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?

What are your thoughts about Fidelity Investments financial planning service?

I'm not very familiar on a first hand basis with them. I'm probably biased but I think you'll find that the highest quality of advisors won't work there. Doesn't mean you can't get good advice for a good price though.

The highest quality of advisor will have enough demand that they'll work for themselves either as an RIA or at an established firm you are familiar with already (EJ, RJ, ML, MS,etc).

I would ask around your circles for recommended independent local fiduciary advisors. Go meet with all of them and ask tons of questions and vet them for one that aligns best with you.

Picking a FA is a lot like picking a PCP. It's extremely personal and can only be made by you. You always have the ability to pivot in the future, if needed.

Agree with a fee only person. Ours just retired so we'll be looking for another. Unfortunately we moved & he can't recommend anyone where we are now.

He did a great job for us over the years & all we did was pay him an hourly rate.

Just curious...what was their hourly rate?

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Just curious...what was their hourly rate?

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In 2011 when we started, he was $150/hour - I think the last time we went it was probably up to $250 or so - I don't remember, but know he had gone up. The first invoice was the biggest because he was reviewing all of our supplied information & formulating his recommendations. We only felt the need for his services twice: 2011 & 2015 when we started to invest in rental real estate. For us it was perfect - no yearly management fee. It sat steady & grew.

We didn't change much in all the years we had him from his initial picks. We started kinda late in investing for retirement as we were self employed and extra money usually went in to the business. Once we did start accumulating extra money we found him thru a friend referral. We invested in some mutual funds & eventually began investing in rental properties so we went in for advice again. The return on that beat anything the stock market had to offer by far, so he advised us to keep doing that - even over adding to our IRA's or dumping more in the stock market - if we found a good real estate buy. That has worked out brilliantly - best advice ever.

We were really disappointed when we called him in 2022 for another round, but found he'd retired. Good for him, though. With real estate costs high now, we'll probably start funding those IRA's again. We'll also start looking for a new fee only guy if we can get some good referrals.

edit: Back to your original question - I have no idea the going hourly rate now.

schwack schwack said:

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Just curious...what was their hourly rate?

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In 2011 when we started, he was $150/hour - I think the last time we went it was probably up to $250 or so - I don't remember, but know he had gone up. The first invoice was the biggest because he was reviewing all of our supplied information & formulating his recommendations. We only felt the need for his services twice: 2011 & 2015 when we started to invest in rental real estate. For us it was perfect - no yearly management fee. It sat steady & grew.

We didn't change much in all the years we had him from his initial picks. We started kinda late in investing for retirement as we were self employed and extra money usually went in to the business. Once we did start accumulating extra money we found him thru a friend referral. We invested in some mutual funds & eventually began investing in rental properties so we went in for advice again. The return on that beat anything the stock market had to offer by far, so he advised us to keep doing that - even over adding to our IRA's or dumping more in the stock market - if we found a good real estate buy. That has worked out brilliantly - best advice ever.

We were really disappointed when we called him in 2022 for another round, but found he'd retired. Good for him, though. With real estate costs high now, we'll probably start funding those IRA's again. We'll also start looking for a new fee only guy if we can get some good referrals.

edit: Back to your original question - I have no idea the going hourly rate now.

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Where is your money now, I'm assuming it is separate from your fee advisor. If it's self-directed and you're happy just add to your current holdings. If you need advice then ask your friends, the ones you know have invested money, who they use. If you call into various firms asking for a portfolio evaluation meeting they will want to know the value of your account, the higher that amount is the more experienced FA you will get. Here is a tip...find a Bank of America branch that has an FA (Merrill Edge) in the branch and set an appointment. He will be a new guy but they have instructions to bring in experienced FA's if the account is sizable or complicated. Or more money is anticipated. And even new FA's mostly know more than the average Joe on the street and Merrill, for all of their faults, has awesome resources they give their FA's.

Dont look for someone that promises the moon (huge returns), look for someone who will help you plan current investment and future income while reasonably mitigating risk

I think I will start by visiting with a Fidelity advisor since that is where all of my non-401k holdings reside. I would prefer to work with someone local (Beaumont TX) in order to meet face to face and get to know them better.

Thank you for the information. We don't have any national banks in town - LOL. We really don't feel we need a lot of direction - certainly not a manager. We liked having someone to review things as we made changes - but as you can see, not too often. Our money was never held with our advisor - he was 100% fee only - so we've always been self-directed.

Right now we are sticking with our original mutual fund investments from 2011, Apple stock & a few others purchased years ago & holding cash in anticipation/hopes of a real estate market correction in our area. That said, we're getting too old & uninterested in major renovations but if the right house came up, we'd consider another one. If that doesn't happen, we might put some into T-bills short term, but we'll have to research how & when to do that. Never looked at bonds or CDs to invest because our real estate investments do so well. I-bond things are too much trouble for us with that $10K limit and their rates going down.

Our rental units are just about 100% recouped since we started in 2015 (purchase & renovations). 2 months of rent payments cover all related expenses on all of our properties (taxes, insurance, basic maintenance). No mortgages. The rest we live on & re-invest in properties if something falls in our lap. We are long term investors & have never touched any of the money we have in the stock market or IRAs, SEP IRAs, etc.

BmtAg96 said:

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I think I will start by visiting with a Fidelity advisor since that is where all of my non-401k holdings reside. I would prefer to work with someone local (Beaumont TX) in order to meet face to face and get to know them better.

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The firm I'm with partners with Fidelity for referrals and it's a great relationship...their advisors are good for more mass market advice to put you in their products with limited planning. Most are CFP's and good at what they do but constrained by the model and having hundreds of households to manage. Where we come in is for those who have more complexity, want different/alternative investments, or want more tax planning they can't really provide.

I'm in the Austin area but we cover Houston as well and I can connect you with a great Fidelity rep there if interested, as I'm almost positive Fidelity doesn't have a physical presence in Beaumont (yet).

Agree with most of the above advice and let me know if I can help! username@gmail

OP do a fee only, don't let somebody convince you to do AUM %

not hedge said:

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OP do a fee only, don't let somebody convince you to do AUM %

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Think you are referring to flat fee or hourly, as most firms that are fee-only do in fact bill on AUM

Most do but you're not obligated to move funds over, sounds like op just wants somebody to double check his work

Here are a couple of websites for fee only people that might be worth looking at.

http://www.napfa.org

https://www.feeonlynetwork.com/

My friend is at Freedom Day Solutions, Ryan Krueger. A t-sip but a really good dude, has a daughter at LSU. Does a podcast w/his partner Jackson Wood out of Utah.

I had done a pretty good job w/ picking the right places to be through my former employees 401K offerings, a couple MLP's paying a consistent dividend, & real estate investments. He has taken it & enhanced it (2022 was tough for everyone).

What I really like, and it's a great question to ask your FA when looking, is that whatever he puts me in, he's in it as well.

You can link to his free podcasts through his LinkedIn page. They're really interesting. He's a little nerdy, but spent 15 years at ML I think b/f breaking away.

You can look up any registered rep by Googling FINRA Broker Chck and typing in his name. For example here is the SEC page for the above Ryan Krueger. Note he was with Citi, not Merrill, and a firm called Curbstone. His only active registration is Series 65.
https://adviserinfo.sec.gov/individual/summary/2158394

OldArmyCT said:

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You can look up any registered rep by Googling FINRA Broker Chck and typing in his name. For example here is the SEC page for the above Ryan Krueger. Note he was with Citi, not Merrill, and a firm called Curbstone. His only active registration is Series 65.
https://adviserinfo.sec.gov/individual/summary/2158394

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Very helpful. Thank you

You should absolutely be starting here:

https://www.letsmakeaplan.org/?gclid=CjwKCAiAh9qdBhAOEiwAvxIok89QBxfR2WjMaPjKazgmBlpZ9tHAktNlnlikWwGJ6NZPC5F3Fop9ZBoCWcMQAvD_BwE&gclsrc=aw.ds

What are the benefits to using an advisor with a CFP designation vs. not?

BmtAg96 said:

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What are the benefits to using an advisor with a CFP designation vs. not?

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I've been in the business for 6 years now and am currently going through the year long process to get my CFP certification. I'll give you my point of view on why I think it's important, but not absolutely necessary.

Investment management is practically commoditized at this point, but that's how must advisors are compensated. That being said, anyone can get asset allocation based off your Risk profile and time horizon. However, at some point, most families financial picture gets to a point where they want the guidance of a professional to make sure that all of their assets are being properly managed for their goals, are tax efficient, help with estate and legacy planning, charitable giving, income replacement, and any insurance needs, etc. Plus, the families I serve are comfortable paying a fee to have a partner that knows the ins and out of their financial picture, as well as their family dynamics. They can also call at any time for any questions or changes that may pop up.

Getting your CFP is no joke. For one, it proves that your advisor has spent the time learning about most of the challenges that investors/families face throughout their lives. Investing is important, but in my view, not nearly the most important aspect of a complete financial plan. What I realized over the past 6 years, is that I was capable of navigating 80% of the topics that came up, however, that other 20% where I felt lacking, didn't sit well with me. I wanted to be able to give the best advice possible, have conviction in the advice given, and know that we considered any and all alternatives for my client to help them make the most informed decision. For me, getting the CFP was about having confidence in my recommendations, and knowing that I am adequately equipped to help clients with 95% of all scenarios that would come up.

All that being said, I do believe that it's important to have, but not absolutely necessary. There are many veteran advisors that don't have the certification, but have been in the business long enough, that they have seen it all and are quite capable of giving sound advice.

My recommendation, find someone that you trust and are comfortable with their fee structure, but don't get lost on that point. We pay fees for all kinds of services, and this is a service that you don't want to get cheap on. There are a lot of mistakes that can be made doing it on your own that are totally avoidable. Find someone that treats you as a partner, not an account.

I am a CFP in the biz. Fidelity is a meat grinder. Talked to a guy that had 5mm with them and a timer went off behind after 45min and they shuffled him out the door. Needless to say he left fidelity. We just signed a VP that works at Fidelity that doesn't trust their advisors. She pays us and would get their advice for free. Hope that helps.

All of this info is very helpful. I explored CFPs in my area through the "let's make a plan" link posted above. A couple of additional questions. Regarding fees, one advisor I spoke with charges 1% of assets under management. I believe this is the standard fee structure, no?

Also what are your thoughts on certain investment firms. I hear Edward Jones advisors offer a more relaxed personal relationship. Thoughts on Merrill or UBS?

BmtAg96 said:

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All of this info is very helpful. I explored CFPs in my area through the "let's make a plan" link posted above. A couple of additional questions. Regarding fees, one advisor I spoke with charges 1% of assets under management. I believe this is the standard fee structure, no?

Also what are your thoughts on certain investment firms. I hear Edward Jones advisors offer a more relaxed personal relationship. Thoughts on Merrill or UBS?

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I'll add Morgan Stanley to this list for opinions. TIA

If you've read all the above one thing should pop up…pick the person, not the firm or the initials behind their name. Fidelity and VG are cheap for a reason but if you're relatively competent you'll get good results. If you're worried about succession pick a fee based guy but make sure he speaks your language. If you blindly walk into a big firm you'll get assigned to a guy based on your projected deposit. Little money = new guy, and vice versa.
See, it's easy.

I use vanguard PAS and happy. I pay 30 bps.

AugustusGloop said:

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I am a CFP in the biz. Fidelity is a meat grinder. Talked to a guy that had 5mm with them and a timer went off behind after 45min and they shuffled him out the door. Needless to say he left fidelity. We just signed a VP that works at Fidelity that doesn't trust their advisors. She pays us and would get their advice for free. Hope that helps.

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Agree with this. I would imagine Fidelity is very similar to Vanguard, where I used to work as a wealth manager before starting my own firm a couple years ago. It was certainly a meat grinder at Vanguard - we used to jokingly refer to it as "fast food advice". Expectations for client count went up every year I was there, with no end in sight, and by the time I left, 230 clients was considered full book in the high net worth group I worked in. It was to the point where you couldn't serve clients at a high enough level to be proud of the work product you were putting out.

Having the corporate advisory firm perspective to contrast with the small, solo firm I run now, it has become so much clearer to me that at that scale, its not about the relationship anymore, its about the process - achieving greater and greater operational efficiencies. Which is great for the firm's bottom line but not so much for the client.

Another benefit to working with a smaller firm is one person owns the relationship (at least in my case as a solo advisor), whereas with a larger firm, you might have 3-5 people managing the relationship, including a paraplanner, associate advisor, admins, etc, which increases the risk of things falling through the cracks

BmtAg96 said:

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All of this info is very helpful. I explored CFPs in my area through the "let's make a plan" link posted above. A couple of additional questions. Regarding fees, one advisor I spoke with charges 1% of assets under management. I believe this is the standard fee structure, no?

Also what are your thoughts on certain investment firms. I hear Edward Jones advisors offer a more relaxed personal relationship. Thoughts on Merrill or UBS?

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Meet with all 3 of them and you should know pretty quickly which you are most comfortable with. The investments offered will be more or less the same

Something I never understood from a layman's perspective is AUM fees. Do you those of you using advisors with AUM fees feel like you are getting your money's worth?

aa4136 said:

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Something I never understood from a layman's perspective is AUM fees. Do you those of you using advisors with AUM fees feel like you are getting your money's worth?

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Regardless of whether its AUM fees or some sort of flat fee, you're asking the right question: what value are you getting for the amount paid in annual fees? However, it sounds like you may be associating AUM with just investment management (in which case I agree: is a $1M portfolio really 10X more complicated to manage than a $100K portfolio to justify the ~10X fee?).

But most AUM advisors treat it as an all-in fee; for instance, my AUM fee also includes retirement planning, insurance planning, tax planning, education planning, estate planning, charitable planning, etc. So really, an AUM fee that is equal to a flat annual fee - its six of one, half a dozen of the other

AUM fee's are the same as any other. It's a question of the value you're receiving.

If the AUM fee is 1% annually, the value that the advisor brings through investment, retirement, tax, estate, and insurance planning should lead to a total return that's at least 1% greater on average than it would have been if you were to doing it on your own. This includes asset LOCATION and helping you not to make mistakes that the vast majority of people make.

Another part of that 1% could be saving yourself the time, research, and record keeping that comes with DIY.

There are numerous ways an advisor could make sense for someone, but there's no question that the biggest value is through a full, comprehensive financial plan where the advisor is the trusted steward.