OT: Financial Planners...Yay/Nay?
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Seems that you should be able to get relatively free/cheap advise for a 403b. Otherwise, if none of the hedge fund managers can beat the market, about all that you can do is diversify. Financial planners can be good for retirement planning. But if you're good at saving and live within your means, then you really don't need rules.
I use one now to manage my retirement funds. They add a lot of value outside of just investment, particularly tax harvesting at year end (selling the losers to get write offs and then reinvesting sometimes in the same funds). I’m at the age where safety and risk minimization are more important to me than growth as I’ll never spend what I’ve accumulated. I mostly invest for dividend income, as I don’t need to spend the principal. Before I retired my company brought in a third party to counsel employees on investing among the 22 fund options in our 401k. As I chaired the investment committee I was comfortable with my own decisions. The best advice I have is to diversify and don’t try to time the market. Pick a risk profile you’re comfortable with and buy and hold long term. Use rebalancing to maintain the distribution among fund options. And don’t look at your balance too often. Invest for the long term.
Tell me your wife doesn't have variable annuities as the most prominently offered option in her plan!
Well if you get one I would suggest you do two things
. Understand their investment philosophy and be comfortable with it. That to me is their biggest advantage. It is an unemotional way in these times of extreme volatility to stay true to a philosophy.
. Pick one that is fee based and not transaction based. You don't want someone that is only making money for you when they are making trades. Sometimes it is better to do nothing and you want someone who is okay with that.
I have one for some of our portfolio and some I manage myself because it is something I enjoy. *** If you do not enjoy it I would certainly use a planner. It can be very stressful in days of 300-400 point swings if it isn't something you like doing.***
I have found as stock pickers they aren't any better than I am or would be any better than a Vanguard or S&P index fund. What they do seem to be better at is finding fixed income vehicles [corporate bonds, bank funds etc] which at my age and their philosophy has a role for me.
. Understand their investment philosophy and be comfortable with it. That to me is their biggest advantage. It is an unemotional way in these times of extreme volatility to stay true to a philosophy.
. Pick one that is fee based and not transaction based. You don't want someone that is only making money for you when they are making trades. Sometimes it is better to do nothing and you want someone who is okay with that.
I have one for some of our portfolio and some I manage myself because it is something I enjoy. *** If you do not enjoy it I would certainly use a planner. It can be very stressful in days of 300-400 point swings if it isn't something you like doing.***
I have found as stock pickers they aren't any better than I am or would be any better than a Vanguard or S&P index fund. What they do seem to be better at is finding fixed income vehicles [corporate bonds, bank funds etc] which at my age and their philosophy has a role for me.
Without going into specifics - yes, get a financial planner. And if you have people in your family who are young (getting out of college, starting their careers), then get them going early with this practice.
My experience with financial planners is that their goal is to get control of the money in your 401k or IRA to put it all in the stock market. That is how they maximize their income.
Go to broker check on Finra.See if they have any alphabet soup after their names,firm,years of experience,awards like top of table or kings court.
^^^ Ding ding ding, this is exactly what most financial planners want to do with your money. I am financially smart with my money and financially literate, so there is not much a financial planner could tell me that I do not already know. Financial literacy 101 will tell you that you need to know how much wages you are going to bring in month in and month out, and then you should subtract out your mortgage/rent, car payment, food, gas, utilities, internet/cable/phone, social expenses, and any other monthly fixed expenses, in order to determine your net savings per month. If your net savings is negative (i.e. you are spending more money than you are bringing in each month), then you have a problem and you don't need a financial planner to tell you that. If you have a family, a financial planner will tell you to make sure your family has health insurance, life insurance, short term/long term disability, an emergency fund, savings for college, and that you are saving money appropriately. Once again, you don't need to hire a financial planner to tell you this stuff. However, if you are not financial literate, then yes, I do recommend that you hire a financial planner.
If you are only talking about 401k and 403b, then you don't need a planner. I have other retirement accounts, company stock, company ESOP, etc. and my planner does a nice job of helping me with a good, comprehensive plan based on the goals I've set. I do a little of my own investing on the side, but i'm not good at it.
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anon_1eeb2b426hv3y
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THIS^^^
The "if you're good at saving and live within your means" part is huge. Sounds like you've got that.
Good ones, you should be able to retain them and use as needed. Some need more advice and oversight than others. If your only issue is 403b planning advice, I'd definitely call one.
Most average Joes don't need a financial planner. Do some reading on your own. There is more than enough free information readily available.
Unless you are really doing things ass backwards, I don't think anyone is worth 1% of your investments per year. I understand that some enjoy the feeling of "safety" in working with a professional, combined with the feeling of being a big baller/wheeler dealer ("buy!! sell! -no, short!!!"). But that comes at a stiff price.
Unless you are really doing things ass backwards, I don't think anyone is worth 1% of your investments per year. I understand that some enjoy the feeling of "safety" in working with a professional, combined with the feeling of being a big baller/wheeler dealer ("buy!! sell! -no, short!!!"). But that comes at a stiff price.
The financial planner will really come in to play more so with your life insurance needs rather than your retirement plan investments. An insurance agent will try to sell you whatever will get them the biggest commission. A financial planner will tell you what you actually need.
You probably don't need one for such limited advice but anyone hiring an advisor should make sure the advisor is (1) a registered fiduciary, so are legally obligated to work only in your best interests (2) fee-only, so will just work as-needed on an hourly basis as opposed to taking a recurring percentage of assets and (3) a Certified Financial Planner or CPA, preferably both.
For more limited needs, there are also some websites and message boards like bogleheads and whitecoatinvestor who offer good advice. You can ask specific questions and get (mostly) good suggestions.
For more limited needs, there are also some websites and message boards like bogleheads and whitecoatinvestor who offer good advice. You can ask specific questions and get (mostly) good suggestions.
Well to me that is why you need a planner that doesn't make his money in the market AND you need to understand his philosophy.
. It is quite easy to get a planner that charges 3/4 -1% of the assets they manage regardless of where the assets lie. Could be all in the market or all in cash.
. When I talk about a philosophy it refers to things like being 100% in the market or some other mixture.
Example the planner I use has a conservative philosophy
. Step 1. Identify annual expenses. I provide that but they will help if you need it.
. Step 2 Identify all sources of income annually
. Then through cash, bonds, [always held to maturity] income if you are working, provide for 10 years of these assets not in the stock market.
. Step 3 - the balance is always in the market.
The philosophy is
. over a 10 year period the market always rises and is the best asset class
. never try and time the market
. hold bonds to maturity to minimize bond volatility
. provide for enough non stock market cash that you do not ever need to sell stocks during a market drop.
That is it. We talk twice a year to review changes in income or expenses.
The only time we deviated was in the 2009 -2014 period when interest rates were near 0 for all fixed income. So they gave me the option to modify the 10 year rule down to a 7 year rule for having non stock market assets. We discussed and I agreed. It really is worth the fee to me although as I said in another post their stock picking is no better than mine in on the stocks I manage.
I’m kind of a set it and forget it type person when it comes to retirement and investing. I like having someone to give an overview of my financial situation and handle specific transfers with me having to figure things out. To each his own though.
You don't need a planner to make choices regarding your wife's 403B. Just pick low-cost, diversified investments -- broad market index funds or ETFs or (depending on your age) some bonds. Most important thing is to look for low fees and costs. Goes without saying, don't pick the funds that had a great year last year. If you don't want to screw up by making the wrong choice, you can't go wrong with an S&P 500 type fund or ETF.
If the 403b is with a good mutual fund company like Vanguard or Fidelity, great, then you will have good choices.
If the 403b is with a crappy investment company, then just pick the lowest-cost safe choice you can make, and when her job ends, roll over the money to Vanguard or Fidelity.
As for hiring a planner in general, the best arrangement is if you can find someone to consult with for an hourly rate.
Unfortunately most planners want to take control of your retirement accounts and then they screw you by taking a percentage off the top every year PLUS they invest in high-cost funds which pay them commissions.
As for really good advice that planners SHOULD be able to give you, a lot of it is available for free on the web anyway. Google "dinkytown investment calculators" or "dinkytown retirement calculators" and you'll see dozens of tools you can use to do some standard retirement planning functions.
Another thing you should consider is getting a Schwab checking account (totally free). Once you are a Schwab customer you can do a retirement simulator for free that will give you some information about whether you've saved enough given your retirement goals.
If you are into your mid to late 50s and starting to think about retirement, you may need tax planning advice more than investment advice anyway.
So it might be wiser to just hire a tax accountant to consult with you on an hourly basis. There are lot of things to consider at that age -- whether to take early social security, how to minimize the social security benefits cut if you have earnings, etc etc.
If the 403b is with a good mutual fund company like Vanguard or Fidelity, great, then you will have good choices.
If the 403b is with a crappy investment company, then just pick the lowest-cost safe choice you can make, and when her job ends, roll over the money to Vanguard or Fidelity.
As for hiring a planner in general, the best arrangement is if you can find someone to consult with for an hourly rate.
Unfortunately most planners want to take control of your retirement accounts and then they screw you by taking a percentage off the top every year PLUS they invest in high-cost funds which pay them commissions.
As for really good advice that planners SHOULD be able to give you, a lot of it is available for free on the web anyway. Google "dinkytown investment calculators" or "dinkytown retirement calculators" and you'll see dozens of tools you can use to do some standard retirement planning functions.
Another thing you should consider is getting a Schwab checking account (totally free). Once you are a Schwab customer you can do a retirement simulator for free that will give you some information about whether you've saved enough given your retirement goals.
If you are into your mid to late 50s and starting to think about retirement, you may need tax planning advice more than investment advice anyway.
So it might be wiser to just hire a tax accountant to consult with you on an hourly basis. There are lot of things to consider at that age -- whether to take early social security, how to minimize the social security benefits cut if you have earnings, etc etc.
False. They aren't allowed to do both. Those few who have tried have been punished. Most, if not all, broker dealers have safeguards in place to prevent this sort of double dipping.
Lots of misinformation on here. Not all financial planners are bad. Consider a fee-only financial planner. They do not sell products. They provide advice for a fee. No commissions for life insurance, mutual funds, or unnecessary annuities.
Good ones provide more than investment advice.
Good ones provide more than investment advice.
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Mind sharing what you take issue with? Do you recommend those planners who skim 1-2 percent a year off the top? That is absurdly expensive for information that is widely available. I think the late John Bogle was right, expenses should matter just as important for investing as they are for running a household or running a business.
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my question is this, which mutual fund would you in vest in ? the first, over any given period of time ROR is 12%, but charges the investor 3% to achieve that, or another fund who's return over any given period of time is 11.5% but only charges 0.25%
There is no correlation between past and future returns of mutual funds, especially at such small differences in returns. So even if the returns are net of expenses, the answer is the latter, especially if it affords greater diversification
He advises that people do what John Bogle says (the only honest mutual fund founder in history): "If you invest in a very low cost index fund you'll do better than 90% of people... Just pick a broad index like the S&P 500."Ahhhh...”The Big Bet”
https://itunes.apple.com/us/podcast/planet-money/id290783428?mt=2&i=1000428342191
What would Warren Buffet do?
while you are correct that past performance is no guarantee of future results, why pick the latter? because of expenses? Expenses really are irrelevant when picking a mutual fund, as all mutual fund results by law, have to be reported after all expenses. So you choose one with low expenses without regard to returns, why? Jack Bogle for many years had one thing to sell, and like a good sales person, that is what he sold, expenses.
In rising markets, passive funds tend to outperform, but the opposite is true in falling markets.
This thread doesn't make enough of a distinction between financial advisers and financial planners. The former tend to focus on the investments, while the latter use a more holistic approach focused on achieving financial goals.
Expenses are the only sure thing you can control when investing. The 3% expense means it has to outperform the market by 25%, which very few can do and probably nobody with long-term consistency. Research shows that there is little or no correlation between past and future returns of funds and expenses are the primary predictor of fund performance. Substantially better returns are consistent with what one would expect with randomness. It's like trying to make money in Vegas betting on football games - you can, if you are lucky or have inside info.
So don't take Buffet's and Bogle's advice, ask a broker how to invest. Maybe he'll find you a great fund with a nice big front end load.
A fool and your money are soon parted.
There's this little thing called COMPLIANCE ask our BOT what happens when you don't follow the rules genius.
The primary reason for the difference in fund returns under different market conditions is that passive funds are 100% invested in stocks at all times. They track the market, not make bets on the future, which are unpredictable and can change in an instant.
It is very important to understand that only financial advisors who are designated fiduciaries have to place the best interests of their clients above their own. That is different from the suitability standard of most brokers: Instead of having to place his or her interests below that of the client, the suitability standard only details that the broker-dealer has to reasonably believe that any recommendations made are suitable for clients, in terms of the client's financial needs, objectives and unique circumstances. A key distinction in terms of loyalty is also important, in that a broker's duty is to the broker-dealer he or she works for, not necessarily the client served..
you still miss the point, returns are quoted net of expenses, so those who only look at the expense ratios, many times miss the forest for the trees.
take at look at this...
Growth of a hypothetical $10,000 investment 1
This chart tracks a Class F-2 share investment over the last 20 years, or, since inception date if the fund has been in existence under 20 years.
The Growth Fund of America (GFFFX)
Index S&P 500: S&P 500 Index is a market capitalization-weighted index based on the results of approximately 500 widely held common stocks. This index is unmanaged, and its results include reinvested dividends and/or distributions but do not reflect the effect of sales charges, commissions, account fees, expenses or U.S. federal income taxes." data-disclosure-paths="" data-statistic="91" data-style="5" data-hoverarea="0">
an F-2 class share would be available in someone's 401k 403b etc, so there is no front end load you mention
while research may show there is no correlation to past results, I'll take my chances wit a guy like Donald O'neal one of the portfolio managers for the last 25 yrs!! I assume if he can do it once, he'll do it again.
FTR the fund is the blue line and the grey/black is the sp 500.
Not strictly true. From Investopedia: "According to FINRA, the Financial Industry Regulatory Authority, almost anyone can call him or herself a financial planner and might come from many different types of backgrounds. Financial planners might be brokers or investment advisers, insurance agents, practicing accountants or individuals with no financial credentials. That is why the consumer must perform his or her due diligence before turning their money over to any sort of financial advisor."
You miss the entire point. One isolated case does not prove the point. Just by sheer chance at least a few will beat the odds but are unlikely to do it in the future: A trillion monkeys typing randomly will give us Shakespeare. Tell me you are not a logic or math major.
PS: And who provided the comparison - the guy selling?
PS: And who provided the comparison - the guy selling?
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are you talking to me? that usually happens when a higher expense ratio fund vastly out preforms a cheap index fund. So you're saying O'neal cant do this again and be counted on? Heck you could say that about the people at S & P.
1. Yes, American is one of the historically better performing active fund families often available in 401Ks at preferred terms. GFFFX expenses are low (.42%) so that helps a lot.
2. It looks like a "stealth" index fund - i.e., only slightly deviates from the index and with low expenses and turnover.
3. Don O'Neill is just one of several managers of your fund.
4. According to Morningstar, long-term it has bested the index by just .13% annually and lagged the last year by .35% - that's pretty much a dead heat.
5. S&P is an index, not a fund.
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