Should I see a fee-only financial advisor or keep DIY?

Non-investing personal finance issues including insurance, credit, real estate, taxes, employment and legal issues such as trusts and wills
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Topic Author
knightrider
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Should I see a fee-only financial advisor or keep DIY?

Post by knightrider » Fri Sep 20, 2019 2:20 pm

I am in my early 40s, married with a toddler. The issue is I am getting over my head with all my accounts ( 401k's, solo 401k, SEP IRAs, TIRA, ROTH, 529, CDs, HSA, FSA etc.. ). Some things I want to do are:

1) Consolidate all accounts with Fidelity ( right now they are spread out in different places )
2) Investigate doing backdoor and mega-backdoor ROTH ( my company's 401k permits mega-backdoor )
3) Merge all my different funds into three funds. Now I have a mix of low-fee index funds. But I've lost track of whether the blend matches my risk tolerance
4) Overall advise on opportunities I am missing and tax-saving strategies

I know I can keep DIY, but each topic requires hours of research and posting here.. I figure it will be many months before I get around to completing all the above tasks. During that time I am probably losing money from lost opportunities..

So do folks think it is worth it to spend $1000 for some expert financial advice? There's a firm that visits our megacorp and presents topics relating to investments and retirement. I talked to them and they said they have all the experts who can help ( including lawyers, CPAs etc ).. Should I take the plunge?
Last edited by knightrider on Fri Sep 20, 2019 4:30 pm, edited 1 time in total.

bluebolt
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Re: Should I see a fee-based financial advisor or keep DIY?

Post by bluebolt » Fri Sep 20, 2019 2:28 pm

Re: #1. I went through that exercise several years ago to simplify my life. Generally, it was very straightforward and Fidelity helped out a lot. Didn't take too much time. Make sure you ask about being reimbursed for any account closing/transfer fees as they will generally do it if you ask and are transferring enough money.

dbr
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Re: Should I see a fee-based financial advisor or keep DIY?

Post by dbr » Fri Sep 20, 2019 2:32 pm

You probably could benefit from paying a person an amount of money to assist you organizing your finances.

The problem is that finding someone who really will help you organize your finances for a fee and not sell you things you don't want and shouldn't have while immensely more complicating your life and ending you up in a situation that is almost impossible for you to extricate yourself from is almost impossible.

Let me rewrite that sentence: It will be almost impossible to find someone to do what you want without ending up with a lot of bad stuff happening. It is highly unlikely the people who visit your firm are anything other than salesmen who are very good at putting your money in their pocket.

I do not recommend financial advisors but it might be an EXAMPLE of a person who is the right model for what you want would be Rick Ferri: https://rickferri.com/

If you need tax advice it might be best to find an appropriate CPA being sure to interview in advance to make clear what your needs are. Legal issues would best go to your own wills and estates attorney or whatever your concern is.

livesoft
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Re: Should I see a fee-based financial advisor or keep DIY?

Post by livesoft » Fri Sep 20, 2019 2:35 pm

It seems to me that you just need to do it yourself, but to actually START. You don't need to do it ALL AT ONCE. Select ONE account and do it. Maybe one account per week.

Certainly, a place called bogleheads.org can come up with where you want to be headed and blueprint on how to get there. That's what you want someone to do. But do you want someone to give you a plan to execute or do you want them to execute the plan, too?
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knightrider
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Re: Should I see a fee-based financial advisor or keep DIY?

Post by knightrider » Fri Sep 20, 2019 2:51 pm

livesoft wrote:
Fri Sep 20, 2019 2:35 pm
Certainly, a place called bogleheads.org can come up with where you want to be headed and blueprint on how to get there.
I could be wrong, but I don't think BH is good for "overall advice". It's great for specific questions, but not for looking at all facets of one's situation. I am sure there are opportunities and things I am missing since I don't have bird's eye view of the field..

Topic Author
knightrider
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Re: Should I see a fee-based financial advisor or keep DIY?

Post by knightrider » Fri Sep 20, 2019 2:52 pm

dbr wrote:
Fri Sep 20, 2019 2:32 pm

If you need tax advice it might be best to find an appropriate CPA being sure to interview in advance to make clear what your needs are. Legal issues would best go to your own wills and estates attorney or whatever your concern is.
This firm that visits our megacorp claim to have all this in-house. So I could do my wills and investment advice from the same folks..

dbr
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Re: Should I see a fee-based financial advisor or keep DIY?

Post by dbr » Fri Sep 20, 2019 2:57 pm

knightrider wrote:
Fri Sep 20, 2019 2:52 pm
dbr wrote:
Fri Sep 20, 2019 2:32 pm

If you need tax advice it might be best to find an appropriate CPA being sure to interview in advance to make clear what your needs are. Legal issues would best go to your own wills and estates attorney or whatever your concern is.
This firm that visits our megacorp claim to have all this in-house. So I could do my wills and investment advice from the same folks..
Well, you know who these people are, so that is your choice -- or do you know who these people are?

It might be useful to talk to others at your company and also interview independent professionals. This is an area fraught with danger where you should see yourself as a sheep ready for fleecing.

JBTX
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Re: Should I see a fee-based financial advisor or keep DIY?

Post by JBTX » Fri Sep 20, 2019 2:58 pm

knightrider wrote:
Fri Sep 20, 2019 2:20 pm
I am in my early 40s, married with a toddler. The issue is I am getting over my head with all my accounts ( 401k's, solo 401k, SEP IRAs, TIRA, ROTH, 529, CDs, HSA, FSA etc.. ). Some things I want to do are:

1) Consolidate all accounts with Fidelity ( right now they are spread out in different places )
Consolidation is good. It shouldnt be that hard to do by yourself. I have both fidelity and vanguard and that gives me more choices.
2) Investigate doing backdoor and mega-backdoor ROTH ( my company's 401k permits mega-backdoor )
I would defer on the backdoor Roth until you are comfortable with this whole process. There is value in it, but it is a fairly modest benefit, and I see numerous threads on here about people somehow screwing it up. As to mega backdoor, that may be more beneficial because you can do a lot more.


3) Merge all my different funds into three funds. Now I have a mix of low-fee index funds. But I've lost track of whether the blend matches my risk tolerance
In some cases target dates may be better and easier. Or the mix you have may not be that bad. One can estimate what your rough allocation is. 3 fund is good, but it isn't the be all end all.



4) Overall advise on opportunities I am missing and tax-saving strategies

I know I can keep DIY, but each topic requires hours of research and posting here.. I figure it will be many months before I get around to completing all the above tasks. During that time I am probably losing money from lost opportunities..

So do folks think it is worth it to spend $1000 for some expert financial advice? There's a firm that visits our megacorp and presents topics relating to investments and retirement. I talked to them and they said they have all the experts who can help ( including lawyers, CPAs etc ).. Should I take the plunge?

It really depends on your aptitude and appetite for these things. The advantage of learning them yourself is it will help you plan down the road. If it takes you a year to get it sorted out it still probably isn't that bad.

If you maxed out as much as possible iras and 401ks, put stuff in target date funds, and save as much as possible, chances are that you will do better than paying for an advisor and doing whatever they recommend. This place is a wonderful resource, but I think sometimes new people see all the minutia and think unless they do it all they can't do any of it. If you do the things I listed above that is probably 90% of the battle.

That said, some people just don't have the stomach for it. In that case a good fee only advisor may be worth it. But if you don't know enough to do most of it yourself, you may not know enough to understand what the advisor is doing and why. Most advisors don't follow a Boglehead type philosophy.

dbr
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Re: Should I see a fee-based financial advisor or keep DIY?

Post by dbr » Fri Sep 20, 2019 3:03 pm

JBTX wrote:
Fri Sep 20, 2019 2:58 pm

That said, some people just don't have the stomach for it. In that case a good fee only advisor may be worth it. But if you don't know enough to do most of it yourself, you may not know enough to understand what the advisor is doing and why. Most advisors don't follow a Boglehead type philosophy.
I agree. The dilemma here is that you at least need to know enough to work on the problem yourself to be able to recognize if the FA is working in your interest or not.

Some of the things that are issues are

1. What is the cost - all in. But shady advisors can obfuscate or even lie about the actual costs.

2. Are you buying products that are bad deals or not suitable for you. Most pitches for insurance, almost all flavors of annuities, privately held funds, and any variety of other schemes are certainly a really bad idea.

3. Are you being put into complicated portfolios you can't understand and that would be hard to untangle.

And so on.

fposte
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Re: Should I see a fee-based financial advisor or keep DIY?

Post by fposte » Fri Sep 20, 2019 3:04 pm

knightrider wrote:
Fri Sep 20, 2019 2:51 pm
livesoft wrote:
Fri Sep 20, 2019 2:35 pm
Certainly, a place called bogleheads.org can come up with where you want to be headed and blueprint on how to get there.
I could be wrong, but I don't think BH is good for "overall advice". It's great for specific questions, but not for looking at all facets of one's situation. I am sure there are opportunities and things I am missing since I don't have bird's eye view of the field..
It's where I've learned most of it. You do have to pick and choose among the various opinions you'll get, but if you posted "Help me simplify my multiple accounts" and used the Asking Portfolio Questions format to outline them, then asked your four questions, that's major Boglehead bait.

It may be that offloading finances would be worth a fair bit to you, with a lot going on, but are you sure that you're willing to pay what it would cost and that it would actually make you less stressed? For me, once I got a spreadsheet and an IPS set up it was pretty much self-steering aside from when taxes or situations changed. What about posting your question here for the heck of it and if it doesn't help you enough then consider paying?

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beyou
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Re: Should I see a fee-based financial advisor or keep DIY?

Post by beyou » Fri Sep 20, 2019 3:04 pm

knightrider wrote:
Fri Sep 20, 2019 2:51 pm
livesoft wrote:
Fri Sep 20, 2019 2:35 pm
Certainly, a place called bogleheads.org can come up with where you want to be headed and blueprint on how to get there.
I could be wrong, but I don't think BH is good for "overall advice". It's great for specific questions, but not for looking at all facets of one's situation. I am sure there are opportunities and things I am missing since I don't have bird's eye view of the field..
What do you think is so unique about your life and situation that you need a specialist to come up with a unique plan differing from others ?

You seem to be confusing 2 different things, organization/tracking and a plan to track.

Organization, I agree with livesoft above, consolidate step by step as slowly as one may have time to do, but do it.
You may not want to move ALL to one broker, such as if your 529 has state tax benefits that you lose and/or penalized if you move to another 529.
You may want to liquidate some to simplify (CDs). You need a tool to record all in one place to see the aggregated asset allocation. I do this at Vanguard using a tool they call Portfolio Watch. Not sure if Fidelity has such a tool, where you can see the IRAs and other accounts aggregated,
and add non-Fidelity holdings manually, to see the overall picture. I hope they have this but if not maybe Vanguard is a better place to consolidate ?
Some use a 3rd party tool and enter all their holdings from their various brokers to one place (Morningstar premium xray, Quicken and others).
A third party tool may be more work in the long run, but it does not require you to consolidate accounts.
Just enter holdings in one place, and update as you make changes.

Once you can see your overall asset allocation in one place (broker or 3rd party tool) then you can monitor existing and proposed new asset allocations. There are many places outside bogleheads to see recommended asset allocations based on your age and other factors, no advisor has special knowledge of the "correct" asset allocation. More important to have a goal in a range of appropriate AA and then monitor that you are sticking to it. The exact amount of stock vs bonds is often overanalyzed ( 50/50 vs 60/40 does not give significantly different results).

Taxes...sounds like you already take advantage of many tax shelters...good for you.

Estate planning one might go to a lawyer specializing in this, of you had a very large estate.
Until then maybe just make sure you have correct beneficiaries on all your retirement/529 accounts,
and a POD/TOD named owner on death on regular/taxable accounts, along with an up-to-date will.
If you have some reason to get a trust, then yes see a lawyer. Not a financial planner, they know nothing worth knowing that you can't learn easily.

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FlyAF
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Re: Should I see a fee-based financial advisor or keep DIY?

Post by FlyAF » Fri Sep 20, 2019 3:11 pm

dbr wrote:
Fri Sep 20, 2019 2:57 pm
This is an area fraught with danger where you should see yourself as a sheep ready for fleecing.
Yep

NotWhoYouThink
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Re: Should I see a fee-based financial advisor or keep DIY?

Post by NotWhoYouThink » Fri Sep 20, 2019 3:14 pm

You should learn what a "fee based financial advisor" is and use a different term for the thing you want.

A fee based financial advisor will manage your money for a fee, usually a percentage of assets under management, but will not charge you commissions on trades. That's all "fee based" or "fee only" means.

What you are looking for is an one-time consultation, or maybe an annual consultation, but you don't seem to want somebody to take over the management of your investments. So lawyers and CPAs, who give advice but do not manage investments, might be good people to consult.

But I agree with livesoft that if you know what to do you should just set some goals and a timeline and get it done. If you don't know what you should do you could ask here or consult with a CPA or tax attorney. But again, make sure you communicate to them that you want someone to point you in the right strategic direction, not someone to do your tax calculations.

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knightrider
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Re: Should I see a fee-based financial advisor or keep DIY?

Post by knightrider » Fri Sep 20, 2019 3:25 pm

beyou wrote:
Fri Sep 20, 2019 3:04 pm
What do you think is so unique about your life and situation that you need a specialist to come up with a unique plan differing from others ?
Mainly to see if there are opportunities I am missing. BH forum is not so good for asking for "give me a whole life analysis"... For example a lot depends on one's risk tolerance, savings rate, lifestyle etc.. That's where I think someone who deals with this day in and day out can give me quick advice based on my unique situation. Basically I need a back and forth dialog..

Fire2030
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Re: Should I see a fee-based financial advisor or keep DIY?

Post by Fire2030 » Fri Sep 20, 2019 4:17 pm

knightrider wrote:
Fri Sep 20, 2019 3:25 pm
Mainly to see if there are opportunities I am missing. BH forum is not so good for asking for "give me a whole life analysis"... For example a lot depends on one's risk tolerance, savings rate, lifestyle etc.. That's where I think someone who deals with this day in and day out can give me quick advice based on my unique situation. Basically I need a back and forth dialog..
Based on your requirements, you will be well served by a "Fee only" FA. You can try to find one in your area using "https://garrettplanningnetwork.com/".
Consolidation of accounts can still be done independently to Fidelity. I just went thru that process. Luckily my wife's and my company's 401K are also with Fidelity which simplified a lot.

MikeG62
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Re: Should I see a fee-based financial advisor or keep DIY?

Post by MikeG62 » Fri Sep 20, 2019 4:38 pm

knightrider wrote:
Fri Sep 20, 2019 3:25 pm
beyou wrote:
Fri Sep 20, 2019 3:04 pm
What do you think is so unique about your life and situation that you need a specialist to come up with a unique plan differing from others ?
Mainly to see if there are opportunities I am missing. BH forum is not so good for asking for "give me a whole life analysis"... For example a lot depends on one's risk tolerance, savings rate, lifestyle etc.. That's where I think someone who deals with this day in and day out can give me quick advice based on my unique situation. Basically I need a back and forth dialog..
Consider Harry Sit. Harry has a service where for a small fee ($200) he will locate for you three financial planners in your area - folks who work on a fee for hour (advice only) basis (no AUM fees). He is also posts on these boards from time to time.

https://adviceonlyfinancial.com/

Full disclosure - I have no relationship with him. Never met or spoke or wrote to him. However, I think he will find someone competent for you, which is what you seem to want.

I would not use these folks who come to your office. That sounds like a recipe for disaster (for the reasons dbr has well articulated above).

Good luck.
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Housedoc
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Re: Should I see a fee-only financial advisor or keep DIY?

Post by Housedoc » Fri Sep 20, 2019 4:45 pm

Beware the "we can do it all"firms.
They subcontract service to make it appear they are BIG. In the old days, a plumbing company would have 4 to 6 phone numbers listed throughout the number prefixes for a city. All numbers routed to 1 office.

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beyou
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Re: Should I see a fee-only financial advisor or keep DIY?

Post by beyou » Fri Sep 20, 2019 4:55 pm

You can get plenty of dialog here.

GrowthSeeker
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Re: Should I see a fee-only financial advisor or keep DIY?

Post by GrowthSeeker » Fri Sep 20, 2019 5:45 pm

Another vote for DIY piecemeal.
Figure what is most important and pick the low hanging fruit first.
I did exactly this, gradually, over about 3 years.

Maybe you want the first step, or at least an early step, to be: roll SEP-IRA and tIRAs into one of the employer based plans in preparation to doing backdoor Roth.

Maybe if you have assets located in 6 firms, first just eliminate 1 or 2 firms.
As long as everything transfers in-kind, just do in-kind trustee-to-trustee transfers. You can worry about what to sell, what to do about gains at another step.
Just because you're paranoid doesn't mean they're NOT out to get you.

tesuzuki2002
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Re: Should I see a fee-only financial advisor or keep DIY?

Post by tesuzuki2002 » Fri Sep 20, 2019 6:06 pm

Sounds like you have already evaluated much of the options and have several plans and ideas... just need to pick the ones you want and go with it. 3 years ago I chose Vanguard... I got almost everything moved over... but then I wanted to SOLO 401K I could roll money into...

But I keep everything aligned between the two.

afan
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Re: Should I see a fee-only financial advisor or keep DIY?

Post by afan » Sat Sep 21, 2019 1:50 pm

If you want a financial advisor you should go to one that ONLY offers advice. Does not sell anything. Does not manage money. Just gives advice. You can find hourly fee advisors, which is what you want.

Consolidating all assets at Fidelity. This should be pretty easy. Call up Fidelity and tell them that. They will be DELIGHTED to walk you through the process. Depending on the rules at the places where your assets are held you may need to sign some forms. There is little thinking involved, just some paperwork that Fidelity can explain.

Once you have that done you can decide on the Roth maneuvers. You do need to do this correctly. I suspect Fidelity can help here as well but this might be something to discuss with an hourly fee advisor.
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