You know you better than anyone. There is nothing that can't be researched or asked or delved into and there is never a fee. There are previous threads on virtually all topics.
You do not need a financial planner. You need to study. And study some more. It is not complicated. Keep it simple.

Take it from a fool who knows. You do not need a financial planner. Read all the free stuff at Vanguard to begin. Your asset allocation is the most important element, according to Vanguard, more so than any specific stock or bond investments. You can learn this stuff with some application.

I spent way too much on financial "advisors" over my investing career. I wish I had a dime now for every dollar they fleeced me of.

Take it from a fool who knows.
~ Don't just do something. Sit there. ~

MBL
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Re: What is a reasonable fee charged by financial planners?

Post by MBL » Wed Sep 19, 2018 7:52 pm

Yeah, I am beginning to think I can do it myself. I have pretty much done all the work myself anyhow. I have projected out our finances for the next 35 years and have conducted multiple "what-if" scenarios as to when distributions and social security might hit. I have used the open social security website to find optimal claiming strategy for myself and husband, but that is done in a vaccuum... just tells you the optimal lifetime earnings without regard to other pieces in the financial puzzle. I think it is becoming clear that I am going to have to take TIAA distributions earlier than originally planned so as to fill up my tax bracket each year between now (60) and age 70. Then will need to invest those funds somewhere outside the retirement plan. It would be really helpful to know if Congress is going to make permanent the new tax brackets and increased standard deduction to $24,000 for married couples so as to be able to plan out beyond 2026.

Index24
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Re: What is a reasonable fee charged by financial planners?

Post by Index24 » Wed Sep 19, 2018 8:01 pm

I live in the SE and I was recently quoted a rate of $200-$250/hr. After the financial advisor incorrectly told me how a backdoor Roth was taxed I decided not to work with them.

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peterinjapan
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Re: What is a reasonable fee charged by financial planners?

Post by peterinjapan » Wed Sep 19, 2018 9:05 pm

My Wells Fargo financial planner did little more than keep me in too-safe investments (so I wouldn't get mad and fire him) and talk me out of investing in AMZN at $399. He is now my former financial planner and I'm doing much better than when I used him.

afan
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Re: What is a reasonable fee charged by financial planners?

Post by afan » Thu Sep 20, 2018 6:50 am

MBL wrote:
Wed Sep 19, 2018 7:52 pm
Yeah, I am beginning to think I can do it myself. I have pretty much done all the work myself anyhow. I have projected out our finances for the next 35 years and have conducted multiple "what-if" scenarios as to when distributions and social security might hit. I have used the open social security website to find optimal claiming strategy for myself and husband, but that is done in a vaccuum... just tells you the optimal lifetime earnings without regard to other pieces in the financial puzzle. I think it is becoming clear that I am going to have to take TIAA distributions earlier than originally planned so as to fill up my tax bracket each year between now (60) and age 70. Then will need to invest those funds somewhere outside the retirement plan. It would be really helpful to know if Congress is going to make permanent the new tax brackets and increased standard deduction to $24,000 for married couples so as to be able to plan out beyond 2026.

If you are that far along then you may be ready for the RPM spreadsheet. This offers a comprehensive view of the financial implications of various decisions. It is not user friendly but there is plenty of advice available from other users.

If you still want an advisor the the finance buff "advice only" referral system may be worth investigating.
We don't know how to beat the market on a risk-adjusted basis, and we don't know anyone that does know either | --Swedroe | We assume that markets are efficient, that prices are right | --Fama

MBL
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Re: What is a reasonable fee charged by financial planners?

Post by MBL » Thu Sep 20, 2018 8:43 am

Never heard of the RPM spreadsheet...

JW-Retired
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Re: What is a reasonable fee charged by financial planners?

Post by JW-Retired » Thu Sep 20, 2018 10:22 am

MBL wrote:
Wed Sep 19, 2018 12:32 pm
I already have my plan in Excel but am running into its limitations for determining optimization strategies on such things as when to take SS, when to turn on distributions of several retirement accounts, and possible need to do Roth conversion. Trying to avoid tax torpedo at age 70.
I admit I'm disgusted from all the horror tales we see here, but I don't think many FAs will want you to delay SS. They often urge you to take SS early so you will have a larger initial pool of assets for them to leach from manage. :D

If you do find one that explains how beneficial delaying SS is tax wise, maybe that's the one for you.
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aristotelian
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Re: What is a reasonable fee charged by financial planners?

Post by aristotelian » Thu Sep 20, 2018 10:50 am

Personally, they would need to pay me to sit through their sales pitch.

afan
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Re: What is a reasonable fee charged by financial planners?

Post by afan » Thu Sep 20, 2018 2:58 pm

MBL wrote:
Thu Sep 20, 2018 8:43 am
Never heard of the RPM spreadsheet...
Search the site for "RPM"
We don't know how to beat the market on a risk-adjusted basis, and we don't know anyone that does know either | --Swedroe | We assume that markets are efficient, that prices are right | --Fama

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onthecusp
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Re: What is a reasonable fee charged by financial planners?

Post by onthecusp » Thu Sep 20, 2018 3:36 pm

MBL wrote:
Wed Sep 19, 2018 7:52 pm
Yeah, I am beginning to think I can do it myself. I have pretty much done all the work myself anyhow. I have projected out our finances for the next 35 years and have conducted multiple "what-if" scenarios as to when distributions and social security might hit. I have used the open social security website to find optimal claiming strategy for myself and husband, but that is done in a vaccuum... just tells you the optimal lifetime earnings without regard to other pieces in the financial puzzle. I think it is becoming clear that I am going to have to take TIAA distributions earlier than originally planned so as to fill up my tax bracket each year between now (60) and age 70. Then will need to invest those funds somewhere outside the retirement plan. It would be really helpful to know if Congress is going to make permanent the new tax brackets and increased standard deduction to $24,000 for married couples so as to be able to plan out beyond 2026.
I think you are ready to do it yourself with help here. Bogleheads is both a wealth of information and a sounding board.
Overall plan in a Spreadsheet - check
Specific questions on taking social security vs. starting distributions - check
Investing distributions in taxable accounts to optimize tax brackets - check

Looks like two or three specific actionable threads that would help you to crystalize your thoughts and get you good advice.

Speculation on future congressional actions. If you go to a financial planner you may get an opinion on that. They will be right or wrong.
If you ask here you will likely get a dozen opinions before the thread is shutdown for good reasons. :D Optimizing beyond a few years is probably wasted effort anyway.

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busdriver
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Re: What is a reasonable fee charged by financial planners?

Post by busdriver » Thu Sep 20, 2018 3:41 pm

MBL wrote:
Wed Sep 19, 2018 12:32 pm
I already have my plan in Excel but am running into its limitations for determining optimazation strategies on such things as when to take SS, when to turn on distributions of several retirement accounts, and possible need to do Roth conversion. Trying to avoid tax torpedo at age 70.
You might want to take a look at Income Strategy website. For $20/mo, you can input your data and look at various strategies' results of taxes paid and funds available for the duration you choose. The initial default strategy will show how to minimize taxes and maximize funds available. You can stop subscription anytime. Professional help is available for $125/hr and I suspect that initial consultation on familiarization of the software after initial purchase will be free, (it was for me). I have used a few additional hours help from them to optimize my particular plan and feel it has been more beneficial than the few financial professionals I've talked to in the past. If you still want to find a planner, cancel subscription before second month and you're only out $20. https://www.incomestrategy.com

livesoft
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Re: What is a reasonable fee charged by financial planners?

Post by livesoft » Thu Sep 20, 2018 3:46 pm

Don't forget that a financial planner is not the same as a financial advisor nor an investment manager nor a salesrep. Those latter folks can sometimes call themselves a financial planner without doing any work of financial planning. In particular, I haven't seen evidence that Vanguard provides a financial plan to anyone. Vanguard does provide investment plans.
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edgeagg
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Re: What is a reasonable fee charged by financial planners?

Post by edgeagg » Thu Sep 20, 2018 4:21 pm

WhyNotUs wrote:
Tue Sep 18, 2018 4:46 pm
She ended just spending it all instead so it did not matter :happy
:oops: That is why our will for our son (who is now 7) does not give him access to assets till he is 40! If my wife and I died in a tragic nerve gas accident tomorrow, he'd spend all the money on legos....

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