Questions to ask Financial Advisors we interview before retiring (supplement, community, inheritance)
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Probably no brainer but make sure they have a fiduciary responsibility to you. And really understand the goals you want to meet and how the advisor plans to achieve them.
Its amaxing how many people dont know the no brainer fiduciary question.
If they aren't fiduciary the conversation stops.
Adios.
Like the others have said you need to know what you want to do and the timing. You also need to know how much you have saved, where and how it is invested, and how much money you currently spend to fund your accustomed life style.
I have found the initial meetings with Financial Planners to be more personally invasive than a comprehensive medical examination with a Doctor whom I have never met before.
I like to ask two questions when a FA is wanting me to invest with him.
1. "What should I do with my investments/401K if the stock market drops again like in 08?"
Usually, the answer is: "Stay the course, don't try to time the market. Ride it out."
My next question:
2. "Is that what you did?"
Frequently this is followed by a long silence.
If that's NOT what the advisor did, then either he's a fool, or a genius. If he's a fool, there's of course no reason to rely on his advice. And if he's a genius, he likely has more rewarding and remunerative career-options, than being a financial-advisor.
Of 1000 people who didn't "stay the course", I'd wager that 999 are fools.
to be honest , to get the most out of an adviser and to know if he is good requires you to do your homework and learn a whole lot .
why do you think the best athletes have coaches ?
these athletes already have the skills , they already know what they need to know , what they need is someone to organize and harness all these things in to a strategy .
how did i learn who is good and bad ? i read the research of top retirement researchers like kices ,dr pfau , bernstein , blanchette and others .
i became familiar with modern thinking and teaching . i may not understand it all or know how to build my own plan with it , but when i mention points to an adviser and he looks at me like a deer in a headlight i know he ain't the guy.
you cannot possibly know if someone is a knowledgeable adviser or not unless you yourself have enough knowledge to grade them .
Its amaxing how many people dont know the no brainer fiduciary question.
If they aren't fiduciary the conversation stops.
Adios.
The fiduciary question by itself is good but we all still need to be careful. The fiduciary rule doesn't require the advisor to cut their own throat. So, for example, they can recommend one S&P 500 fund and comply with the fundamental fiduciary rule. But, as we all know, there are many dozens of S&P 500 funds with expense ratios that vary from the extreme low to very expensive. I've read in an article that the Fiduciary Rule doesn't require the advisor to recommend the lowest expense ratio S&P 500 fund. I just looked for the article but didn't find it.
I had had a fiduciary advisor in the late 80s who fulfilled all the other criteria that was important, and he put us in an SEI S&P 500 fund. The late 80s was a different time, and I had less practical knowledge. SEI funds are good funds, and their core competency is extensive reporting to advisors who each have dozens or hundreds of clients. It makes the life of the advisor easier, and they provide tools and accounting services and other back-office software and services to help the advisor run their business. The downside is that the SEI funds incur relatively high expense ratios. If I knew then what I know now, I would have insisted on a low-cost fund to the extent such things were available at the time. I don't know how the ER of the SEI funds compared to other retail funds back in the 80s, but today they are way too expensive by comparison to modern low-cost funds.
By the time I wised up, if I were to move my money from high ER SEI S&P 500 fund to a modern low-cost fund, I would incur a very large tax bill for the gains I've racked up over the decades.
Last edited by SportyandMisty; 01-08-2018 at 08:11 AM..
keep in mind MOST planners today SUCK at the 2nd 1/2 of the game . they basically spent their years following the baby boomers .
most of their knowledge and experience and even training is in the accumulation stage . most are way behind in know how to best plot out the 2nd half of the game which is the decumulation stage .
most know little about meshing social security , aca subsidies , medicare premium levels and rmds with your needs and resources .
most fee only know even less about putting good low cost integrated strategies together meshing tax free life insurance , immediate annuities and your own investing since they lack the training and certification in many helpful products .
finding a skilled adviser in the 2nd half of the game i found was like looking for hay in a hay stack .
From my my past (limited) experiences with Morgan Stanley, I would have my money out of their within about an hour. I found that their approach to managing money is to ensure that they hold on as much as possible.
I would agree with most that using a fee-based adviser is probably the best approach. You do have to interview several and understand exactly what their approach will be. You also have to make sure that they are a fiduciary.
Top athletes need coaches, because they need every imaginable competitive edge, including access to the latest in exercise-science, nutrition and so forth. And the coaches presumably also act as secretaries and personal assistants, as social-brokers and agents. But does an amateur athlete need a coach? I mean the sort of athlete who qualifies for a prestigious marathon, but finishes no better than the middle of the pack, or maybe even in the second tenth. For such an athlete, a coach would be an expensive indulgence. If a runner can finish the Boston Marathon in 3:00:00 without a coach, but after much coaching, improves to 2:50:00 – what’s the point?
If I had say $1B, I’d also probably benefit from a team of financial “coaches”, be it tax-preparation or investment opportunities or selecting best piers for parking my yachts. But I’d also probably not be cooking my own meals or doing my own laundry – activities that I presently do badly, but which nevertheless I aim to do myself. This is because at my present level, the opportunity-cost, in doing my own laundry etc., isn’t particularly high. Following the runner-analogy, if I could already finish a marathon in 2:20:00, but a coach got me to improve to 2:10:00 – the same 10-minute improvement as in the previous example – that would be a huge benefit, and definitely worth the expense of a coach.
Also, Mathjak mentioned the two stages of portfolio management: accumulation, and decumulation. There’s a potential third stage, which unfortunately receives precious little attention: what I call the stasis-stage, where one has completed saving for retirement, but remains decades away from traditional retirement-age. Thus, one keeps working, neither adding to investments, nor drawing from them. This stage is rarely mentioned, because it’s not lucrative for the financial-advise industry. But for some people, it might comprise decades, possibly being longer than the decumulation stage.
i would say decades away from retirement is still the accumulation stage . i can't imagine making changes that far out . why ? decades away there was no reason i would not be 100% equities as long as volatility was not an issue . but certainly whatever i was doing up to that point would still be all systems go .
Open etrade account or td ameritrade and transfer all of your 401K over.
Manage yourself and invest in low cost index funds like: VTI, VNIX, ITOT, SCHB and let it ride. Those funds have costs of only .03 to .04%. It has been proven time and time again that no financial advisor can beat those index returns and those that do, only do so temporarily and are very few and far between.
It is their fees and costs that prevent you from really making any money. The advisors put you in funds that have 1 to 1.50 percent fees and loads and make commissions.
FYI all financial advisors have their money in low cost index funds too because they are not stupid with their money just greedy with yours (IMO).
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