(07-10-2018, 11:13 PM)Evan Wrote: Financial Advisers are basically just salesmen for a bank's investment products.   They are also incredibly expensive which destroys your returns and have been historically proven to make no more money than index funds.  

Roboadvisers give you diversification, rebalancing and in most cases tax harvesting.   Most roboadvisers also have hybrids with real FAs if a voice on a phone gives you a warm and fuzzy.
Vanguard will give you free advice if your account is over a certain amount (50k IIRC)

(07-11-2018, 09:07 AM)WRXtranceformed Wrote: I bet if you got in a room full of wealthy people, the majority of them would tell you that they use some kind of money management services.  It's almost a given when you build serious wealth.  Unless you are an expert in finance, wealth management and actually possess licenses to obtain the best kinds of investments, the odds are that you're not going to perform as well as you could.  There have have probably been studies on that, I'm just too lazy to look them up.

(07-11-2018, 10:05 AM).RJ Wrote:

(07-11-2018, 09:07 AM)WRXtranceformed Wrote: I bet if you got in a room full of wealthy people, the majority of them would tell you that they use some kind of money management services.  It's almost a given when you build serious wealth.  Unless you are an expert in finance, wealth management and actually possess licenses to obtain the best kinds of investments, the odds are that you're not going to perform as well as you could.  There have have probably been studies on that, I'm just too lazy to look them up.

Yes, if you are in the 10's to 100's of millions of dollars, then I agree.

For the rest of us?  I'd like to see some data that hiring this out is better in the long run.  Everything I've read says the opposite.

Quote:Just how worthwhile are financial advisors?
Beyond getting your overall finances in shape, a good advisor can also improve your investment performance. A Vanguard study found that by tapping the services of a financial advisor, you might improve your results by as much as three percentage points annually. Here's a look at just how powerful those three points can be -- the following table shows how an annual $8,000 investment can grow over time, at 7% annually and at 10% annually:

$8,000 Invested Annually For:

Growing at 7%

Growing at 10%

10 years

$118,269

$140,249

20 years

$350,951

$504,020

25 years

$541,412

$865,454

30 years

$808,584

$1.4 million

DATA SOURCE: CALCULATIONS BY AUTHOR.

That's pretty powerful, no? Even over just a single decade, the difference was almost $22,000 -- and over 30 years, it was close to $600,000! Of course, not everyone who uses a financial advisor will see their returns juiced this much. But even a two-percentage-point bump can make a big difference, and some might enjoy a bump of four points or more.

By the way, Vanguard broke out how they arrived at the three percentage points, finding, for example, that being able to consult an advisor at any time, such as when they were thinking of selling during a market correction, added as much as 1.5% to their returns because the advisor kept them sticking to their plan. On top of that, advisors setting a sensible asset allocation to follow added up to 0.75%. Advisors can also help keep fees low, by guiding clients to low-fee options. That can add another 0.45% to performance.

Quote:Overall net impact of good advice: about 3%

Suppose a good comprehensive financial advisor who does all these things charges a fee of 1% of assets under management. An investor who is capable of doing all of the above on his or her own is able to keep all of these advantages. However, an investor who doesn’t know how to effectively implement the above, or who wishes to instead devote their energy elsewhere, misses this extra Advisor Alpha. Even though they saved the 1% advisory fee, they end up worse off.

Justin Wagner from Vanguard offers the following example. Suppose the overall market return is 8%. Without good financial decision making, the combined impact of fees, taxes, and poor investment decisions is around 4%. This leaves a net return of 4% to the investor. However, for someone working with a capable advisor, they eliminate poor investment decisions, minimize taxes, and only pay the 1% fee, leaving a net return of 7%. That is the Advisor Alpha. The value added by good advice can greatly exceed the fees.

(07-11-2018, 10:55 AM)Apoc Wrote: The mechanic analogy is pretty spot on. Some people just don't have interest in dedicating time and brain power to money management. Sometimes mechanics upsell you, sometimes they save your ass from a costly mistake or get you a deal on parts. I have no desire to work on my car so I'll pay someone else, but I'll follow my money like it's going out of style.

I think Lee and I have compared rates of return and they're within 1%... but not everyone is going to have the same discipline. My mom wanted me to help her with money after her divorce and I told her she needed to pay a professional. I'm okay managing my money closely, but I am not at all interested assuming that risk for someone else. She'd never be able to self manage effectively, so it makes sense for her to pay a mechanic.

(07-11-2018, 10:30 AM)WRXtranceformed Wrote: I realize opinions are like buttholes, but IMO it's worth doing the research into an advisor before you commit to turning your own financial wrench for your entire life.  Don't get me wrong, I have a very active role in our retirement planning (including a hard pass on a recent employee private stock purchase, because the deal was not favorable at all to the buyer. I got free FA advice from the Weber-Wise team on that btw) but it helps having someone who helps you design a plan and execute.  "A man without a goal is a ship without a rudder." - Thomas Carlyle

(07-11-2018, 12:02 PM).RJ Wrote: Also, be weary of "advice" given lately.  The market has been hot for a long time and anyone speculating on the stock market is probably making money... but it isnt because they're smart.

(07-11-2018, 12:20 PM)Mike Wrote: This is a good podcast http://freakonomics.com/podcast/stupidest-money/