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I don't think the advice is bad, but you just don't like the advisors approach and maybe the fees. Gernerally speaking the American Funds are well managed and have a good reputation. The state of VA uses them as an option on their 529 plan which has a high ranking by morning star. I would revisit the conversation with the advisor again and tell him what you are telling us. If you need a fee only planner in Virginia I can refer you to someone.
Now the Motley FOOLs value individuals picked stocks.. most people cannot handle the REAL research needed to do this. Hence mutual funds with LOW loads, like Vanguard, Fidelity, American Century.
Now, personally, I invest in the stock market via stocks, mutual funds and I also invest in Real Estate (But only buy properties that are undervalued and with LOTS of research.)
These are good starting points for you.
Good luck and personally, I hope the guy you went with will man up and give you your money back without socking your family for his "work"
file a complaint with the board that certifies this broker and with his agency and be prepared to defend your excellent points that part of the "required" information was never presented to you point by point--
just the threat of doing it might be enough to get some of the cost of doing business with this guy
while American funds are good funds--there was no reason to change from excellent, low cost funds you were in except to gen up fees for your advisor and his company...
there is also nothing wrong with term insurance in/of itself--term is usually considered a value-product for people with small children who have to protect an income stream--
you said that your husband is an entrepeneur with an unstable income stream--
I am sure without that income, your family would be hurting because most people can't afford to replace 50% of the money they are used to living on
but there are options for doing that when you have a small business
the best thing our second advisor did--after we broke off relationship with commission based advisor that really did not seem to be geared to quality investment advice--
we ended up with more money than we put in only because we had a managed commodity fund that tripled the investment--
he also put us into some private REITS that we can't sell that are millstones and other investments that were borderline successful when the market was avg 11% a year...
our advisor for past 5 or so years is CPA/CFA==partner in firm that has done our business and personal taxes for almost 20 yrs--excellent CPA firm in our area
I don't always agree with what this guy wants to move to or when but my husband trusts him...
we managed to recover most of what we lost in the market fall--and we stayed invested the entire time--
the best thing he did was show my husband how to take advantage of tax regulations to invest large amount of money in his LLC/sole-proprietorship 401K over the past 3-4 yrs...
it helps greatly at tax time as we usually get a rebate vs paying--and we build up his 401K significantly
so even though we pay what I think is a lot of money--1% management fee--
he is available really whenever we want to meet with him--
he went with us to initial meeting with attorney he recommended because we wanted to make new will and do some planning with documents like living will and power of attorney--
both of them told us NOT to use a bank or even his financial/CPA firm as executor of the estate--
technically a CPA has a fiduciary duty to YOU as client not to do something that is against your interests--but there are always qualifications/povs about what is "really" for/against your interests...
if the advice makes money most people are happy...if the advice loses them money--they are unhappy...
if you want a site that gives advice/info from someone with a public track record--I will PM you the site for financial advisor who wrote investment colum for Dallas Morning News for like 25 yrs--
good info on how to invest for yourself if you don't want to pay advisor fees--and point of view that way to best increase your money is to use low-cost, index type funds since most managed funds fall below their sector avg for profitability in any give range of years...
Now the Motley FOOLs value individuals picked stocks.. most people cannot handle the REAL research needed to do this. Hence mutual funds with LOW loads, like Vanguard, Fidelity, American Century.
Now, personally, I invest in the stock market via stocks, mutual funds and I also invest in Real Estate (But only buy properties that are undervalued and with LOTS of research.)
These are good starting points for you.
Good luck and personally, I hope the guy you went with will man up and give you your money back without socking your family for his "work"
its not just about leaving money for your heirs that makes tax planning important.
if i leave my 401k and traditional iras to my wife we have no idea how much her partner uncle sam will take as she withdraws money to live .but by taking some of that ira money and leveraging it into nice clean tax free life insurance for the value of the ira and 401k dough i can leave her totaly tax free money.
whatever is left over from the ira's at her passing the kids will get. at least that tax infested money thats left will leave the kids lifetime to pay the taxes due on it and not my wifes.
How on earth do you save $550k in retirement, have no debt (not even a mortgage), bring in $200k/yr and get fooled so badly by this "financial advisor?" I figure that someone who can be so financially well off at the incredibly early age of late 30's would not be able to be tricked so easily.
There are many resources through Vanguard that could have given you better advice for free than what you got from that financial adviser. Oh yeah, hint-hint, you are VERY well off compared to most people when you have $550k in retirement, bring in $200k/year, and have no mortgage or debt. It doesn't take a genius to tell you that someone in your financial situation can meet almost any financial goal. Heck, just saving a mere 5% of your income in a 529, you could pay for your 3 year old's college at even the most expensive of universities. You could even pay for their grad school if they want to go. Unless if you decide to buy a new car each year, eat five star dining every night, and go on vacation every other week you should be just fine financially.
How on earth do you save $550k in retirement, have no debt (not even a mortgage), bring in $200k/yr and get fooled so badly by this "financial advisor?"
A couple of factors:
1) he was very likable and appeared to be up front with how he makes his money, especially when we asked. So it was not the fact that we minded paying him commission if he delivered a service. We minded that he was paid for not delivering what we told him we needed (A PLAN!)
2) he did not bring out all the forms until the 3rd hour of a overly long 3 hour meeting, and by then, toddler was ripping around the house and we were both exhausted from the long meeting.
In retrospect, we should have demanded that he leave the forms with us and we'd look at it before we signed it. What he'd done was he filled out the first pages, verbally described what we would be signing [but it wasn't after we received the mailed hard copies of these forms, that we saw he skipped about 2 pages of questions he should have asked us, that would inform us of WHEN AND HOW the commissions were taking out], then opened to the last signing page and asked us to sign the papers. By then, it was dinnertime, spouse was on the phone in midst of a business call while trying to sign different documents, and I was ready to kick this guy out so I could eat.
We thought that we were signing these forms to OPEN UP an account with this broker. Not for automatic asset transfer from our existing accounts. He was unclear, and we were ignorant with the process of working with these types of professionals.
I'm not too proud to admit that we paid the stupid tax on this one.
However, I'm also happy to report that I was at least smart enough to take the steps to reverse the tide, including recovering 90% of the commissions, by dealing directly with American Funds and explaining to them what happened. They told me this broker should have given me a statement of intent that would break down all the up front costs, which I had never heard of. They did suggest that I speak with the broker's manager - not the broker - because this is not the right way the broker should have done this. So we lost a good many hours and maybe $250 with this guy. Better than the $10K we could have lost if we were any more stupid.
For what it's worth, American Funds people have been nothing but responsive and considerate in this situation. The broker? Not so much.
Edited to Add:
We have more complex financial goals than only retirement - we also had some generational planning goals, hence, we didn't feel ready to do this ourselves. Otherwise, I understand why you would wonder we needed help from the likes of a financial planner. We avoided working with one until now, we had been solicited for years.
P.S. and the way we were able to save this amount is that we didn't upgrade our lifestyle when our income increased, and we lived in a small apartment for years. one of us still drive a 20 year car owned from high school years. we certainly didn't start out making this amount (and one of us had student loans).
1) he was very likable and appeared to be up front with how he makes his money, especially when we asked. So it was not the fact that we minded paying him commission if he delivered a service. We minded that he was paid for not delivering what we told him we needed (A PLAN!)
2) he did not bring out all the forms until the 3rd hour of a overly long 3 hour meeting, and by then, toddler was ripping around the house and we were both exhausted from the long meeting.
In retrospect, we should have demanded that he leave the forms with us and we'd look at it before we signed it. What he'd done was he filled out the first pages, verbally described what we would be signing [but it wasn't after we received the mailed hard copies of these forms, that we saw he skipped about 2 pages of questions he should have asked us, that would inform us of WHEN AND HOW the commissions were taking out], then opened to the last signing page and asked us to sign the papers. By then, it was dinnertime, spouse was on the phone in midst of a business call while trying to sign different documents, and I was ready to kick this guy out so I could eat.
We thought that we were signing these forms to OPEN UP an account with this broker. Not for automatic asset transfer from our existing accounts. He was unclear, and we were ignorant with the process of working with these types of professionals.
I'm not too proud to admit that we paid the stupid tax on this one.
However, I'm also happy to report that I was at least smart enough to take the steps to reverse the tide, including recovering 90% of the commissions, by dealing directly with American Funds and explaining to them what happened. They told me this broker should have given me a statement of intent that would break down all the up front costs, which I had never heard of. They did suggest that I speak with the broker's manager - not the broker - because this is not the right way the broker should have done this. So we lost a good many hours and maybe $250 with this guy. Better than the $10K we could have lost if we were any more stupid.
For what it's worth, American Funds people have been nothing but responsive and considerate in this situation. The broker? Not so much.
Edited to Add:
We have more complex financial goals than only retirement - we also had some generational planning goals, hence, we didn't feel ready to do this ourselves. Otherwise, I understand why you would wonder we needed help from the likes of a financial planner. We avoided working with one until now, we had been solicited for years.
Congrats on all you have acheived in life so far.
If I had 500k on the line I would have met him without toddlers running around. This is afterall yours , your spouse and your toddlers future riding on this.
The fact that he rushed you through and * told * you what the papers said instead of showing you/ seeing it/ in writing is disturbing...
An advisor that wants comission or control is not going to be a rude gruff tyrant. He is going to be the nice guy. Now please be good and give him control of your retirement ( you did - it worked ) Thankfully you can rescind and get everything back and go in a new direction.
Maybe he saw he was wearing you down , a crying toddler pulling at your pants , ripping up the livingroom out of sheer boredom ..
Next time , alone , no kids , his office . ( let me correct that, not HIS office , not him . ...Something does not smell right with this guy )
and acting more like a broker of products and services he earns commissions on.
Thats the main problem with investment advisors. There is so much money to be made on commissions that most just sell out for them. You are much better off reading books on financial planning.
Thats the main problem with investment advisors. There is so much money to be made on commissions that most just sell out for them. You are much better off reading books on financial planning.
+1
The wealth of free quality knowledge available for free from places such as Vanguard or credible websites like motelyfool, CNBC, etc. makes financial advisers not necessary for many individuals who are willing to put in the time to learn.
Also, jstriding, you seem like an intelligent individual who was just caught off guard. It's very easy to be caught of guard with these things. But, considering you have the foresight to save and not upgrade your lifestyle, I think you have the discipline to research this information at a place such as Barnes and Noble, a good financial planning website, or Vanguard (since you have funds there). Best of luck with everything!!
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