Typical Financial Advisor Fees.

[JDawg1536]

What EOM said.

Some horrible advice and misconceptions about planners in this thread. A good planner offers a lot more than just "taking your money and making themselves money." If your mom has a good chunk of money and is about to retire, things are a little more in depth than "just throw it in an ETF."

And yeah, you could do all that research on your own, but a Certified Financial Planner has years of experience and has spent hundreds of additional hours in the classroom and training. You could also teach yourself to rebuild your own transmission, fly your own plane, and represent yourself in court.

Meet with a few advisers and find a good one you're comfortable with.

 

[DaveSimmons]

If you want an immediate annuity, you can buy it with a single payment and no ongoing kickbacks. If you want stocks and bonds, you can buy low-expense index funds and ETFs with an annual expense ratio of 0.1% or less.

If you are paying a financial adviser even 1% a year you are losing $10,000 on a $1 million retirement nest egg. If you let them put your assets into high expense ratio funds you're losing another $10,000-40,000.

If you can find an adviser who will accept a one-time fee to tell you what funds you should get at Vanguard, Schwab, or Fidelity not funds that will pay them a kickback then great. Otherwise you're throwing away $10-50,000 or more a year in extra fees.

I think Schwab offers this service, I haven't checked whether Vanguard or Fidelity offers a service or automated tool.

Having someone you can call any time sounds nice, but $50,000 a year nice?

Edit: to be more clear, I'd only recommend paying someone to give you a shopping list of low-expense funds, that you buy yourself after setting up your own accounts with Vanguard, Schwab or Fidelity. They tell you what to do then collect their single one-time flat fee. No commissions, no lousy house funds, no giving them any control over your money. If you need ongoing help it should be like with a CPA or lawyer -- hourly rate or another flat fee, never x% of your assets.

A CPA doesn't get 3% of your income to do your taxes, why should a CFP rake off that much for a few hours of work?

 

[John Connor]

Get a safe, buy gold bars, problem solved.

Anyone look a the stock market recently with the China crap going on? The world farts and all hell breaks lose.

 

[TheGardener]

It sounds like A shares vs C shares when investing. A shares are about 4-5% one time payment upfront when buying shares. C shares are no fee for buying, but a 1% annual fee. For any holdings over 5 years, A shares make more sense, short term can take advantage of C shares.

I have a financial adviser that gets his cut out of that 5%. I have my Life insurance, IRA, Rollover IRA, some stocks, bonds, and several college funds as well as my wife's IRA through him. He's available to answer questions anytime i call with various questions and he does do what's right for me, not for him. He always takes time to thorough answer my questions and not just shluff me off with a quick answer. It's why it sometimes takes him a bit of time to return calls since i know he's doing the same with another client. It's a value-add service and for now while I've got lots of things in flux i think it's worth it.

I bet your FA sends you a card every Christmas.

 

[Jeff7]

Get a safe, buy gold bars, problem solved.

Anyone look a the stock market recently with the China crap going on? The world farts and all hell breaks lose.

Good thing the value of gold is so darned stable.



:sneaky:

 

[JDawg1536]

If you are paying a financial adviser even 1% a year you are losing $10,000 on a $1 million retirement nest egg. If you let them put your assets into high expense ratio funds you're losing another $10,000-40,000.

If you can find an adviser who will accept a one-time fee to tell you what funds you should get at Vanguard, Schwab, or Fidelity not funds that will pay them a kickback then great. Otherwise you're throwing away $10-50,000 or more a year in extra fees.


Having someone you can call any time sounds nice, but $50,000 a year nice?

A CPA doesn't get 3% of your income to do your taxes, why should a CFP rake off that much for a few hours of work?

You are grossly misinformed.

 

[DaveSimmons]

You are grossly misinformed.

Please explain in detail. I have no need for a FA / CFP myself but perhaps you can offer reasons why I might recommend them to others despite the high fees.

Otherwise I'll stick with the above, posted again below:

Edit: to be more clear, I'd only recommend paying someone to give you a shopping list of low-expense funds, that you buy yourself after setting up your own accounts with Vanguard, Schwab or Fidelity. They tell you what to do then collect their single one-time flat fee. No commissions, no lousy house funds, no giving them any control over your money. If you need ongoing help it should be like with a CPA or lawyer -- hourly rate or another flat fee, never x% of your assets.

 

[EOM]

If you want an immediate annuity, you can buy it with a single payment and no ongoing kickbacks. If you want stocks and bonds, you can buy low-expense index funds and ETFs with an annual expense ratio of 0.1% or less.

If you are paying a financial adviser even 1% a year you are losing $10,000 on a $1 million retirement nest egg. If you let them put your assets into high expense ratio funds you're losing another $10,000-40,000.

If you can find an adviser who will accept a one-time fee to tell you what funds you should get at Vanguard, Schwab, or Fidelity not funds that will pay them a kickback then great. Otherwise you're throwing away $10-50,000 or more a year in extra fees.

Mine'll give me advice about my 401k, which isn't through him, so he receives no compensation for that. My mom is a couple of years away from retirement and had stuff ALL OVER THE PLACE. A $5000 in a fund that earns no interest, another $5000 in already mature bonds, etc.... he helped her bring it all together and get some of it into tax shelters and gave her good advice about the penalties of dipping into Social security and other funds early, which she was originally planning to do, etc.
he helped my brother realign his retirement funds a bit too.

I think Schwab offers this service, I haven't checked whether Vanguard or Fidelity offers a service or automated tool.

Having someone you can call any time sounds nice, but $50,000 a year nice?

Edit: to be more clear, I'd only recommend paying someone to give you a shopping list of low-expense funds, that you buy yourself after setting up your own accounts with Vanguard, Schwab or Fidelity. They tell you what to do then collect their single one-time flat fee. No commissions, no lousy house funds, no giving them any control over your money. If you need ongoing help it should be like with a CPA or lawyer -- hourly rate or another flat fee, never x% of your assets.

A CPA doesn't get 3% of your income to do your taxes, why should a CFP rake off that much for a few hours of work?

 

[DaveSimmons]

Mine'll give me advice about my 401k, which isn't through him, so he receives no compensation for that. My mom is a couple of years away from retirement and had stuff ALL OVER THE PLACE. A $5000 in a fund that earns no interest, another $5000 in already mature bonds, etc.... he helped her bring it all together and get some of it into tax shelters and gave her good advice about the penalties of dipping into Social security and other funds early, which she was originally planning to do, etc.
he helped my brother realign his retirement funds a bit too.

I'd be fine with someone paying $20-$100 an hour for professional advice like that, but you're paying much more:

A shares are about 4-5% one time payment upfront when buying shares. C shares are no fee for buying, but a 1% annual fee. For any holdings over 5 years, A shares make more sense, short term can take advantage of C shares.

I have a financial adviser that gets his cut out of that 5%.

Also, are you sure the A shares have no expense ratio or maintenance fees? It seems unlikely that the 5% is all you'll ever pay, though that is 27 times the annual expense ratio of a Vanguard Target fund.

 

[Blackjack200]

Please explain in detail. I have no need for a FA / CFP myself but perhaps you can offer reasons why I might recommend them to others despite the high fees.

Otherwise I'll stick with the above, posted again below:

Edit: to be more clear, I'd only recommend paying someone to give you a shopping list of low-expense funds, that you buy yourself after setting up your own accounts with Vanguard, Schwab or Fidelity. They tell you what to do then collect their single one-time flat fee. No commissions, no lousy house funds, no giving them any control over your money. If you need ongoing help it should be like with a CPA or lawyer -- hourly rate or another flat fee, never x% of your assets.

To provide investment advice an individual needs to be a registered advisor and has to expose themselves to a lot of liability. No one is going to provide advice in that kind of way. If that's the level of advice you're looking for you're best served with books or Bogleheads. (Not that there's anything wrong with that, it's what I do)

 

[bryanl]

What I find funny is they've proposed an entire proposed portfolio up front without paying a dime which means if you wanted to screw them you could set up an online trading account and just buy what they have in the portfolio.

It means Jones proposed a cookie-cutter plan, the kind available free from many online sources and from introductory books on financial planning.

Watch out when a plan includes insurance products for investments, like variable or universal life insurance or annuities since it indicates that the planner is trying maximize commissions. Insurance for insurance is another matter.

Most CFPs (Certified Financial Planners) work on commission and are no better than Edward Jones, and with both the problem isn't just the costs but the risk of being talked into very bad, very inappropriate investments.

Mutual fund B and C shares are so bad that no honest adviser will sell them.

 

[JimKiler]

Have her put her money in a vanguard etf/mutual fund. Their fees are as low as 0.05%.
https://personal.vanguard.com/us/funds/snapshot?FundId=0540&FundIntExt=INT

Just go to their website and set up an account.

Dang, .05% expense ratio is super low! i have my 401K with them but not those funds. Maybe time to open an IRA, thanks for the information.

 

[LogicBoard]

I'm echoing what others have said. Vanguard - low fees, plain index funds, that's the way to go.

 

[ChAoTiCpInOy]

Has anyone used Wealthfront and recommend it?

 

[DCal430]

FYI most financial advisors get tons of gifts from people like fund wholesellers for investing your money in their fund. Their is a huge conflict of interest.