Is a Financial Advisor ever worth it? Should I just stay ROBO? [FINRA regulated employee]

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well_hello_
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Is a Financial Advisor ever worth it? Should I just stay ROBO? [FINRA regulated employee]

Post by well_hello_ » Thu Jun 25, 2020 5:30 pm

Hi All,

First post so please let me know if this is the wrong place. I know generally financial advisors are discouraged because they eat up returns. I'm trying to concretely understand if they're a total scam or if it might be worth it for a busy regulated professional.

I am a FINRA broker dealer (I think that's what it's called) regulated employee. Aka to make any trade in an account I have control over I have to request permission and do some online paperwork. It's a pain because it takes time and I only get a day or two to make the trade after approval. This got me thinking about whether a financial advisor would be right for me.

In the past I've used a FA and it was a ton of fees for them to pick a bunch of high cost mutual funds. I saw the error in my ways and went low cost ETFs. I'm not the best at remembering to rebalance nor making sure I get the best value for fees. I generally pick standard index funds by Vanguard or if the account has other restrictions something similar offered by another player.

I'm not sure if I'm losing enough value by not rebalancing or if there are other benefits at play. Things I think I might get from a FA are tax strategies, general advice / planning, etc. It looks like most of them charge .75-1% of AUM.

Details about me:
F late 20's unmarried
income: 500k / year before taxes. After taxes its ~300k
I spend ~100k / year and save ~200k. I live in a HCOL area
I always max my 401k (I was able to max + mega back door roth for 4k years but I'm not only allowed to max)
I always traditional to roth convert my ira each year.
I don't buy high sell low, try to market time, get nervous and backout etc. I just keep plugging away my cash.

assets:
60k cash - emergency fund + checking account. This covers my expenses for 6+ months
Own a 1 mill house in HCOL area. 500k mortgage, 500k in value in the house. I rent this out at cost (mortgage, taxes, repairs, and ~opportunity cost) I don't include the rent income or the mortgage payments as they net each other out.
200k roth funds split between robo and low cost etfs
150k in trad 401k
200k investments in low cost ETFs
small potatoes in 529s (No kids yet but would like them, I live in a tax advantaged state)
I work... a lot and I honestly very rarely rebalance because its a hassle.

I've been a little bit wary of the ROBOs. I'm nervous they could mis-trade (a la knight capital) etc so I've kept my funds reduced with them. One thing I liked about the robos is that I could transfer money regularly and have it invested. Again I'm kind of bad at remembering to buy funds and its a bunch of paperwork to do it myself so I dislike requesting to buy low cost ETF XYZ. I feel like I understand the basics of finance / investing but I want help figuring out more nuanced things. For example I want to understand if contributing to a 529 in my situation is worth the tax savings. I want someone to verify my numbers when it comes to things like taxation based on where I live (city taxes or living / working in two states) or if I'm using all of the tax advantaged accounts correctly. Another thing I'm curious about are alternative investments. FA ive talked to have mainly offered my alternative investments or personal capital / mint like plans. Am I just missing the benefits of having a longer term relationship?

So does a FA ever make sense? Does it make sense for me? How would I go about finding one? Should I just get over my fear of ROBOs? Do you use them if so why?

It seems like most of them are helping people budget / finding % to save for retirement and I dont feel like thats what I need. It felt like the market was mainly catering to people with fewer assets (how to budget crowd) or who were far older (how to retire) or they were chasing whales (big $$). I don't think I fall into any of those scenarios? Am I looking for another type of professional? A CPA?

I looked at fee only planners and again the plans seemed too simplified. Also for the 400k i might move over it seemed like the 1% fee was pretty much the same between the fee only vs AUM if I wanted to have someone every year.

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Re: Is a Financial Advisor ever worth it? Should I just stay ROBO? [FINRA regulated employee]

Post by Stinky » Thu Jun 25, 2020 6:25 pm

Welcome to the Forum!

What is your targeted asset mix? I assume that it would be pretty equity heavy, given your age.

If you were to invest in a straightforward three fund portfolio (total domestic stock, total international stock, total domestic bond), you’d be covering the waterfront at a very low cost. And you wouldn’t need an advisor of any type.

I wouldn’t sweat the rebalancing. If you did it once a year, that would be ok.
It's a GREAT day to be alive - Travis Tritt

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well_hello_
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Re: Is a Financial Advisor ever worth it? Should I just stay ROBO? [FINRA regulated employee]

Post by well_hello_ » Thu Jun 25, 2020 6:47 pm

I’m at a 90/10 mix. I’m pretty risk tolerant. I don’t need the funds and I have plenty of years to work should the portfolio go down.

Does that sound reasonable/ is that what you’re asking?

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Re: Is a Financial Advisor ever worth it? Should I just stay ROBO? [FINRA regulated employee]

Post by Stinky » Thu Jun 25, 2020 6:50 pm

well_hello_ wrote:
Thu Jun 25, 2020 6:47 pm
I’m at a 90/10 mix. I’m pretty risk tolerant. I don’t need the funds and I have plenty of years to work should the portfolio go down.

Does that sound reasonable/ is that what you’re asking?
I think 90/10 sounds reasonable for someone your age.

Is your 90% all domestic? Or some international? You’ll find many threads on domestic/international, with opinions all over the place.
It's a GREAT day to be alive - Travis Tritt

123
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Re: Is a Financial Advisor ever worth it? Should I just stay ROBO? [FINRA regulated employee]

Post by 123 » Thu Jun 25, 2020 7:11 pm

I think you can do better with something like Vanguard mutual funds than with a financial adviser. The adviser would just push high cost products at you in addition to the AUM fee. The AUM fee is just a badge that the customer wears telling the adviser they don't have confidence in their own decisions, that exactly what a salesman is looking for, a customer who doesn't have the confidence to say "No".
The closest helping hand is at the end of your own arm.

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well_hello_
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Re: Is a Financial Advisor ever worth it? Should I just stay ROBO? [FINRA regulated employee]

Post by well_hello_ » Thu Jun 25, 2020 7:16 pm

123 wrote:
Thu Jun 25, 2020 7:11 pm
I think you can do better with something like Vanguard mutual funds than with a financial adviser. The adviser would just push high cost products at you in addition to the AUM fee. The AUM fee is just a badge that the customer wears telling the adviser they don't have confidence in their own decisions, that exactly what a salesman is looking for, a customer who doesn't have the confidence to say "No".
Fair, do you have any thoughts on a robo for tax loss harvesting etc or do you think always Vanguard mutual funds? Also naive question but why mutual funds vs etfs?

Another thing I'm curious about is access to institutional vs regular vanguard shares. I notice my 401k has lower fee funds (through vanguard)

In the same vein... who is the right professional (do I need one) for tax strategy, double checking my calculations etc? I feel fairly confident that I'm on the right track but I want someone that can double check me and propose other ideas. Does this service exist? I tried talking to an accountant and they just lectured me on starting an IRA. I think they assumed things based on my age.

Thank you for all of the help!
Last edited by well_hello_ on Thu Jun 25, 2020 7:31 pm, edited 1 time in total.

inverter
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Re: Is a Financial Advisor ever worth it? Should I just stay ROBO? [FINRA regulated employee]

Post by inverter » Thu Jun 25, 2020 7:20 pm

OP, from my understanding, a FA or robotrader wouldn't exempt you from those requirements, but just shift the burden of placing the actual trades. You would still have to report trades in a managed account.

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Re: Is a Financial Advisor ever worth it? Should I just stay ROBO? [FINRA regulated employee]

Post by well_hello_ » Thu Jun 25, 2020 7:21 pm

Stinky wrote:
Thu Jun 25, 2020 6:50 pm
well_hello_ wrote:
Thu Jun 25, 2020 6:47 pm
I’m at a 90/10 mix. I’m pretty risk tolerant. I don’t need the funds and I have plenty of years to work should the portfolio go down.

Does that sound reasonable/ is that what you’re asking?
I think 90/10 sounds reasonable for someone your age.

Is your 90% all domestic? Or some international? You’ll find many threads on domestic/international, with opinions all over the place.
It's a mix but a not very well thought out mix.

Given my compensation format / saving style. I have an extra ~10-20k each month to save. That amounts to 2-3 trades each month. It takes at least an hour + a context switch to do that. Are there any solutions to reduce that. Thats what I liked about the Robo. It removed reporting obligations and it could be easily automated. Are there any vanguard type programs that just have an allocation and can be funded regularly?

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Re: Is a Financial Advisor ever worth it? Should I just stay ROBO? [FINRA regulated employee]

Post by well_hello_ » Thu Jun 25, 2020 7:23 pm

inverter wrote:
Thu Jun 25, 2020 7:20 pm
OP, from my understanding, a FA or robotrader wouldn't exempt you from those requirements, but just shift the burden of placing the actual trades. You would still have to report trades in a managed account.
Hm it's true I still need to report. My understanding is that as long as I can't make specific trades they can be reported monthly and don't have to be requested ahead of time. With a robo I can't pick the funds so they just require monthly statement reporting. Basically I can't get my robo to buy a specific instrument I can only change my risk model. My company has ok'ed robos. I suspect that a FA would have to be through a trust.

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Re: Is a Financial Advisor ever worth it? Should I just stay ROBO? [FINRA regulated employee]

Post by One Ping » Thu Jun 25, 2020 7:28 pm

You might consider doing something like this ... 2 Funds for Life ... combining a Target Date Fund and a second fund (SCV in this case).

Here is a Boglehead thread on it Paul Merriman 2 Funds for Life

Note: Not looking to start a SCV "war", but for someone younger who has the time and resources it could be a simple approach to increase expected return over the long haul.
"Re-verify our range to target ... one ping only."

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Re: Is a Financial Advisor ever worth it? Should I just stay ROBO? [FINRA regulated employee]

Post by well_hello_ » Thu Jun 25, 2020 7:37 pm

One Ping wrote:
Thu Jun 25, 2020 7:28 pm
You might consider doing something like this ... 2 Funds for Life ... combining a Target Date Fund and a second fund (SCV in this case).

Here is a Boglehead thread on it Paul Merriman 2 Funds for Life

Note: Not looking to start a SCV "war", but for someone younger who has the time and resources it could be a simple approach to increase expected return over the long haul.
Oh interesting. I'll check this out. I'm watching the video now.

I've been trying to figure out if a target date fund makes sense. I have it in my 401k but I don't actually think it represents where I'm at. I have 35-40 years according to the fund. I am interested in FIRE (at least the FI part) but I don't have an exact time table for it, just basically whenever I have 6+ mill. The way it was explained to me was that it totally made sense if I had a very traditional time line. Not sure if thats true for me?

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Re: Is a Financial Advisor ever worth it? Should I just stay ROBO? [FINRA regulated employee]

Post by afan » Thu Jun 25, 2020 7:47 pm

For the advice you seek, a financial advisor who charges an hourly fee would be appropriate. They will not manage your assets but they could provide tax and estate planning, and might have ideas of the most efficient way to do your regular investing.
I don't know the rules, but could you set up automatic recurring purchases from wherever you deposit your paycheck into a stock and bond mutual fund? Could you get automatic approval each pay period? If possible, that would get around your need to remember to make the purchases.

The problem with a robo is that I have not heard of one that will invest your money in 2-4 cap weighted index funds. They will give you what they think the mix should be and you are stuck with it. Plus charge you an AUM fee for their trouble. The Schwab free robo will keep a large cash position and use this to make money on the spread between what they earn on your cash and what they pay.

I would avoid the automatic tax loss harvesting. They will complicate your life when you file income taxes, often with a huge number of trades.
I don't know of a free robo that will just put your money into a percent allocation of funds that you choose. If there were, it does not sound much different from setting up automatic purchases.
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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Re: Is a Financial Advisor ever worth it? Should I just stay ROBO? [FINRA regulated employee]

Post by JBTX » Thu Jun 25, 2020 7:48 pm

well_hello_ wrote:
Thu Jun 25, 2020 7:37 pm
One Ping wrote:
Thu Jun 25, 2020 7:28 pm
You might consider doing something like this ... 2 Funds for Life ... combining a Target Date Fund and a second fund (SCV in this case).

Here is a Boglehead thread on it Paul Merriman 2 Funds for Life

Note: Not looking to start a SCV "war", but for someone younger who has the time and resources it could be a simple approach to increase expected return over the long haul.
Oh interesting. I'll check this out. I'm watching the video now.

I've been trying to figure out if a target date fund makes sense. I have it in my 401k but I don't actually think it represents where I'm at. I have 35-40 years according to the fund. I am interested in FIRE (at least the FI part) but I don't have an exact time table for it, just basically whenever I have 6+ mill. The way it was explained to me was that it totally made sense if I had a very traditional time line. Not sure if thats true for me?
Yes a target date could make a lot of sense. Definitely in tax advantaged, but maybe even taxable. Only a small portion of a target date is in bonds at your age, and yields are minimal so taxes will be minimal. It is true that there will be a modest amount of tax inefficiency, but I would argue it is very modest and probably less than the AUM fee an advisor may charge you.

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Re: Is a Financial Advisor ever worth it? Should I just stay ROBO? [FINRA regulated employee]

Post by well_hello_ » Thu Jun 25, 2020 8:01 pm

afan wrote:
Thu Jun 25, 2020 7:47 pm
For the advice you seek, a financial advisor who charges an hourly fee would be appropriate. They will not manage your assets but they could provide tax and estate planning, and might have ideas of the most efficient way to do your regular investing.
I don't know the rules, but could you set up automatic recurring purchases from wherever you deposit your paycheck into a stock and bond mutual fund? Could you get automatic approval each pay period? If possible, that would get around your need to remember to make the purchases.

The problem with a robo is that I have not heard of one that will invest your money in 2-4 cap weighted index funds. They will give you what they think the mix should be and you are stuck with it. Plus charge you an AUM fee for their trouble. The Schwab free robo will keep a large cash position and use this to make money on the spread between what they earn on your cash and what they pay.

I would avoid the automatic tax loss harvesting. They will complicate your life when you file income taxes, often with a huge number of trades.
I don't know of a free robo that will just put your money into a percent allocation of funds that you choose. If there were, it does not sound much different from setting up automatic purchases.
Do you have any advice on finding a fee only? I've found a lot of the fee only people are very basic budget + how much should you save types. Any way to filter for someone competent that handles my type of circumstances often?

Good point about the tax complications. My taxes are slowly becoming a headache. My concern there was because my tax rate is ~40% which makes dividends etc problematic for me.

I'll see if there is an alternative to day of requesting.

I'd heard that about the schwab robo.

Do you happen to know of any service / companies that do this "wherever you deposit your paycheck into a stock and bond mutual fund? Could you get automatic approval each pay period"?

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Re: Is a Financial Advisor ever worth it? Should I just stay ROBO? [FINRA regulated employee]

Post by inverter » Thu Jun 25, 2020 9:36 pm

well_hello_ wrote:
Thu Jun 25, 2020 7:23 pm
inverter wrote:
Thu Jun 25, 2020 7:20 pm
OP, from my understanding, a FA or robotrader wouldn't exempt you from those requirements, but just shift the burden of placing the actual trades. You would still have to report trades in a managed account.
Hm it's true I still need to report. My understanding is that as long as I can't make specific trades they can be reported monthly and don't have to be requested ahead of time. With a robo I can't pick the funds so they just require monthly statement reporting. Basically I can't get my robo to buy a specific instrument I can only change my risk model. My company has ok'ed robos. I suspect that a FA would have to be through a trust.
In that case, use a robo then. Having to do reporting 12 times a year isn’t that bad. There are a litany with choices, all of them with different nuances.

I suspect you don’t need a FA, as if you are smart enough to work in finance, you’re smart enough to to sit down for a couple of hours and study your way through a concept. I’m a late 20s consultant and that’s the attitude I take as well.


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Re: Is a Financial Advisor ever worth it? Should I just stay ROBO? [FINRA regulated employee]

Post by vsquid » Fri Jun 26, 2020 2:26 am

I would go with a robo if that takes care of your biggest issues (reporting and "managing"). You can always leave the service if you think it is not worth the money or that you want to self manage. Also you don't need to go all in with a robo. You can keep your existing investments and just open a new account for new contributions so you can see if you like the service.

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Re: Is a Financial Advisor ever worth it? Should I just stay ROBO? [FINRA regulated employee]

Post by Dottie57 » Fri Jun 26, 2020 4:45 am

Stinky wrote:
Thu Jun 25, 2020 6:25 pm
Welcome to the Forum!

What is your targeted asset mix? I assume that it would be pretty equity heavy, given your age.

If you were to invest in a straightforward three fund portfolio (total domestic stock, total international stock, total domestic bond), you’d be covering the waterfront at a very low cost. And you wouldn’t need an advisor of any type.

I wouldn’t sweat the rebalancing. If you did it once a year, that would be ok.
This.

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Re: Is a Financial Advisor ever worth it? Should I just stay ROBO? [FINRA regulated employee]

Post by afan » Fri Jun 26, 2020 7:19 am

I have a friend who has to clear all transactions. They were able to set up automatic mutual fund purchases with every pay period. The purchases are always in the same funds in the same amounts. This made it possible to get approval for the plan and not have to get repeated approval for each identical purchase. My friend would need specific approval for each sale unless it was regularly scheduled sales of the company stock. For that, they could set up a plan, have it approved, and not need to do each sale as a one off.


You might speak with your compliance people about whether you could do the same. If you go with broad cap weighted mutual funds the only risk of individual trades would be using inside information to speculate on the overall direction of stocks and bonds. If you make the same investments every time, then there is no risk of this.

A target date fund would just cut the number of trades but the paperwork should not change.

I have not found a good sophisticated financial adviser but I have not looked very hard. Allan Roth is highly regarded and definitely sophisticated. Expensive but you can easily afford him. He is in heavy demand, so it may take a while to get to him.

The Finance Buff will provide you with three recommended advisers who fit your needs. The referral service is paid but inexpensive. No fee if you do not find a suitable candidate. I believe these are all hourly fee types.

White Coat investor has a list of recommended advisers. This is not limited to hourly fee people. Many want to manage your money for AUM fees- not at all what you need. The list is free but there is no customized matching to your needs.

I agree with others that you have all the background you need to be your own sophisticated adviser.

I would avoid alternative investments. Particularly with your reporting requirements and presumably conflict of interest or inside information concerns, you will be safer with broad cap weighted funds. Far more transparent, lower cost, simple taxes.

With index funds the dividends will be almost all qualified, so the tax rate will not be 40%. Please do not get sucked into some tax dodge scheme. You make a lot of money and will pay a lot of tax. Your stock fund will throw off about 2% in dividends and nearly no capital gains distributions. If you use separate funds, not a target date, then any bonds in taxable can be in munis.

You may also want to ask some colleagues about advisers they use. They may know people who are just what you are looking for. If not, nothing lost by asking.
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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Re: Is a Financial Advisor ever worth it? Should I just stay ROBO? [FINRA regulated employee]

Post by afan » Fri Jun 26, 2020 7:29 am

You might find mutual funds more to your needs than ETFs. You can place the mutual fund orders nights and weekends and know that you will get the next day's closing price. With ETFs this is riskier since your purchase will take place during the day, perhaps in the middle of odd events that push the price off.
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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Re: Is a Financial Advisor ever worth it? Should I just stay ROBO? [FINRA regulated employee]

Post by TomatoTomahto » Fri Jun 26, 2020 7:40 am

Dottie57 wrote:
Fri Jun 26, 2020 4:45 am
Stinky wrote:
Thu Jun 25, 2020 6:25 pm
Welcome to the Forum!

What is your targeted asset mix? I assume that it would be pretty equity heavy, given your age.

If you were to invest in a straightforward three fund portfolio (total domestic stock, total international stock, total domestic bond), you’d be covering the waterfront at a very low cost. And you wouldn’t need an advisor of any type.

I wouldn’t sweat the rebalancing. If you did it once a year, that would be ok.
This.
Yes, don’t make this more complicated than it has to be. Wife and son are FINRA regulated employees. Open ended mutual funds are not covered securities. You have loads of human capital, so AA isn’t as big a concern (ie, you’re more like my son’s AA than my wife’s). You don’t need a FA. You can TLH if you want to, but it’s not a necessity, and the Robos will make your portfolio a dog’s breakfast if you let them, so I’d stay far away.

You’re clever enough to make half a buck income; I’m sure you’re clever enough to enter a buy order for a mutual fund.
Okay, I get it; I won't be political or controversial. The Earth is flat.

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Re: Is a Financial Advisor ever worth it? Should I just stay ROBO? [FINRA regulated employee]

Post by well_hello_ » Fri Jun 26, 2020 9:33 am

TomatoTomahto wrote:
Fri Jun 26, 2020 7:40 am
Dottie57 wrote:
Fri Jun 26, 2020 4:45 am
Stinky wrote:
Thu Jun 25, 2020 6:25 pm
Welcome to the Forum!

What is your targeted asset mix? I assume that it would be pretty equity heavy, given your age.

If you were to invest in a straightforward three fund portfolio (total domestic stock, total international stock, total domestic bond), you’d be covering the waterfront at a very low cost. And you wouldn’t need an advisor of any type.

I wouldn’t sweat the rebalancing. If you did it once a year, that would be ok.
This.
Yes, don’t make this more complicated than it has to be. Wife and son are FINRA regulated employees. Open ended mutual funds are not covered securities. You have loads of human capital, so AA isn’t as big a concern (ie, you’re more like my son’s AA than my wife’s). You don’t need a FA. You can TLH if you want to, but it’s not a necessity, and the Robos will make your portfolio a dog’s breakfast if you let them, so I’d stay far away.

You’re clever enough to make half a buck income; I’m sure you’re clever enough to enter a buy order for a mutual fund.
I appreciate the vote of confidence. I generally feel competent at making financial decisions I just wasnt sure if I was doing it optimally (and if so it that would be problematic). I'm relieved to hear that infrequent rebalancing is fine. I was under the impression (perhaps from the hype) that it was important to do this frequently.

I'm not familiar with what AA stands for?

Can you explain what you think robos do poorly? I understand they charge extra fees. Do you dislike their portfolio allocations?

Note - I work in finance but I'm not a finance (trader) person (this may be obvious given than I'm asking all of these questions XD).

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Re: Is a Financial Advisor ever worth it? Should I just stay ROBO? [FINRA regulated employee]

Post by well_hello_ » Fri Jun 26, 2020 9:35 am

afan wrote:
Fri Jun 26, 2020 7:19 am
I have a friend who has to clear all transactions. They were able to set up automatic mutual fund purchases with every pay period. The purchases are always in the same funds in the same amounts. This made it possible to get approval for the plan and not have to get repeated approval for each identical purchase. My friend would need specific approval for each sale unless it was regularly scheduled sales of the company stock. For that, they could set up a plan, have it approved, and not need to do each sale as a one off.


You might speak with your compliance people about whether you could do the same. If you go with broad cap weighted mutual funds the only risk of individual trades would be using inside information to speculate on the overall direction of stocks and bonds. If you make the same investments every time, then there is no risk of this.

A target date fund would just cut the number of trades but the paperwork should not change.

I have not found a good sophisticated financial adviser but I have not looked very hard. Allan Roth is highly regarded and definitely sophisticated. Expensive but you can easily afford him. He is in heavy demand, so it may take a while to get to him.

The Finance Buff will provide you with three recommended advisers who fit your needs. The referral service is paid but inexpensive. No fee if you do not find a suitable candidate. I believe these are all hourly fee types.

White Coat investor has a list of recommended advisers. This is not limited to hourly fee people. Many want to manage your money for AUM fees- not at all what you need. The list is free but there is no customized matching to your needs.

I agree with others that you have all the background you need to be your own sophisticated adviser.

I would avoid alternative investments. Particularly with your reporting requirements and presumably conflict of interest or inside information concerns, you will be safer with broad cap weighted funds. Far more transparent, lower cost, simple taxes.

With index funds the dividends will be almost all qualified, so the tax rate will not be 40%. Please do not get sucked into some tax dodge scheme. You make a lot of money and will pay a lot of tax. Your stock fund will throw off about 2% in dividends and nearly no capital gains distributions. If you use separate funds, not a target date, then any bonds in taxable can be in munis.

You may also want to ask some colleagues about advisers they use. They may know people who are just what you are looking for. If not, nothing lost by asking.
Ah this is exactly what I'm looking for. I'm new to being FINRA regulated (switched jobs). I'll see if they will let me do this. Do you happen to know how your friend was buying the funds (which service)?

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Re: Is a Financial Advisor ever worth it? Should I just stay ROBO? [FINRA regulated employee]

Post by Stinky » Fri Jun 26, 2020 10:01 am

well_hello_ wrote:
Fri Jun 26, 2020 9:33 am
I'm not familiar with what AA stands for?
AA is asset allocation.

Not Alcoholics Anonymous. :D :sharebeer
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Re: Is a Financial Advisor ever worth it? Should I just stay ROBO? [FINRA regulated employee]

Post by afan » Fri Jun 26, 2020 12:21 pm

well_hello_ wrote:
Fri Jun 26, 2020 9:35 am
afan wrote:
Fri Jun 26, 2020 7:19 am
I have a friend who has to clear all transactions. They were able to set up automatic mutual fund purchases with every pay period. The purchases are always in the same funds in the same amounts. This made it possible to get approval for the plan and not have to get repeated approval for each identical purchase. My friend would need specific approval for each sale unless it was regularly scheduled sales of the company stock. For that, they could set up a plan, have it approved, and not need to do each sale as a one off.


You might speak with your compliance people about whether you could do the same. If you go with broad cap weighted mutual funds the only risk of individual trades would be using inside information to speculate on the overall direction of stocks and bonds. If you make the same investments every time, then there is no risk of this.

A target date fund would just cut the number of trades but the paperwork should not change.

I have not found a good sophisticated financial adviser but I have not looked very hard. Allan Roth is highly regarded and definitely sophisticated. Expensive but you can easily afford him. He is in heavy demand, so it may take a while to get to him.

The Finance Buff will provide you with three recommended advisers who fit your needs. The referral service is paid but inexpensive. No fee if you do not find a suitable candidate. I believe these are all hourly fee types.

White Coat investor has a list of recommended advisers. This is not limited to hourly fee people. Many want to manage your money for AUM fees- not at all what you need. The list is free but there is no customized matching to your needs.

I agree with others that you have all the background you need to be your own sophisticated adviser.

I would avoid alternative investments. Particularly with your reporting requirements and presumably conflict of interest or inside information concerns, you will be safer with broad cap weighted funds. Far more transparent, lower cost, simple taxes.

With index funds the dividends will be almost all qualified, so the tax rate will not be 40%. Please do not get sucked into some tax dodge scheme. You make a lot of money and will pay a lot of tax. Your stock fund will throw off about 2% in dividends and nearly no capital gains distributions. If you use separate funds, not a target date, then any bonds in taxable can be in munis.

You may also want to ask some colleagues about advisers they use. They may know people who are just what you are looking for. If not, nothing lost by asking.
Ah this is exactly what I'm looking for. I'm new to being FINRA regulated (switched jobs). I'll see if they will let me do this. Do you happen to know how your friend was buying the funds (which service)?
Had a simple brokerage account at a major firm, dictated by the employer. Had paycheck deposited into the account and set up automatic purchases of mutual funds each pay period. Once cleared by compliance, it seemed easy.
This fried does not speculate in individual stocks. Not sure what they do when bonus money comes in and they have Investment beyond the routine purchases.

First check on what you are allowed to do. That will tell you how many hoops you need to jump through each time. This may not be as difficult as it seems.
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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well_hello_
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Re: Is a Financial Advisor ever worth it? Should I just stay ROBO? [FINRA regulated employee]

Post by well_hello_ » Fri Jun 26, 2020 1:40 pm

afan wrote:
Fri Jun 26, 2020 12:21 pm

Had a simple brokerage account at a major firm, dictated by the employer. Had paycheck deposited into the account and set up automatic purchases of mutual funds each pay period. Once cleared by compliance, it seemed easy.
This fried does not speculate in individual stocks. Not sure what they do when bonus money comes in and they have Investment beyond the routine purchases.

First check on what you are allowed to do. That will tell you how many hoops you need to jump through each time. This may not be as difficult as it seems.
I looked into this today. Thank you so much!

It turns out if I set it up as automatic and I only purchase mutual funds this works perfectly!!! So thrilled, thank you again. Its a little paperwork to set up but I think I should be able to set it and forget it. Now on to figuring out which mutual funds XD.

UnitaryExecutive
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Re: Is a Financial Advisor ever worth it? Should I just stay ROBO? [FINRA regulated employee]

Post by UnitaryExecutive » Fri Jun 26, 2020 10:48 pm

Yes, there are some instances where they are worth it. We have a small percentage of our assets w/ one even though we know that it's generally considered a square thing to do. Here are some reasons why it may make sense:

1. Connections. There are some FAs who have an incredible book of clients. If you need to talk to someone who is an expert in X, you need an attorney, or even you need the perfect job, they know someone.
2. Deal flow. They may have access to certain investments that aren't open to the public. We've had access to IPOs that we wouldn't have gotten on the open market. We're in a couple: an Alkeon growth fund, a Blackstone life science fund where there's no liquidity for 10 years but large returns, and another Blackstone REIT with tax benefits.
3. In some cases, one spouse or another may take care of finances. If they're complex, you have a piece of mind that if you pass away there's someone there you trust to help manage your portfolio.

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Re: Is a Financial Advisor ever worth it? Should I just stay ROBO? [FINRA regulated employee]

Post by babystep » Sat Jun 27, 2020 2:00 am

well_hello_ wrote:
Fri Jun 26, 2020 1:40 pm
afan wrote:
Fri Jun 26, 2020 12:21 pm

Had a simple brokerage account at a major firm, dictated by the employer. Had paycheck deposited into the account and set up automatic purchases of mutual funds each pay period. Once cleared by compliance, it seemed easy.
This fried does not speculate in individual stocks. Not sure what they do when bonus money comes in and they have Investment beyond the routine purchases.

First check on what you are allowed to do. That will tell you how many hoops you need to jump through each time. This may not be as difficult as it seems.
I looked into this today. Thank you so much!

It turns out if I set it up as automatic and I only purchase mutual funds this works perfectly!!! So thrilled, thank you again. Its a little paperwork to set up but I think I should be able to set it and forget it. Now on to figuring out which mutual funds XD.
VTSAX :?:

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well_hello_
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Re: Is a Financial Advisor ever worth it? Should I just stay ROBO? [FINRA regulated employee]

Post by well_hello_ » Sun Jun 28, 2020 4:15 pm

UnitaryExecutive wrote:
Fri Jun 26, 2020 10:48 pm
Yes, there are some instances where they are worth it. We have a small percentage of our assets w/ one even though we know that it's generally considered a square thing to do. Here are some reasons why it may make sense:

1. Connections. There are some FAs who have an incredible book of clients. If you need to talk to someone who is an expert in X, you need an attorney, or even you need the perfect job, they know someone.
2. Deal flow. They may have access to certain investments that aren't open to the public. We've had access to IPOs that we wouldn't have gotten on the open market. We're in a couple: an Alkeon growth fund, a Blackstone life science fund where there's no liquidity for 10 years but large returns, and another Blackstone REIT with tax benefits.
3. In some cases, one spouse or another may take care of finances. If they're complex, you have a piece of mind that if you pass away there's someone there you trust to help manage your portfolio.
Do you have any further advice on how you chose one / what you've really benefitted from?

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well_hello_
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Re: Is a Financial Advisor ever worth it? Should I just stay ROBO? [FINRA regulated employee]

Post by well_hello_ » Sun Jun 28, 2020 4:17 pm

babystep wrote:
Sat Jun 27, 2020 2:00 am
well_hello_ wrote:
Fri Jun 26, 2020 1:40 pm
afan wrote:
Fri Jun 26, 2020 12:21 pm

Had a simple brokerage account at a major firm, dictated by the employer. Had paycheck deposited into the account and set up automatic purchases of mutual funds each pay period. Once cleared by compliance, it seemed easy.
This fried does not speculate in individual stocks. Not sure what they do when bonus money comes in and they have Investment beyond the routine purchases.

First check on what you are allowed to do. That will tell you how many hoops you need to jump through each time. This may not be as difficult as it seems.
I looked into this today. Thank you so much!

It turns out if I set it up as automatic and I only purchase mutual funds this works perfectly!!! So thrilled, thank you again. Its a little paperwork to set up but I think I should be able to set it and forget it. Now on to figuring out which mutual funds XD.
VTSAX :?:
I'm currently at Merrill Edge. II have to go through a request process to get an ok to open a brokerage account. Any chance you have a link to a 3 fund (or whatever) merrill offering of mutual funds?

I've been doing research and I found a bumch of ETFs but not mutual funds that allow automatic purchasing. I may have to go through the account opening process with vanguard bleh.

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Re: Is a Financial Advisor ever worth it? Should I just stay ROBO? [FINRA regulated employee]

Post by Nate79 » Sun Jun 28, 2020 4:28 pm

Etrade might be a good option as many of the Vanguard mutual funds are free to buy and sell and they are a great brokerage with good customer service.

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Merrill mutual fund (trifecta? quad-fecta?) that's comparable to Vanguard

Post by well_hello_ » Sun Jun 28, 2020 4:28 pm

[Thread merged into here, see below. --admin LadyGeek]

Hi All,

I am a FINRA regulated employee but not on the finance side so please bear with me. Because of this, opening a new account means extra paperwork and extra monitoring to make sure my statements are being transferred. I'm currently with Merrill Edge for the status / perks. I also can't purchase ETFs without requesting for each purchase. It's a hassle so I'm looking for mutual funds because that is allowed (I still dont get why but those are the rules).

I've read about the Vanguard Trifecta (and other options). I'm looking for an equivalent Merrill Edge automatic purchasing mutual fund combination that is hopefully more of less the same. Does anyone do this themselves? It will be in my taxable account if that matters and my tax rate is ~40%. I plan to put around 100k in a year for at least ~15+ years without touching it except for an annual rebalance. Set it and forget it. I'm hoping to learn if anyone else does this and better understand the tradeoffs. Aka would I make $100 more a year opening a vanguard account? If so it might not be worth it. If its 1k per year it might be worth it.

Some vanguard mutual funds are sold but not the basic trifecta ones. The posts I've seen for trifecta type plans with Merrill are only etfs.

Edit I was wrong about not funding the funds. Turns out ML UI / search functionality leaves a lot to be desired.
Last edited by well_hello_ on Sun Jun 28, 2020 7:24 pm, edited 1 time in total.

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Re: Merrill mutual fund (trifecta? quad-fecta?) that's comparable to Vanguard

Post by 02nz » Sun Jun 28, 2020 4:33 pm

I'd give them a call and ask about the funds you want. I did a quick check on VTSAX just now and that seems available from ME at $19.95/purchase; not sure what they charge if you set up an automatic investment plan. Since you want to stick with Vanguard mutual funds (presumably for their tax-efficiency), I'd probably just make new purchases at Vanguard rather than paying a fee at ME. Also, I've read threads here where FINRA-regulated employees could only hold a legacy mutual-funds-only account at Vanguard, not the newer brokerage account that Vanguard wants to move everybody to. Not sure if that applies to you or if it's still possible to open a new legacy account.

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Re: Is a Financial Advisor ever worth it? Should I just stay ROBO? [FINRA regulated employee]

Post by babystep » Sun Jun 28, 2020 5:57 pm

well_hello_ wrote:
Sun Jun 28, 2020 4:17 pm
babystep wrote:
Sat Jun 27, 2020 2:00 am
well_hello_ wrote:
Fri Jun 26, 2020 1:40 pm
afan wrote:
Fri Jun 26, 2020 12:21 pm

Had a simple brokerage account at a major firm, dictated by the employer. Had paycheck deposited into the account and set up automatic purchases of mutual funds each pay period. Once cleared by compliance, it seemed easy.
This fried does not speculate in individual stocks. Not sure what they do when bonus money comes in and they have Investment beyond the routine purchases.

First check on what you are allowed to do. That will tell you how many hoops you need to jump through each time. This may not be as difficult as it seems.
I looked into this today. Thank you so much!

It turns out if I set it up as automatic and I only purchase mutual funds this works perfectly!!! So thrilled, thank you again. Its a little paperwork to set up but I think I should be able to set it and forget it. Now on to figuring out which mutual funds XD.
VTSAX :?:
I'm currently at Merrill Edge. II have to go through a request process to get an ok to open a brokerage account. Any chance you have a link to a 3 fund (or whatever) merrill offering of mutual funds?

I've been doing research and I found a bumch of ETFs but not mutual funds that allow automatic purchasing. I may have to go through the account opening process with vanguard bleh.
Go to Merril Edge -> Trade -> Mutual Funds -> Automatic Investment Plan -> Select a Mutual Fund -> Mutual Funds Screenner.
You can find VTSAX here. If you want to open a new account at Vanguard that would work as well.

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Re: Is a Financial Advisor ever worth it? Should I just stay ROBO? [FINRA regulated employee]

Post by LadyGeek » Sun Jun 28, 2020 6:49 pm

well_hello_, and Welcome! In order to give appropriate advice, it's best to keep all the information in one spot I merged your update back into your first thread. The combined thread is in the Personal Investments forum.

If you have any questions, ask them here.
Wiki To some, the glass is half full. To others, the glass is half empty. To an engineer, it's twice the size it needs to be.

Topic Author
well_hello_
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Re: Is a Financial Advisor ever worth it? Should I just stay ROBO? [FINRA regulated employee]

Post by well_hello_ » Sun Jun 28, 2020 7:22 pm

babystep wrote:
Sun Jun 28, 2020 5:57 pm
well_hello_ wrote:
Sun Jun 28, 2020 4:17 pm
babystep wrote:
Sat Jun 27, 2020 2:00 am
well_hello_ wrote:
Fri Jun 26, 2020 1:40 pm
afan wrote:
Fri Jun 26, 2020 12:21 pm

Had a simple brokerage account at a major firm, dictated by the employer. Had paycheck deposited into the account and set up automatic purchases of mutual funds each pay period. Once cleared by compliance, it seemed easy.
This fried does not speculate in individual stocks. Not sure what they do when bonus money comes in and they have Investment beyond the routine purchases.

First check on what you are allowed to do. That will tell you how many hoops you need to jump through each time. This may not be as difficult as it seems.
I looked into this today. Thank you so much!

It turns out if I set it up as automatic and I only purchase mutual funds this works perfectly!!! So thrilled, thank you again. Its a little paperwork to set up but I think I should be able to set it and forget it. Now on to figuring out which mutual funds XD.
VTSAX :?:
I'm currently at Merrill Edge. II have to go through a request process to get an ok to open a brokerage account. Any chance you have a link to a 3 fund (or whatever) merrill offering of mutual funds?

I've been doing research and I found a bumch of ETFs but not mutual funds that allow automatic purchasing. I may have to go through the account opening process with vanguard bleh.
Go to Merril Edge -> Trade -> Mutual Funds -> Automatic Investment Plan -> Select a Mutual Fund -> Mutual Funds Screenner.
You can find VTSAX here. If you want to open a new account at Vanguard that would work as well.
Ugh thank you. I was confused because when I tried to search VTSAX in the screener no results came up. But if you filter to vanguard group and then page over it's there.

Do you happen to know if there are any differences vs buying with Vanguard? I get the free trades so buyings should be the same but other than that? It's already admiral shares.

Topic Author
well_hello_
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Re: Is a Financial Advisor ever worth it? Should I just stay ROBO? [FINRA regulated employee]

Post by well_hello_ » Sun Jun 28, 2020 7:23 pm

LadyGeek wrote:
Sun Jun 28, 2020 6:49 pm
well_hello_, and Welcome! In order to give appropriate advice, it's best to keep all the information in one spot I merged your update back into your first thread. The combined thread is in the Personal Investments forum.

If you have any questions, ask them here.
Thank you I wasnt sure if I should separate the general advice from fund selection.

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Re: Is a Financial Advisor ever worth it? Should I just stay ROBO? [FINRA regulated employee]

Post by babystep » Sun Jun 28, 2020 10:56 pm

well_hello_ wrote:
Sun Jun 28, 2020 7:22 pm
babystep wrote:
Sun Jun 28, 2020 5:57 pm
well_hello_ wrote:
Sun Jun 28, 2020 4:17 pm
babystep wrote:
Sat Jun 27, 2020 2:00 am
well_hello_ wrote:
Fri Jun 26, 2020 1:40 pm


I looked into this today. Thank you so much!

It turns out if I set it up as automatic and I only purchase mutual funds this works perfectly!!! So thrilled, thank you again. Its a little paperwork to set up but I think I should be able to set it and forget it. Now on to figuring out which mutual funds XD.
VTSAX :?:
I'm currently at Merrill Edge. II have to go through a request process to get an ok to open a brokerage account. Any chance you have a link to a 3 fund (or whatever) merrill offering of mutual funds?

I've been doing research and I found a bumch of ETFs but not mutual funds that allow automatic purchasing. I may have to go through the account opening process with vanguard bleh.
Go to Merril Edge -> Trade -> Mutual Funds -> Automatic Investment Plan -> Select a Mutual Fund -> Mutual Funds Screenner.
You can find VTSAX here. If you want to open a new account at Vanguard that would work as well.
Ugh thank you. I was confused because when I tried to search VTSAX in the screener no results came up. But if you filter to vanguard group and then page over it's there.

Do you happen to know if there are any differences vs buying with Vanguard? I get the free trades so buyings should be the same but other than that? It's already admiral shares.
Holding at any brokerage shouldn't make a difference in terms of ownership of the asset.
Other considerations might be multiple accounts to manage, customer support, user interface, etc.

UnitaryExecutive
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Re: Is a Financial Advisor ever worth it? Should I just stay ROBO? [FINRA regulated employee]

Post by UnitaryExecutive » Mon Jun 29, 2020 1:40 am

Do you have any further advice on how you chose one / what you've really benefitted from?
Ours was through a referral. The fact that the person who referred us (he's brilliant) had a FA made me question all prior assumptions I had (that they just take a vig to rebalance and you're better off indexing). Most FAs are pretty bad and it's a really personal choice- the FA has to be aligned with your goals, bring a perspective that adds value, etc.

For us, the real benefits are deal flow (previously unaccessible hedge funds and IPOs) and connections. The person we use has an unbelievable rolodex of clients and connections. We've been connected to real estate attorneys, accountants, and medical experts (we had questions on whether to store cord blood). In February when it was obvious covid19 was serious and the market wasn't pricing it in yet, we called him to sell and he mentioned that we should procure chloroquine if we could and we got some just in case. He has also gotten folks executive-level jobs in the past by making a couple phone calls.

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