Thought I'd ask the group....

If you were to start from ground zero knowing what you know now, for the next 15 years, would you invest $1000 per month with your best financial advisor, or would you invest in a balanced mutual fund portfolio in a Roth at a FREE service like Vanguard?

Vanguard

There might be advisors that beat the indices, but you have to pick the right advisor and the advisor pick the right stocks. Odds aren't in your favor there and that doesn't even take fees into account.

You're also counting on that advisor to beat the market regularly, not just twice every five years or whatever.

Vanguard.

I have a family member I help who has an advisor and Fidelity managed funds. It's honestly only because I don't want to be responsible for their investments/strategy. Are they worth their fee? Probably not. Does it avoid me ever being "blamed" if something bad happens in market? Yes.

If $1000/month is what you're coming to an advisor with I recommend going with Vanguard. Good advisors, i.e. those with years of experience, have minimums to open an account and at your level you'll get the new guy. Plus you'll pay commissions at worse or higher management fees at best. Whether or not an FA can beat the market is often a crapshoot, and shouldn't be the only reason for having an advisor in the first place. You might get the guy who ten years ago said Buy Apple or you might get the one who put you in IBM. There are lots of reasons to have an advisor that have nothing to do with investment returns. Go find one when you have enough money to matter and then give the FA half, but only if he never says "I can beat the market."

Job of an FA is not to beat indexes.

As someone in the industry, vanguard.

Topher17 said:

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Vanguard

There might be advisors that beat the indices, but you have to pick the right advisor and the advisor pick the right stocks. Odds aren't in your favor there and that doesn't even take fees into account.

You're also counting on that advisor to beat the market regularly, not just twice every five years or whatever.

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You can also get good advice from an advisor and implement strategies that you aren't aware of.

And they also do all the work for you, so you are paying for their service as well and you dont lift a finger.

Just presenting both sides of the argument....

They also charge 1% regardless of whether they make you money or not

Assuming a typical salary like most post college Americans, I see no reason to use an advisor early in your investing career. The formula is easy for anyone to follow with the instruments we are allowed to use by the government. And there are a million resources out there that all pretty much tell you the same thing regarding what to do in the beginning.

We didn't get an FA until we were in our 40s when we were at high enough incomes that allowed for maxing all tax deferred vehicles plus a significant surplus beyond that. At that point, I wanted other eyes on it just to make sure we weren't doing something stupid tax-wise, the analysis it gets you, the insight into government policy, and estate planning.

Just sock away that monthly cash flow in to 1 ETF at either Vanguard or maybe Fidelity. Fidelity lets you purchase fractional shares based on a $ amount, Vanguard only allows you to buy whole shares.

Pick one you like such as VTI - Total US Stock Market, or VT - Total World (~70% US / 30% International)

Keep doing this until you hit $100,000, then reevaluate if you want to add any other asset classes or reach out for financial advice.

RockOn said:

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Just sock away that monthly cash flow in to 1 ETF at either Vanguard or maybe Fidelity. Fidelity lets you purchase fractional shares based on a $ amount, Vanguard only allows you to buy whole shares.

Pick one you like such as VTI - Total US Stock Market, or VT - Total World (~70% US / 30% International)

Keep doing this until you hit $100,000, then reevaluate if you want to add any other asset classes or reach out for financial advice.

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Didn't realize Vanguard didn't allow this.

We are at Fidelity and would highly recommend for that feature alone.

Anecdotal: my mom has used Vanguard for years and is switching everything to Fidelity because Vanguard's customer service is downright terrible. They have screwed up multiple things with her stuff.

Agree with others who say use vanguard ETFs in a free account that allows fractional shares.

Google "vanguard core series pdf" and download that to get some ideas of asset allocation based on risk tolerance. The portfolios on slide 3 are really good and diversified and if it's money you won't need for 15+ years I would stick pretty far to right side of the table in the 70-90% equity range.

Further down in that report they have good portfolios for tax efficiency if these are funds you are holding in a taxable account and not some sort of IRA.

I have to imagine one day Vanguard will create that ability, but right now Fidelity is my preference for new funds.

40% VTI, 30% VGT, 20% VOOG, 10% QQQ. Set and forget it

RockOn said:

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I have to imagine one day Vanguard will create that ability, but right now Fidelity is my preference for new funds.

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Yeah, I'm shocked they haven't already. Fidelity is their main competitor and has allowed it for a year(?).

Fidelity has a better interface than vanguard as well. I only have my Roth with them. So I don't have to mess with often

I assume the OP is starting out from (essentially) zero without extensive knowledge of finance...

Knowing what I know now, I'd select my asset manager/financial advisor--the rub is I had neither the amount of capital to engage an asset manager/financial advisor worth the fees nor the knowledge to know what I was looking for in an asset manager/financial advisor. Plus capital growth and capital preservation are different endeavors.

For (what I assume are) your circumstances, I echo what has been said above: dollar cost average into VTI (70%) and VXUS (30%) until you get to somewhere around 500k in investable assets while increasing your knowledge along the way. When you get to that point you'll have a much wider selection of asset managers/financial advisors to choose from and you'll be moving into a different phase of life (where capital preservation is much more important) and you can assess whether an asset manager/financial advisor is worth what you will pay for the service/advice.

100% VTI and forget about it

Vanguard DIY.

Sizeable chunks of my 401k & Roth IRA are in VTI with great results. I also have a older gov't retirement account which I can't put into VTI - but I would today if it were possible.

Here's a decent reason to have an advisor instead of blindly jumping into a Vanguard.

https://www.wsj.com/articles/vanguard-target-retirement-tax-bill-surprise-11642781228?st=uigqrcp8d8dtahy&reflink=desktopwebshare_permalink

OldArmyCT said:

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Here's a decent reason to have an advisor instead of blindly jumping into a Vanguard.

https://www.wsj.com/articles/vanguard-target-retirement-tax-bill-surprise-11642781228?st=uigqrcp8d8dtahy&reflink=desktopwebshare_permalink

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Probably deserves its own thread but the next question is what to buy in a taxable account to avoid excessive taxes?

jamey said:

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OldArmyCT said:

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Here's a decent reason to have an advisor instead of blindly jumping into a Vanguard.

https://www.wsj.com/articles/vanguard-target-retirement-tax-bill-surprise-11642781228?st=uigqrcp8d8dtahy&reflink=desktopwebshare_permalink

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Probably deserves its own thread but the next question is what to buy in a taxable account to avoid excessive taxes?

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As everyone has mentioned above, VTI or VT are fine candidates for taxable accounts. The ETF structure is very tax efficient, the passive/index strategy is also very tax efficient. You don't need a financial advisor for you to look up the 20+ year history of distributions and see that these funds don't have capital gain distributions.

And just a few topics below this one is a poster with a financial advisor AND a fund that distributed $10/share (~20%) this year. We can only hope this was in an IRA.

Worth a read: https://www.bogleheads.org/wiki/Tax-efficient_fund_placement

jamey said:

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OldArmyCT said:

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Here's a decent reason to have an advisor instead of blindly jumping into a Vanguard.

https://www.wsj.com/articles/vanguard-target-retirement-tax-bill-surprise-11642781228?st=uigqrcp8d8dtahy&reflink=desktopwebshare_permalink

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Probably deserves its own thread but the next question is what to buy in a taxable account to avoid excessive taxes?

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Tax free muni's.

RockOn said:

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jamey said:

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OldArmyCT said:

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Here's a decent reason to have an advisor instead of blindly jumping into a Vanguard.

https://www.wsj.com/articles/vanguard-target-retirement-tax-bill-surprise-11642781228?st=uigqrcp8d8dtahy&reflink=desktopwebshare_permalink

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Probably deserves its own thread but the next question is what to buy in a taxable account to avoid excessive taxes?

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As everyone has mentioned above, VTI or VT are fine candidates for taxable accounts. The ETF structure is very tax efficient, the passive/index strategy is also very tax efficient. You don't need a financial advisor for you to look up the 20+ year history of distributions and see that these funds don't have capital gain distributions.

And just a few topics below this one is a poster with a financial advisor AND a fund that distributed $10/share (~20%) this year. We can only hope this was in an IRA.

Worth a read: https://www.bogleheads.org/wiki/Tax-efficient_fund_placement

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So just setup an account with fidelity or whoever and buy VT and VTI and let it ride.

I assume Fidity would send me any tax return I need to file? But it should be small.

jamey said:

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RockOn said:

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jamey said:

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OldArmyCT said:

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Here's a decent reason to have an advisor instead of blindly jumping into a Vanguard.

https://www.wsj.com/articles/vanguard-target-retirement-tax-bill-surprise-11642781228?st=uigqrcp8d8dtahy&reflink=desktopwebshare_permalink

---

Probably deserves its own thread but the next question is what to buy in a taxable account to avoid excessive taxes?

---

As everyone has mentioned above, VTI or VT are fine candidates for taxable accounts. The ETF structure is very tax efficient, the passive/index strategy is also very tax efficient. You don't need a financial advisor for you to look up the 20+ year history of distributions and see that these funds don't have capital gain distributions.

And just a few topics below this one is a poster with a financial advisor AND a fund that distributed $10/share (~20%) this year. We can only hope this was in an IRA.

Worth a read: https://www.bogleheads.org/wiki/Tax-efficient_fund_placement

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So just setup an account with fidelity or whoever and buy VT and VTI and let it ride.

I assume Fidity would send me any tax return I need to file? But it should be small.

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They will send you an email to let you know when your tax forms are ready. You then login and download them as pdfs.

Then email to your CPA. That's what I do anyway...after I get all forms in I zip it up and send in one attachment.

You're going to need $1M for almost quality advisors to take you. At least $500k with upside to $1M in the near future.

Go Vanguard until then.

ORAggieFan said:

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You're going to need $1M for almost quality advisors to take you. At least $500k with upside to $1M in the near future.

Go Vanguard until then.

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I already have all that with a current advisor. Just wondering going forward, with my new budget in place, if I should start doing this on my own with a FREE service or to continue to add to the pile w my advisor

Depends on risk level and age to retirement.

When I was working goal was growth.
Now retired early so main goal is asset preservation that keeps up with inflation.

I self invested via a 401K with Vanguard for almost 30 years. Kept it 100% in S&P 500.
With 401K maxed we invested after tax investments ourselves, primarily in tax free muni bonds.

After I retired I wanted professional help from a smaller firm, 5 to 10 professionals with a share in the company.
I had tried a few companies over the years and interviewed two more before I found a firm I liked.

Fee is .075% , goals are aligned, making 4% a year after fees, I am very happy.
Funds are with Fidelity.

In their interview I asked them to walk me through their response to a market collapse like 2000 or 2008.
Two years later Market nosedives due to COVID. I'm traveling and get a call. Advisor talks me through their playbook. Wife and I stay calm and reassured.

My advisor gets Birthday and Christmas presents from us.

Topher17 said:

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Vanguard

There might be advisors that beat the indices, but you have to pick the right advisor and the advisor pick the right stocks. Odds aren't in your favor there and that doesn't even take fees into account.

You're also counting on that advisor to beat the market regularly, not just twice every five years or whatever.

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This advisors pretty much always average out, and if they don't, the real question becomes, "Is it because they're good, or is it just an inevitable run of chance?" There's no real way to tell.

EagleCamden said:

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ORAggieFan said:

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You're going to need $1M for almost quality advisors to take you. At least $500k with upside to $1M in the near future.

Go Vanguard until then.

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I already have all that with a current advisor. Just wondering going forward, with my new budget in place, if I should start doing this on my own with a FREE service or to continue to add to the pile w my advisor

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I would be working with your advisor on this. Anything extra I send to him. My 529 and 401k investments are also on his advise (no commissions). If you don't trust your advisor on these decisions you need to find a new one.

I was an S&P index guy for years, switched to MS about three years ago and I'm happy with the services and performance… mainly I wanted a managed account for when the bubble bursts to mitigate the downside. When the market is going up, a caveman can make money.

EagleCamden said:

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Thought I'd ask the group....

If you were to start from ground zero knowing what you know now, for the next 15 years, would you invest $1000 per month with your best financial advisor, or would you invest in a balanced mutual fund portfolio in a Roth at a FREE service like Vanguard?

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Can you clarify the arrangement?

Is the $1000 going into an actively managed fund that your advisor manages, or their company owns/manages? IOW, you will pay a management fee on top of your normal advisory fee?

Or are you simply getting advice as part of your normal advising fee on how to spend this money?

I'm assuming it's the former.

It's obvious from the responses here that most people use a FA bc it gives them the feel goods. Make that part of your evaluation.

That said - I'd DIY that $1000/month to learn and read and learn and watch and read and gain confidence in the process. That's where I find most people get hung up - the process.

Once you feel like you've got some experience, you may no longer need to justify the FA bc of the feel good factor.

TikkaShooter said:

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It's obvious from the responses here that most people use a FA bc it gives them the feel goods. Make that part of your evaluation.

That said - I'd DIY that $1000/month to learn and read and learn and watch and read and gain confidence in the process. That's where I find most people get hung up - the process.

Once you feel like you've got some experience, you may no longer need to justify the FA bc of the feel good factor.

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12 people said to go Vanguard and 3 people said to go advisor route.

It's obvious you replied to the wrong thread or didn't read it.

I suppose I wrote it out poorly.

Rewrite:

It's obvious from the responses here that those who use an FA, do so bc it gives them the feel goods.

Meaning, that IMO - investing is scary to some folks. They don't understand it. Never taught about it. And would rather let someone else do it vs "screw it up" if DIY.

There's just so much great free info out there these days. I'd start at Boggleheads wiki and go from there.