Alternatives to financial advisor and general investment advice

Have a question about your personal investments? No matter how simple or complex, you can ask it here.
Post Reply
Topic Author
Claire
Posts: 3
Joined: Mon Mar 23, 2020 7:45 pm

Alternatives to financial advisor and general investment advice

Post by Claire » Mon Mar 23, 2020 8:20 pm

Dear all:
First, thank you all for your very generous time in advising newbies like me. I hope everyone is managing to keep safe and healthy during these trying times.

I have decided to leave my Ameriprise advisor (high fees, poor/non-existent communication, reacted badly when I asked what the fees covered and how come I underperformed the market last year, etc.). So I am in the market for alternative options to a financial advisor. I'm a disciplined saver (about 60% of my income), but I have not learned how to invest. It frightens me but I'm willing to learn as I don't think my money is growing as it should. I think I need some hand-holding to start off - not sure I can jump right into DIY. I've considered Wealthfront and Personal Capital but wonder whether they're right for my needs. I've been 100% debt-free for 8 years, have maxed out 401k contributions for as long, contributing to 529, emergency funds for 12 months and good salary (knock on wood with these special times).
- What does a good alternative look like for someone like me? My goal is wealth growth
- What mistakes might I be making and should correct promptly?
- Is now a good time to make a transition?
- What to do with cash in the bank? Keep? Invest? Buy?
- In my mid-30s with a chronic medical condition but I suspect the multi-index UL I have is overkill with its $6k/annual premium.
- How do I exit current financial advisor gracefully but firmly?

Just writing it out makes me feel like a financial hot mess for these decisions. I welcome soft and tough love. Must get my financial house in order and I'm willing to learn. Thanks so much!

User avatar
Sandtrap
Posts: 9921
Joined: Sat Nov 26, 2016 6:32 pm
Location: Hawaii No Ka Oi , N. Arizona

Re: Alternatives to financial advisor and general investment advice

Post by Sandtrap » Mon Mar 23, 2020 8:45 pm

1 Open a brokerage account at Vanguard
2 Talk to Vanguard VPAS Services at no charge
3 Transfer your funds (in kind) Don’t need your advisor permission. Vanguard will talk you through it.
4 Post a portfolio review so we can help you create a long term comprehensive financial strategy. Many options.
5 Decide your path. DIY or VPAS.
6 Concurrently to #1-5 read the forum Wiki “Getting Started”

j🌺
Wiki Bogleheads Wiki: Everything You Need to Know

jjface
Posts: 2754
Joined: Thu Mar 19, 2015 6:18 pm

Re: Alternatives to financial advisor and general investment advice

Post by jjface » Mon Mar 23, 2020 8:51 pm

Vanguard Personal Advisory service as suggested above is a good way to get hand holding in a safe environment.

One hurdle to jump is the idea that investing has to be complicated. It can be especially if you want to eek out every dollar you can but it doesn't have to be. A novice investor can do a lot worse than investing in the Vanguard balanced index mutual fund or vanguard lifestrategy moderate growth, adding to it each year and leaving it alone until retirement. If you want more wealth growth possibilities with more risk the go for the Vanguard life strategy growth fund. Assuming your 401k has these options.
https://investor.vanguard.com/mutual-fu ... estrategy/#/

Read this great free booklet if you want to learn and take things a little further:
https://www.etf.com/docs/IfYouCan.pdf

User avatar
Peter Foley
Posts: 5030
Joined: Fri Nov 23, 2007 10:34 am
Location: Lake Wobegon

Re: Alternatives to financial advisor and general investment advice

Post by Peter Foley » Mon Mar 23, 2020 9:00 pm

A follow up to Sandtrap's advice and that of jjface: investing doesn't have to be hard. Read up just a little on the Wiki about the 3 fund portfolio, and as an alternative, Target Retirement Funds. Both options are very simple.

Before investing, however, also try to get a read on your ability to take risk, need to take risk, and willingness to take risk. These concepts relate to your overall asset allocation between stock mutual funds and bond mutual funds. You have to know your risk tolerance to be able to implement any investment strategy.
Last edited by Peter Foley on Tue Mar 24, 2020 1:58 pm, edited 1 time in total.

sport
Posts: 8959
Joined: Tue Feb 27, 2007 3:26 pm
Location: Cleveland, OH

Re: Alternatives to financial advisor and general investment advice

Post by sport » Mon Mar 23, 2020 9:07 pm

Another approach to consider is to start with Vanguard's PAS. After a year or two, when you understand what they are doing, and you are comfortable with it, you can discontinue PAS and do it yourself. While PAS is inexpensive, it is not free. So, use it as long as you feel you need it, and then you can take over the job yourself. (A little known secret: it is not difficult.) :idea:

Chip Shot
Posts: 84
Joined: Tue Apr 30, 2019 5:42 am

Re: Alternatives to financial advisor and general investment advice

Post by Chip Shot » Tue Mar 24, 2020 6:25 am

sport wrote:
Mon Mar 23, 2020 9:07 pm
Another approach to consider is to start with Vanguard's PAS. After a year or two, when you understand what they are doing, and you are comfortable with it, you can discontinue PAS and do it yourself. While PAS is inexpensive, it is not free. So, use it as long as you feel you need it, and then you can take over the job yourself. (A little known secret: it is not difficult.) :idea:
This :thumbsup

WIAV8TOR
Posts: 67
Joined: Thu Dec 10, 2015 7:26 pm

Re: Alternatives to financial advisor and general investment advice

Post by WIAV8TOR » Tue Mar 24, 2020 6:32 am

Welcome. Don’t forget to go to the library & check out a few books. Those by John C Bogle is a great start.


An important key is asset allocation, with age & investment psyche factored in.

HomeStretch
Posts: 4016
Joined: Thu Dec 27, 2018 3:06 pm

Re: Alternatives to financial advisor and general investment advice

Post by HomeStretch » Tue Mar 24, 2020 8:32 am

Good advice, above. No one will ever care about your portfolio as much as you do. Even if you use a lower-cost advisor service like Vanguard’s PAS, do the suggested reading to educate yourself so you can determine whether the advisor’s proposed plan is a good fit for you.

Concurrent with educating yourself and changing brokerages/advisors, for best advice from this forum post your financial picture in the format found in ”Asking Portfolio Questions”:
https://www.bogleheads.org/wiki/Asking_ ... _questions

To address some other items in your post:
1. Cash in the bank - is this your emergency fund or additional funds to invest?
2. Universal life insurance is usually not the best choice. Check out 20 or 30-year level premium term life insurance as an alternative at online brokers such as selectquote.com (I used and liked them), term4life and Xander are often mentioned in the forum.

alex_686
Posts: 5786
Joined: Mon Feb 09, 2015 2:39 pm

Re: Alternatives to financial advisor and general investment advice

Post by alex_686 » Tue Mar 24, 2020 8:41 am

A true fee only CFP. One should be able to write up a high quality IPS and AA which you can execute yourself at a low cost brokerage firm.

afan
Posts: 4555
Joined: Sun Jul 25, 2010 4:01 pm

Re: Alternatives to financial advisor and general investment advice

Post by afan » Tue Mar 24, 2020 8:45 am

VPAS is a good transition service. Cheaper than the vast majority of advisers and will put you in a reasonable portfolio. Although VPAS includes financial advice, it seemed to to too generic and inexpert to be of much use. You will get far more detailed and thoughtful information here.

Alternatives include consulting an hourly fee only adviser. Some, like Rick Ferri, will only advise on investing. Others, like Allen Roth, will give more comprehensive advice, which you might need given uncertainty of how much and what kind if life insurance you need.

Garret Planning network offers hourly fee only advising. The Finance Buff also will identify such advisers for you.
All of these options come with fees. Depending on how much money you have they could be more or less than a year with VPAS.

Thanks to market efficiency, the investing part of managing your finances is dead simple.
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

Topic Author
Claire
Posts: 3
Joined: Mon Mar 23, 2020 7:45 pm

Re: Alternatives to financial advisor and general investment advice

Post by Claire » Thu Mar 26, 2020 12:29 am

Sandtrap wrote:
Mon Mar 23, 2020 8:45 pm
1 Open a brokerage account at Vanguard
2 Talk to Vanguard VPAS Services at no charge
3 Transfer your funds (in kind) Don’t need your advisor permission. Vanguard will talk you through it.
4 Post a portfolio review so we can help you create a long term comprehensive financial strategy. Many options.
5 Decide your path. DIY or VPAS.
6 Concurrently to #1-5 read the forum Wiki “Getting Started”

j🌺
Thanks. I have done this and their wait times for appointments is long, which is understandable under the circumstances. Portfolio review coming up. Will re-read "Getting started." A few people elsewhere on the blog think Vanguard DIY is better than VPS in that the advice here might be as good as or better (and more diverse) than a single VPS advisor. What do you think?

User avatar
Sandtrap
Posts: 9921
Joined: Sat Nov 26, 2016 6:32 pm
Location: Hawaii No Ka Oi , N. Arizona

Re: Alternatives to financial advisor and general investment advice

Post by Sandtrap » Thu Mar 26, 2020 7:53 am

Claire wrote:
Thu Mar 26, 2020 12:29 am
Sandtrap wrote:
Mon Mar 23, 2020 8:45 pm
1 Open a brokerage account at Vanguard
2 Talk to Vanguard VPAS Services at no charge
3 Transfer your funds (in kind) Don’t need your advisor permission. Vanguard will talk you through it.
4 Post a portfolio review so we can help you create a long term comprehensive financial strategy. Many options.
5 Decide your path. DIY or VPAS.
6 Concurrently to #1-5 read the forum Wiki “Getting Started”

j🌺
Thanks. I have done this and their wait times for appointments is long, which is understandable under the circumstances. Portfolio review coming up. Will re-read "Getting started." A few people elsewhere on the blog think Vanguard DIY is better than VPS in that the advice here might be as good as or better (and more diverse) than a single VPS advisor. What do you think?
Depends on:
1 How well the portfolio review goes, level and quality of input, quality of data provided, etc.
2 Your willingness and ability to setup then maintain the portfolio (depends on complexity)
3 You might decide that Vanguard VPAS services is worth the "hands off" for a very small fee, or not
4 You might decide to go with VPAS for a short time then discontinue (no contracts) and DIY from then on
5 Once you go through all of the WIKi reading and study the book list on your own, your perspective will change greatly. At some point, you might think, "wow, this is a lot simpler than folks think and FA's let on", then, based on the results of your "portfolio review", decide to DIY. A lot depends on how much you want to learn, initially it can be overwhelming, but after awhile its like "riding a bike" and you might enjoy it.
6 The Wiki book list complements the WIKI so doing both is a plus. Once going thru that you will know as much or more than many FA's salesman.

j :happy
Wiki Bogleheads Wiki: Everything You Need to Know

Topic Author
Claire
Posts: 3
Joined: Mon Mar 23, 2020 7:45 pm

Re: Alternatives to financial advisor and general investment advice

Post by Claire » Fri Apr 03, 2020 10:03 am

Thanks to everyone for your great advice. I'm steadily making progress and will revert with questions. Please stay healthy and safe!

rixer
Posts: 655
Joined: Tue Sep 11, 2012 4:18 pm

Re: Alternatives to financial advisor and general investment advice

Post by rixer » Fri Apr 03, 2020 10:11 am

Don't forget to look into low cost, balanced, index funds.

User avatar
Sandtrap
Posts: 9921
Joined: Sat Nov 26, 2016 6:32 pm
Location: Hawaii No Ka Oi , N. Arizona

Re: Alternatives to financial advisor and general investment advice

Post by Sandtrap » Fri Apr 03, 2020 10:14 am

Claire wrote:
Fri Apr 03, 2020 10:03 am
Thanks to everyone for your great advice. I'm steadily making progress and will revert with questions. Please stay healthy and safe!
Yes.
Do check back with updates.
j :happy
Wiki Bogleheads Wiki: Everything You Need to Know

retired@50
Posts: 1722
Joined: Tue Oct 01, 2019 2:36 pm

Re: Alternatives to financial advisor and general investment advice

Post by retired@50 » Fri Apr 03, 2020 10:44 am

Claire wrote:
Mon Mar 23, 2020 8:20 pm
Dear all:

- What does a good alternative look like for someone like me? My goal is wealth growth
- What mistakes might I be making and should correct promptly?
- Is now a good time to make a transition?
- What to do with cash in the bank? Keep? Invest? Buy?
- In my mid-30s with a chronic medical condition but I suspect the multi-index UL I have is overkill with its $6k/annual premium.
- How do I exit current financial advisor gracefully but firmly?

Just writing it out makes me feel like a financial hot mess for these decisions. I welcome soft and tough love. Must get my financial house in order and I'm willing to learn. Thanks so much!
Regarding questions above.
1. I'd start with the Three-Fund Portfolio. This is sort of a base case for every retirement investor. If, after reading about it you decide you don't like it for some reason, let the forum know and we'll come up with some suggestions. See link. https://www.bogleheads.org/wiki/Three-fund_portfolio

2. Mistakes. You're hopefully already working on correcting them. These include paying a high (1% or more) assets under management (AUM) fee to Ameriprise. In addition to this, you're likely paying expense ratios that are higher than .15% (perhaps .50% - 1.25%) for the funds at Ameriprise. Finally, you've been talked into a Universal Life Policy for $6K per year. I'd suggest you switch this to a term life policy to protect any dependents.

3. Transition. Sure, now is better than next year because the sooner you start saving on all those fees mentioned in question 2 the better.

4. Cash. Keep this handy for emergencies. You never know what sort of bad luck may come your way. Having an emergency fund in a money market or savings account is important, and will always seem like a drag on your potential returns. Get used to this idea, just for the peace of mind that you'll know if you lose your income tomorrow, you've got some sort of cushion.

5. Switch the life insurance to term life if possible. Mixing life insurance products and investing is the specialty of crooked insurance salespeople and lousy financial advisers. There are certainly legitimate reasons to own life insurance, but VERY FEW reasons to use anything other than term life.

6. I wouldn't even bother with telling the adviser. Call Vanguard and provide the details they need to get the process started. At some point your adviser will figure it out and he/she will move on. In spite of what you may believe, this person isn't your friend, and never was.

Regards,
Boggle - a game from Parker Brothers. Bogle - investor, founder of Vanguard.

pennywise
Posts: 734
Joined: Sat May 31, 2014 6:22 am

Re: Alternatives to financial advisor and general investment advice

Post by pennywise » Fri Apr 03, 2020 11:26 am

Chip Shot wrote:
Tue Mar 24, 2020 6:25 am
sport wrote:
Mon Mar 23, 2020 9:07 pm
Another approach to consider is to start with Vanguard's PAS. After a year or two, when you understand what they are doing, and you are comfortable with it, you can discontinue PAS and do it yourself. While PAS is inexpensive, it is not free. So, use it as long as you feel you need it, and then you can take over the job yourself. (A little known secret: it is not difficult.) :idea:
This :thumbsup
Yes! My husband and I moved all our investments to Vanguard in early January-two IRA accounts and a brokerage account. We opted for PAS to get some solid advice and guidance on allocation.

We also wanted some expertise to manage a disparate set of accounts as one entity with a focus on keeping our money safe, but with some growth for our retirement needs.

This morning I happened to take a look at our portfolio balance for the first time since the pandemic started affecting the financial world. I am incredibly grateful that we lucked out in getting PAS set up when we did! Our accounts, other than a stock index fund (of course), are relatively okay. We're down ~15% overall on a 50/50 portfolio.

Also OP, the questions and concerns you have are the same ones I wrestled with. Vanguard made it super easy to set up everything and our advisor was always responsive and explained all his recommendations to us as we worked through the process.

Also as noted, PAS at Vanguard doesn't have to be permanent, you can work with your advisor to get everything started, then go on your own as and when you feel more comfortable.

Up till a few weeks ago a lot of folks didn't seem to think there was any reason to have an advisor. But when the world turns upside down, it's nice to have someone you trust standing next to you guiding you through the tumult.

Post Reply