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I've had a financial planner, who does not have clients but makes his money by giving classes, tell me that it is never smart to hire a financial planner. They rarely actually make more money for you than they cost you. His advice is to get educated and make your own investments directly. There is tons of financial planning information available for free on the net and in books.
Reps to you. Better to get educated then hire someone else to look after your money and get paid only when they "spend" your money.
I had a personal finance planner - once - when I had my first job and was not fiscally savy. This guy sucked my money and all I got was front-loaded funds (that performed worse than S&P in both up and down times!), some overpriced life insurance etc. I got some basic education (this was well before my MBA) via a couple of months of part-time reading and have never looked back since. I maintain a portfolio consistent with my risk and this is the most important single thing one can do. I have low expense funds in the mix. I do not have time so I do not chase stocks so I limit that to 3-5% of my portfolio. Taxes are complicated for me so I outsource that part out - $300/year expense. Overall, I have performed very close to S&P500 - not surprising given my fund mix. Statistically, this portfolio will beat 70-80% of the actively managed funds and I am ok with that. Suggest you buy a MS Money or Quicken for the lifetime planner and for quickly seeing the protfolio performance - it really is not that big a deal once you are set up. As the f/planners privately joke - their job is to convert useless client equity to useful personal commissions - so buyer beware
I had a personal finance planner - once - when I had my first job and was not fiscally savy. This guy sucked my money and all I got was front-loaded funds (that performed worse than S&P in both up and down times!), some overpriced life insurance etc.
Let me guess: he was with "First Command" (formerly known as USPA/IRA)? I did the same thing and learned the hard way. They are horrible.
<snip> This guy sucked my money and all I got was front-loaded funds (that performed worse than S&P in both up and down times!), some overpriced life insurance etc. <snip> As the f/planners privately joke - their job is to convert useless client equity to useful personal commissions - so buyer beware
Just because a person has a Series 63 and a state insurance license doesn't make them a financial planner. A person that sells front-loaded funds has a commission based income and his/her judgement is always suspect. Be careful however, lumping all financial planners into the same category. That is stereotyping and is wrong. About 1% actually have the education and knowledge to help a person make wise financial decisions. A fee based advisor who will commit to a fiduciary relationship will have your best interest at heart. Their fee is usually a percentage of the assets under management. Assets go up, fee goes up and vice versa.
If someone wants to invest the time, the effort and money into learning how to do portfolio analysis and investment planning, they may have the knowledge to make investment decisions. As far as using the internet, etc., if you know what to look for and understand how to apply the data, then the net is a great resource. The internet is also a great source of conflicting data. CNNMoney, CNBC, Yahoo, Google, Morningstar, etc., all have 'experts' who do not agree on what tomorrow will bring much less what investments you should have in your portfolio today. If you have no clue what the data means or how it relates to making portfolio decisions, then its worthless.
Using an advisor is simply contracting out a service. Think of a Investment Advisor like a Jiffy Lube. If you have the tools, the skill, the time, the wherewithall to change your own oil then you should do so. Same with making bread. Easy enough to do, but time consuming. Same with using a CPA for taxes. You can contract it out for a fee or buy TurboTax and do it yourself. It's the value added that determines if contracting or doing it yourself is best.
If you don't have the skill then contract out the service. A lot of folks have the knowledge but not the time. For them it is easier to contract out the research and analysis. All they want are options and recommendations. They make their own decisions. Other have neither the time or knowledge in which case they should pick an advisor they trust and rely on his/her expertise. In the Investing tab, someone is asking for help in their 401(k) planning. Point made.
Unfortunately, several of the folks here chose to broad brush an industry based on their own very narrowly focused experiences. To employ an advisor or not is not based on the amount of money. It is based on your level of comfort of doing it yourself. My 2-cts worth.
I am actually looking for a planner since I am going to be administering a trust soon and have a complex situation ............ someone who does not make money on trades but lays out a strategy.
What I am finding is a wide range - I think it is kind of like going to a doctor -- there is a lot of mediocrity out there and some real good.
I am actually looking for a planner since I am going to be administering a trust soon and have a complex situation ............ someone who does not make money on trades but lays out a strategy..
You might think about using a team approach consisting of a financial advisor (a fee based person), a lawyer knowledgeable in estate law and a CPA qualified in estate tax issues. These are three distinct areas requiring three distinct skill sets. You then review the options and recommendations and make decisions based on the advice. If you find it is difficult to work with a team member, replace them.
Quote:
Originally Posted by grannynancy
What I am finding is a wide range - I think it is kind of like going to a doctor -- there is a lot of mediocrity out there and some real good.
There is a lot of mediocrity. Interview until you find someone you feel comfortable with and who will commit to a fee based fiduciary relationship. Get a fee structure up front and know how they make their money. This will give you a fair idea of how much the annual cost will be for their services. Have them explain their investment strategy. The investment recommendations must be consistent with the goals of the trust. Do a Google on them and use the FINRA site to research for past problems. Run if any one dances around providing a full disclousure.
dsnellen - excellent advice. People throw around the term "financial planner" all the time and have no idea what it means. Usually it's the "planner" himself!
Anyone who is going to use a rep to buy funds (when you should really be going the no load route yourself) or hiring an actual planner for an hourly fee - PLEASE go to finra.org and do a broker check. It will tell you if the person you're considering has a criminal record or has had any customer complaints.
Whether you get help from hiring an advisor, or if you get help by taking courses and learning how to handle money; it does not matter.
If you are not in control of your money [and obviously paying taxes because of your lack]; then get help.
Income taxes are the nation's method of taking money from those who do not know how to handle money themselves. Basically like a fine. A penalty for ignorance.
Income taxes are the nation's method of taking money from those who do not know how to handle money themselves. Basically like a fine. A penalty for ignorance.
Beekeeper - you can't really believe this. Without taxes the government is unable to provide basic services for its citizens. This includes interstates, the miliitary, social security, etc. Unless your are a former or current senator, all US citizens will pay a tax on their earning regardless of how well they manage their money.
There are however, many legal ways of reducing taxes while increasing individual net worth. The primary method is via a business entity. You could purchase/start a business. This is a good strategy for a couple where the husband earns a fair salary and the wife is at home and bored. Simply buy a flower shop, card shop, dress shop, etc., anything that might interest the wife and have her run it. It gets her out of the house and provides a tax shelter for the husband's income.
The bottomline is that to deduct an expense you must first spend the money (depreciation of assets is another toipic). But you can spend that money increasing the value of an entity which might be sold later for an increased value. Capital gains an issue, but can be covered.
The other thought is that you can spend .66 cents to save .34 cents. Or pay .34 cents to keep the remaining .66 cents. Taxes and death must be dealth with. My 2-cts worth.
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