BmtAg96 said:

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I would like to consider working with a financial advisor to help with retirement planning and wealth management. What is the best way to get started in selecting someone to work with? I currently manage my own investments through Fidelity. I know they offer wealth management services at a fee. My thoughts are to start with them to see what they offer. I also see a value in working with someone local in my community. Thoughts?

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how old are you?

I am in the same position- have my own corporate 401Ks (three of them) and a private Fidelity brokerage

I am loathe to use a financial advisor right now though because that is 1% fees which over time really harm total returns.

I'm 52, so I think I can wait until 60 to have someone take over the taxation part of the portfolio. I don't like the idea of putting everything I have under another person's control and not have ability to see it all the time

See if you can find someone to do a fixed cost review of your portfolio. May cost $3k but a lot cheaper than 1% on your assets.

LMCane said:

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BmtAg96 said:

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I would like to consider working with a financial advisor to help with retirement planning and wealth management. What is the best way to get started in selecting someone to work with? I currently manage my own investments through Fidelity. I know they offer wealth management services at a fee. My thoughts are to start with them to see what they offer. I also see a value in working with someone local in my community. Thoughts?

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how old are you?

I am in the same position- have my own corporate 401Ks (three of them) and a private Fidelity brokerage

I am loathe to use a financial advisor right now though because that is 1% fees which over time really harm total returns.

I'm 52, so I think I can wait until 60 to have someone take over the taxation part of the portfolio. I don't like the idea of putting everything I have under another person's control and not have ability to see it all the time

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They don't harm total returns if the advice and guidance received leads to a total return that's 1% higher. There is far more to "total return" than the performance of the portfolio

LMCane said:

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BmtAg96 said:

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I would like to consider working with a financial advisor to help with retirement planning and wealth management. What is the best way to get started in selecting someone to work with? I currently manage my own investments through Fidelity. I know they offer wealth management services at a fee. My thoughts are to start with them to see what they offer. I also see a value in working with someone local in my community. Thoughts?

---

how old are you?

I am in the same position- have my own corporate 401Ks (three of them) and a private Fidelity brokerage

I am loathe to use a financial advisor right now though because that is 1% fees which over time really harm total returns.

I'm 52, so I think I can wait until 60 to have someone take over the taxation part of the portfolio. I don't like the idea of putting everything I have under another person's control and not have ability to see it all the time

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I'm 49. I am looking for guidance around planning for our savings and retirement goals. My wife and I just want more clarity around a strategy to maximize our returns based on our risk tolerance. I want someone who will help keep us on track and provide peace of mind.

Just call Cohesion Wealth. I was in your shoes and spent a lot of time looking for a group. A fellow Texags poster referred me to them, and I haven't looked back. They handle my taxes and financial planning. The final thing that put me over was I had a big portion of my net worth in XOM stock from a prior employment, they recommended I leave it there. Most FA want the fees with my AUM. They've done very well for me.
Both principals are Aggies.

If you're completely comfortable table with your beneficiaries handling your money today then you may not need an FA. One of my kids would have trouble handling a weekly allowance, hence the FA.

Cyp0111 said:

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See if you can find someone to do a fixed cost review of your portfolio. May cost $3k but a lot cheaper than 1% on your assets.

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Anyone in houston you recommend for this?

Folks still don't get it that a portfolio review isn't what financial advisors do to generate value. Go hire betterment.com to do that for you if that's all you want.

nactownag said:

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Folks still don't get it that a portfolio review isn't what financial advisors do to generate value. Go hire betterment.com to do that for you if that's all you want.

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^ this.

These days it's difficult to justify having people Oy simply for investment management. The real value to clients should be well beyond investment selection.

Let's say I'm 38 and theoretically , have $5MM in investable assets. I fail to see how getting charged let's say a blended fee of 70-90 bps for other items helps me.

Cyp0111 said:

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Let's say I'm 38 and theoretically , have $5MM in investable assets. I fail to see how getting charged let's say a blended fee of 70-90 bps for other items helps me.

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Do you know what other items/solutions are available or advisable?

I'm sure you're right if you are a DIYer. A fee greater than 0 is too much sometimes. Problem is that it costs money to deliver the type of massive value we do for our clients.

We have a team of people with salaries and benefits and plenty of other costs.

It's really a pretty simple equation. If value is greater than cost it's a good deal if value is less than cost it's bad deal. How much value is somewhat dependent on the person.

There's very little I do for clients that they can't do or learn for themselves.

Capital gain losses and gain harvesting
Roth conversion strategies
Charitable giving strategies like donor advised funds and CRUTs etc
Medicare premium planning
Understanding how to reduce taxes on social security
Estate planning and gifting concepts using ILITs
The list goes on

All of this is available for anyone to go and learn. Problem is people don't want to or have the capacity to even know where to start so a true planner can help add a ton of value when they are incorporating these ideas.

But…9/10 "advisors" don't do or provide anything like this and just put your money in a model and collect a 135bps fee.

Someone can source a very capable estate planning/private client attorney directly and accountant.

I'm sure there are things that can help, but the rub has been. at those numbers over a duration is $40-50k per year justified.

The AUM model as a result of pivoting from paid fees is somewhat of a scam imo. I think a flat fee not aum % is a more honest way to provide value. thats just me though.

Cyp0111 said:

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Someone can source a very capable estate planning/private client attorney directly and accountant.

I'm sure there are things that can help, but the rub has been. at those numbers over a duration is $40-50k per year justified.

The AUM model as a result of pivoting from paid fees is somewhat of a scam imo. I think a flat fee not aum % is a more honest way to provide value. thats just me though.

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Different strokes I suppose. It's good when advisors offer options, and when they do, let the client decide what's best for them in the fiduciary capacity if full disclosure.

A lot of clients prefer the % AUM model as it puts the advisor on a sort of retainer without having to worry about transactional, hourly, or per meeting costs.

As a DIYer I see it like hiring a lawyer or accountant. I pay $200/hr (or whatever) for his time, receive good advice and move on.

An example of this is back9financial. The guy did a really good quality social security analysis for my parents for a flat fee.

Your post is very valid and something one would attribute value to. I think that it make sense in the de-accumulation phase. But talking over a longer time horizon, for people in their earning years, the AUM fee is difficult.

my rebuttal is again, 1% aum for retainer on $5MM assets (theoretical) is a big standby fee on an annual basis and exceeds what it would cost to have ad hoc work in any given year yet along over a long time horizone.

What should the flat fee be per year? Realistically?

Cyp0111 said:

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my rebuttal is again, 1% aum for retainer on $5MM assets (theoretical) is a big standby fee on an annual basis and exceeds what it would cost to have ad hoc work in any given year yet along over a long time horizone.

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I would imagine in this day and age, you're not going to find anybody with $5M in investable assets paying 1%.

I think everyone should be compensated for their time.

I think the year of on boarding an account should have a higher fee associated with all of the work, any year that significant work should also cost more.

I struggle with the 1% per year as again, on a higher cost account still in accumulation, the fee structure does not make sense to me.

$25K in year of setup, an agreed fix fee if significant work in a year then AUM fee closer to 30-40 bps makes sense.

Anything else, the value construct falls apart, that math will change as someone gets older and the fee may be justified.

I have a few friends that are not W-2 and access to a private bank makes sense for home loans so they're happy to pay that fee given the upside for non traditional financing.

This thread has been super helpful to me as my wife and I try to navigate a similar deal as the OP. What's the difference between a fee-based financial fiduciary at a private firm or a financial advisor from somewhere like Edward Jones? Is the Edwards Jones FA just going to sell me on EJ products? I think we are looking for more for recommendations and guidance along the lines of what we should do to meet your goals rather than hearing a sales pitch.

Same here, this has been a good resource as my wife and I are in a similar situation. Both 40, never used a FA up until this point, however have meet with a few FA's recommended by close friends over the last few weeks as I'm nearing the point of wanting to have some more professional advise/guidance and peace of mind.

I did meet with an EJ advisor yesterday, who said he allows his clients the option of going the 1.35% AUM route, or stay in the old commission structure. It caught me off guard a little, as I was assuming essentially everyone was doing the ~1% AUM structure. I obviously need to follow up with him on how the commissions work, but it almost sounded too good to be true, as you would only pay a 1-2% commission on trades executed and avoid the annual fee, which over the course of 20-30 years adds up to a large sum of money. Anyone else have any experience with this with an EJ advisor? Surely there's more to it, than just paying a commission on trades, right?

TIA.

Full disclosure: I was with EJ until recently and am now an owner of an independent fee only RIA.

Obviously my pitch going forward is that I'm a fiduciary 100% of the time and I don't collect any money or compensation from anyone else but my client which reduced conflict of interest and I don't work for anyone else (I.e. EJ) but them which means we're fully aligned and have the lowest level of conflict possible.

But of course we don't think EJ is bad as long as you find great person there. Make sure you are very careful about it. I felt like I was doing great work for clients at EJ but we just outgrew it.