22 Replies Latest reply on Apr 28, 2014 1:16 PM by BoBraxton

    Financial Planners

    Andee

      Does anyone have a financial planner outside of TIAA-CREF?  If so do you find it helpful?  Also what fees or percentage of your savings/portfolio total do you pay?  

        • Re: Financial Planners
          MyR Community Manager

          Andee, thank you for creating a new discussion thread! We appreciate and enjoy your participation in the MyRetirement online community and look forward to your future contributions.

          • Re: Financial Planners
            JerryD

            I paid some very large annual fees to financial advisors other that T-C. I still have some loses that I am trying to write off. Even though one said that it followed a strategy that I had studied for years, strongly believed in and payed many dollars for their literature, the advisor killed us with 2% of assets fees and poor investment choices. I finally decided that nobody cares more than me about my money and that I could lose money much cheaper than paying for advice. Bite the bullet and educate yourself. IMHO while you educate you can put your funds into conservative investments so that at least you don't lose money. Just remember, a 50% loss requires a 100% gain just to break even. And a 33% loss requires a 50% gain. Etc.

             

            In my younger years, I spend a lot of time chasing the "hottest" mutual funds. I finally decided that what I needed to make a successful retirement for us was a strategy that had a very small number of well understood choices that did reasonably well. We consolidated 100% of our retirement funds in order to follow this strategy. I never regretted that decision and retired life is much less stressful.

              • Re: Financial Planners
                BoBraxton

                Agree strongly with nobody cares more (or as much) for my / our money that myself and becoming educated. My education began about the same year our one offspring graduated (from university) when a relative of a very close friend offered an investment short term to pay high interest. Repayment was to begin in six months with the full amount (with interest - or at least the interest paid at a high rate). It did not take a long time for me to figure out no payment was ever going to be made. Sixteen thousand dollars gone just like that have, over the long haul, made it quite easy to ignore movements down or up of ten thousand dollars and more a single trading day. I, too, have decided on a very, very small number of selections - almost all in one simple (I am not allowed to state exactly what) with a tiny part in what does not go up or down plus a serving of global investments (mutual funds) on the side, only two companies. Retirement began 2011 September 1. Things are going well (so far).

              • Re: Financial Planners
                sktn77a

                "I finally decided that nobody cares more than me about my money and that I could lose money much cheaper than paying for advice."

                 

                Well said!  Ever wondered why "financial advisors" charge a fee based on assets managed rather than earnings?  I tried to tell several advisors I would pay them 10% of whatever they earned from my assets, not 1.5% of what they managed.  Needless to say, there were no takers, and that says a lot!

                  • Re: Financial Planners
                    BoBraxton

                    As far as I know the fees I pay are the lowest possible. I agree that paying based on the value of assets "managed" is ridiculous. The board of Pensions to which my spouse belongs one year "lost" $47 million in the investment portfolio (as I recall) and to add injury to insult, the fees paid to financial advisers / management was also $47 million. Right away I felt incensed - true "managers" should participate in losses and in gains. If there is only the UP-side for them then my preference is to do without. I am at least as good as losing money so why should I pay even more to "them" to do it for me!?

                  • Re: Financial Planners
                    taconner

                    I always invested our money & actually did quite well with a diversified package of investments, but grew tired of hearing my wife complain that we were not maximizing our investments & that we needed an expert like a financial planner. To make a long story short, we went with a financial advisor & wound up paying high fees for some questionable investments & now have gone back to handling our funds although we are stuck with several annuities that we'll just have to ride out. Never use a financial advisor of an insurance company who only wants to sell you their financial instruments. I have periodically used TIAA CREF & also a lady who runs her own private financial planning company & charges an hourly fee, just to have both analyze my investment package & provide advice for current & future investments. Adding their advice to my own opinion has paid dividends &I  feel much more in control. I have progressively become more conservative in investing & at the ages of 66 & 65 do not want too much risk although the experts project that we will continue to live longer & should not become too conservative or we'll run out of money.

                    • Re: Financial Planners
                      JoeW519

                      When I was younger: I was an active, involved investor. I spent 20 hours or more on average each week making the decisions and reading all the reports, company and otherwise, that I could. I was rewarded with good returns.

                       

                      Then I engaged two advisors and made "very good" returns .... one was a newsletter that designs model portfolios I could follow (or not) and also wrote abstracts of many of the reports I was reading -- they saved a lot of time and gave me a lot of ideas, They offered a management service, but I enjoyed managing for myself. The other advisor was/is a friend who is a CFP. He charges me $125/hr for me to bat ideas off of and he makes suggestions and offers some direction when I get tied up in details (which I tend to do).

                       

                      These days: I'm tired of being so diligent and occupied .... ESPECIALLY since I ran a spreadsheet and saw (for the 45th time I think) that I on average make about 2% better than the averages over three decades. This is nearly the same as a manager would charge. So: I moved everything to index funds. Now I don't have to worry about a manager and I still determine my diversification with no fee (ETFs) or around 0.1% (funds).

                       

                      Like taconner, I'd never take advice from someone who had something to sell, or who charge a commission. I see no way the sales commission is going to come to me for my own money ... so I would never use anything but a fee-only planner (CFP).

                        • Re: Financial Planners
                          BoBraxton

                          Around 1993 (give or take) I first got involved in investing when prior returns were showing something like 38% in one year. That got my attention; however, I also learned quickly the truth of "past returns do not indicate future returns." My personal feeling is that "people" have unreasonable ideas of what kind of returns to expect (and that they need). Based on recent years of indexed mutual fund (one in particular), I calculated the return (just dividends) to be a little under 2% per year, regardless of the share prices and the ostensible "book" value based on number of shares and share price. In the most recent 12 months the actual gain (result mostly of share price appreciation) may be 20% but that "gain" I ignore because it results from very small increase in number of shares and therefore is not reliable. Personally, what amazes me is the amount that we receive in social security direct deposits and two pensions -- when I figure the amount of money we would need to have invested ourselves to create that much income at a rate a little lower than 2% per year. On the other hand, two percent looks very generous when compared to "safe" money such as in Money market. To invest is a risk - not to invest is certain loss when the inflation rate is anything higher than zero.

                          • Re: Financial Planners
                            JerryD

                            I had the same epiphany about chasing specific securities. It was actually an investment advice newsletter that started me thinking about ETF's and not worrying about every last bit of gain. ETF's (and other widely diversified accounts like TIAA-CREF typically has) make life so much easier.

                             

                            I would like to paraphrase jcom's statement about the goal for an advisor in terms of goals for yourself: "(Being) A ... (good) planner is NOT to make you the most amount of money possible. It is to ... achieve your goals with the least amount of risk. ... what financial success really means: a comfortable and secure life with the widest array of options possible as you age."

                             

                            Welcome, jkom, it's been a while since you dropped in.

                              • Re: Financial Planners
                                jkom51

                                Thank you, JerryD, nice to be back (like the new site much better than the old one!).

                                 

                                As I like to point out, most people have not ever used a fiduciary advisor. They have used investment advisors, or financial advisors, which are not the same thing from a legal standpoint. The SEC is moving towards making advisors become fiduciaries, but needless to say the Fin Svs industry is fighting them tooth and nail on this.

                                 

                                The most important lesson I learned from working for that excellent independent CFP was investing is at most, 10% of financial planning. Setting goals, especially for couples, is about 20%. An additional 20% is risk mitigation, the area I think is poorly understood by consumers. 50% is budgeting and saving.

                                 

                                There is absolutely no point in getting wound up over whether your investments earned 7% or 3% or 21%, if your accounts aren't titled correctly, you haven't done your legal papers, you have no idea that your spouse has totally different ideas about retirement, and your recordkeeping is scribbled on the backs of envelopes. THAT is what a good advisor will do for you. You can do it yourself, but the question is....will you, if no one is bugging you to get it done? For every person that has their affairs in order, I'll bet there are 4,000 others who are still in the "good intentions" stage!

                                  • Re: Financial Planners
                                    JoeW519

                                    That's a great comment, imo, jkom51! As in so many other areas of our lives, we assume the fiscal basics are in place and look for magic buttons. In fact, if all the basics are dealt with it's much easier to make the decisions needed to give the results you want and magic buttons are so much snake oil. That's the way, my folks taught me, that you know if a hope makes sense.

                                     

                                    Both of them were accountants, one for the Agriculture Dept, the other for the business he owned with a couple of others. I learned from them and couldn't help but adopt their habits ... Genetics and habit have made me compulsive about record keeping and planning so my need for investment advice has become more of a comfort to validate my own judgment than it is a need to know, for example, how much I need to live on.

                                     

                                    I suspect many of us here (via TIAA in a forum speaking of retirement finance) are in a similar boat. But I know that someday I'm not going to be as capable at setting up the basics and I know my lovely spouse is not well-suited to take up the discipline. I've often wondered what will happen without a "fiduciary advisor" in my head. Any hints on how to find someone to help with overseeing "budgeting and saving," the daily crux of the matter?

                                      • Re: Financial Planners
                                        jkom51

                                        >>But I know that someday I'm not going to be as capable at setting up the basics and I know my lovely spouse is not well-suited to take up the discipline. I've often wondered what will happen without a "fiduciary advisor" in my head. Any hints on how to find someone to help with overseeing "budgeting and saving,">>

                                         

                                        You have hit upon the penultimate weakness of any financial planning, whether DIY or pro. Consistent and thorough implementation just can't be guaranteed. It is extremely hard, as a couple, to ensure that the passive spouse remains aware of, and capable of assuming, all aspects of your family's financial affairs. Speaking as someone who has settled an easy estate, I know (and cringe) that my spouse would have a fairly large task to take over my responsibilities should I die or become disabled.

                                         

                                        Your question made me think that maybe the only thing would be to set up an emergency scenario and actually do the nitty-gritty; e.g.:

                                        - Where's the Durable Healthcare Power of Attorney forms for the both of you? Who's the estate attorney, and does your successor executor or trustee know who that is? Do they at least know how to find out that information?

                                        - Under what circumstances should the Financial PoA be invoked? What does the spouse need to do to activate it? What accounts are affected, and which ones are not?

                                        - In case of death, where are the funds coming from to maintain the estate while it goes through probate? Does your family know your wishes? Are they aware very little can be done without the death certificate? Do they know they need multiple copies, and must pay for them? Do they know if you have life insurance, and with what carrier(s)?

                                        - Does your family know if you are taking IRA/401k distributions, and if you are, the best way to pass those to your heirs without excessive taxes, since these are POD accounts unaffected by a will or trust?

                                        - In case of disability: does your family know your wishes? Does your estate have sufficient liquidity in an emergency for one or both of you to receive the best nursing care? Have you investigated any convalescent facilities nearby and if not, how would your spouse find one suitable? How would your spouse come see you if you are in a facility? If your home needs to be modified, how could it be done? How would your spouse find reputable home healthcare aides, if you could be brought home?

                                         

                                        Maybe not a bad idea to make an action plan - one for death, one for disability - and actually sit down to discuss each "bullet point" thoroughly.

                                         

                                        It's difficult to do this with the older generation. My MIL was always "protected" by her two husbands, and now that she has dementia she can't reason a problem out to save her life, even if she wanted to 'think it out'. Boomer couples tend to be more "partners", but even so, one person (like me or you) tends to take over all the detail stuff. And it's all too easy to not keep the spouse sufficiently updated so that they're comfortable with stepping into your shoes.

                                         

                                        I guess I'm going to be plunking my spouse in front of my PC and saying, "OK, here's where I keep all this stuff...." LOL!!

                                          • Re: Financial Planners
                                            JerryD

                                            jkom, it is probably not unusual that there is one spouse that does the details and another that would rather let them do it. They may be passively interested. If there is no interest, it's time to talk to a professional and to paste his/her card on the Frig and remind the spouse frequently that they need to call when ...

                                             

                                            One thing that we did was to cover most of the estate stuff in a trust document with all of the attachments like power-of-attorney, pour-over will, medical advocate, wishes, etc. It's all in a nice book right alongside the folder with all of the corresponding official, signed documents and things like titles. The very next thing we did was to buy a fireproof, lockable box and put all things related in it. At least the survivors will not have to try and guess where everything is although they may have to go through it all, maybe with the help and advice of a lawyer. Buy a box that is dedicated to this subject. Don't fill it with everyday stuff like tax filings, outdated receipts etc. that just seem to accumulate when people do not manage their document storage well (That's everybody isn't it?). The next thing is to tell an interested younger person or persons like the kids where the key is and what it is for. I even went so far as to lay a printout that I update regularly with the passwords used on various Internet resources like investment and bank accounts.

                                             

                                            It is hard to make the process stress-less, but a little planning and organization will give those that follow a big head start.

                                              • Re: Financial Planners
                                                BoBraxton

                                                We have one offspring, married, two grandchildren (6 and 2 ages). Our son has requested the detailed information (including passwords and such) be on a USB "flash" drive so that instead of just printed paper(s), he could just collect the "flash" drive and get to everything in that place. Of course, recently as a consequence of "bleeding heart" vulnerability, I have changed many of our passwords.

                                              • Re: Financial Planners
                                                BoBraxton

                                                By analogy I am the one in your position - the detail person. Myers-Briggs I S T J - my spouse (age 70) is the "global and intuitive" - Myers-Briggs E N F J

                                            • Re: Financial Planners
                                              MyR Community Manager

                                              jkom51, I’m glad you’re pleased with the new community experience. It’s great to see you back and engaging!

                                               

                                              -Genevieve

                                        • Re: Financial Planners
                                          jkom51

                                          As usual, I will be the devil's advocate here. I worked for an extraordinary independent CFP for a couple of years and learned so much it was amazing. It helped that I had a strong financial svcs background and the client base was small (deliberately so - a year before I met him, he "fired" 80% of his clients and thereafter only took a few new clients every year). It was an education to see the positive difference an ethical professional fiduciary could make in his clients' lives. He liked to joke that he spent half his time trying to get some clients to stop counting pennies, and the other half of his clients to stop spending too much!

                                           

                                          Unfortunately Malaysia is the only country in the world who strictly licenses ALL financial planners. The US is a hodge-podge of regulations, some tight, most very loose. And frankly, the really good planners don't advertise. They don't hold free seminars. You'll never see their names except rarely, when occasionally quoted in high-end business media. They get 80-90% of their business as "soft" referrals, from satisfied clients (many of whom are multi-generational clients) or other professionals.

                                           

                                          I handled all our investments because the state pension fund offered good choices, had the lowest possible fees, and even offers an amazing breadth of quality retirement planning seminars, classes, workshops, webinars, and hand-outs. But we needed a pro for my MIL, because there is a good chance she might outlive us - and there is no one else capable of handling her affairs (she has dementia). I got a referral from my old boss to a couple of CFP firms and picked the one I thought would do the best job.

                                           

                                          And yes, despite the 1.4% fee, they have done an excellent job on her portfolio over the last seven years. We are very pleased, and know that should anything happen to us, the successor trustee will have someone to rely upon for sound financial strategy as MIL declines.

                                           

                                          Last year, I decided I was tired of doing the investments, especially as the market has been in such rotational flux. The pension fund, by its very nature, cannot offer riskier investments such as emerging market equities/bonds, commodities, etc. We took early retirement four years ago and fortunately do not need to take any distributions from our portfolio at all. I handed over the investing to the same CFP firm I picked for MIL's portfolio. Hers are in a moderate-risk portfolio; ours are in a moderately high-risk allocation.

                                           

                                          Could I do this myself cheaper? Sure I could. Could my DH, if something happened to me? He could, but he'd hate every minute of it, and probably make a raft of newbie investor mistakes. A good fiduciary planner is NOT to make you the most amount of money possible. It is to act as a sounding board, a neutral and professional advice resource, a financial educator, and to help you plan the best way to achieve your goals with the least amount of risk. Risk mitigation is vastly underestimated and under-used by most amateurs; and the neglect of it is often the biggest obstacle to achieving what financial success really means: a comfortable and secure life with the widest array of options possible as you age.

                                          • Re: Financial Planners
                                            MyR Community Manager

                                            Beachdreamer had a similar question back in 2010. Other members—including jkom51 and JerryD—shared their experiences and perspectives. You may want to check out this thread as well: Anyone worked with a financial planner?

                                              • Re: Financial Planners
                                                smaneck

                                                I'm lucky, my mother was a financial adviser. I only have maybe 10% of my portfolio with the firm she used to work with but we talk about financial matters all the time, both hers and mine. However, the both of us invest much more aggressively than we would advise anyone else to do. I think that is a bigger problem when your dealing with clients who are likely to panic and pull their money out at the wrong time.

                                                  • Re: Financial Planners
                                                    BoBraxton

                                                    good reason(s) I do not wish to get or to give advice. Into the third year of our retirement, both of us were invested 100% in equities. For the most recent twelve months, that was a good thing, in my opinion. Each of us has a traditional IRA (roll-over of each 403(b) ) and a tax-exempt (already taxed) Roth IRA. A little of two of four funds is now in Money Market, which is neither invested for growth AND has significantly higher fee(s) - a double whammy.

                                                • Re: Financial Planners
                                                  edquistls

                                                  I finally decided this past year to have a retirement assessment done and I am thrilled with the results. I met with a financial planner who charged a flat fee to create my assessment with included recommendations on what insurance I need and don't need; legal documents that need updating; a realistic retirement budget and so much more. It required that I create very thorough budget for 2013 - look at where all my assets are located - talk to my kids. I am single and I really don't think I could have created the bigger retirement picture with the hands on help I received. It took 3 meetings and I will go back for periodic adjustments ever few years.

                                                   

                                                  Best thing I have done for myself in years!