My advisor charges 1% for managing my Roth IRAs.

No additional charge for financial planning or managing my annuities T-Bills.

I use Fidelity as my platform.

My finances are pretty stable and I'm starting to feel I don't need to pay 1% anymore and am considering just using Fidelity or possible a Robo-Service.

Any thoughts? You guys seem to really know your stuff.

Thanks.

1% is too much. If you still want an advisor, I would shop around. You should be able to find someone from .25 to .5, if not lower.

Would go robo before I paid that. Also, if you are at Fidelity there is some level of advising you get by default by just having your money there. Only reason I know that is because we have a portion of our investments there and they reach out to me all the time and have told me this. I do not know if there are any minimum balances for that though.

Not to hijack, but hopefully a helpful question. Has anyone had any experience with Facet?

https://facet.com/

You should at a minimum tell him you are thinking of leaving him, lots will waive their fees for a year to try and keep you.

It depends on what you're getting for the 1% and how much money you have.

At our firm, we charge up to 1.25% (on assets under 1 million) but we deliver access to private investments you can't get access to easily. Perhaps more significant is we have an in house tax business that clients really appreciate having a one stop shop to get tax advice and investment advice at the same place.

So if you are paying 1% and not getting tax advice and preparation and not getting access to private placements then yes you're paying too much in my opinion.

The other correct answer to this is that if you are thinking about this then you need to leave them.

Whether you should DIY it or not is another matter.

SquareOne07 said:

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YouBet said:

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1% is too much. If you still want an advisor, I would shop around. You should be able to find someone from .25 to .5, if not lower.

Would go robo before I paid that. Also, if you are at Fidelity there is some level of advising you get by default by just having your money there. Only reason I know that is because we have a portion of our investments there and they reach out to me all the time and have told me this. I do not know if there are any minimum balances for that though.

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No self respecting advisor is going to do any job worth a darn to you for .25%

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Mine does. Y'all are paying too much.

Also, mine is fee based and not driven by %. The latter has steadily decreased over the years as the balance has far outpaced any small fee increase I might take year to year.

So my actual % is less than that.

If it makes you feel any better I do have them actively managing a portion of our conservative portfolio through a muni bond ladder where I'm paying them .5% for that piece.

SquareOne07 said:

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permabull said:

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You should at a minimum tell him you are thinking of leaving him, lots will waive their fees for a year to try and keep you.

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No self respecting advisor would waive their fees for a year and work for free

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I've left two and one offered it to me before I switched. The other didn't find out I was leaving until they saw the assets get transferred and called me up to ask why I didn't talk to them first because they could have worked on the fees.

If you are avoiding leaving due to the awkward conversation, the bank you want to move the funds to can do all the paperwork for you and have them moved without you talking to them. Lots will even reimburse you for the account closing fee you are likely going to have to pay when you leave your current advisor.

Southlake said:

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My advisor charges 1% for managing my Roth IRAs.

No additional charge for financial planning or managing my annuities T-Bills.

I use Fidelity as my platform.

My finances are pretty stable and I'm starting to feel I don't need to pay 1% anymore and am considering just using Fidelity or possible a Robo-Service.

Any thoughts? You guys seem to really know your stuff.

Thanks.

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What is your advisor's performance? All that matters is the percentage of gain from last year. No other mumbo jumbo matters.

I suggest you do your own, even if it is a percentage, just to gain confidence. Put it in index funds and sit back and relax.

SPY is a good start.
23% this year. Is your guy better?

SPY Chart

SquareOne07 said:

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If all you pay your advisor for is to invest in the market for you, you probably shouldn't be paying them at all

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Yes that is right.

What are the other services the FA provides? Better tax efficiency comes to mind. Estate planning.

But the OP talks about managing his IRAs.

We didn't use an advisor until we got into our early 40's. At that point, our situation got more complicated, and I needed someone to handle tax efficiency, estate planning, insurance advice, contingency planning, and ideas for allocation beyond the surface level common scenarios.

In other words, I had exhausted my time and ability to manage it all myself so having another set of eyes on everything has been super helpful. So, our advisor provides all of the above and more.

We also consolidated tax prep into this with him and have recently added and linked my parents investments so I can keep on an eye on their stuff for them. My mom can no longer see and my dad has zero interest in managing their finances, so I'm acting as an advocate. Having all of our stuff under one advisor is hugely helpful and it saved them a ton of money because they were paying 1.25%, previously. Now they are paying 0.5% and they aren't paying a fee at all. He rolled their stuff into ours and waived the fee for them.

Brian Earl Spilner said:

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You don't need a FA.

Put your Roth into the S&P 500 and never think about it again.

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It depends how old you are, retirement plans, etc. That may not be the best if someone is nearing/in retirement.

1% fee to a GOOD financial planner would've saved a lot of people significant $ in 2000 or 2008…

I managed my money for years…then signed up with Schwab Wealth Management. I left them for Fidelity for an issue not related to their fee structure. However, at one of our meetings the advisor said, "I feel I would be doing my clients a disfavor if their results beat the S&P yearly." I'm like what??? He said his purpose was to grow clients portfolios without the stress incurred by the fluctuations in the S&P.

I am now back to managing it myself.

It would need to be 23% plus more to make up for the fees

I left my advisor 18 months ago. Best decision ever. 3 fund portfolio and doing great since. And I save the 10k a year in fees

I've invested my own 401k and HSA for 19 years with pretty good success. But I'm going to meet soon with a financial advisor that a few coworkers swear by. What are some questions I should be asking her?

I have a question for everyone who is trying to beat the s&p500... Do you mean for your entire portfolio or just the equity portion?

Even with a 90/10 stock bond blend it would be pretty hard to get a portfolio to beat the s&p500 on a green year with the bonds dragging your returns down.

double aught said:

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I've invested my own 401k and HSA for 19 years with pretty good success. But I'm going to meet soon with a financial advisor that a few coworkers swear by. What are some questions I should be asking her?

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ToddyHill said:

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I managed my money for years…then signed up with Schwab Wealth Management. I left them for Fidelity for an issue not related to their fee structure. However, at one of our meetings the advisor said, "I feel I would be doing my clients a disfavor if their results beat the S&P yearly." I'm like what??? He said his purpose was to grow clients portfolios without the stress incurred by the fluctuations in the S&P.

I am now back to managing it myself.

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He knows he will never beat the S&P so he gaslights his clients that beating the market is actually bad for them? Bold strategy.

double aught said:

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I've invested my own 401k and HSA for 19 years with pretty good success. But I'm going to meet soon with a financial advisor that a few coworkers swear by. What are some questions I should be asking her?

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Ask if she knows of any good real estate investments in your local area.

permabull said:

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I'd honestly run from someone who claims they can beat the market... anyone who can really do that doesn't need your sub 8 figure account and isn't going to market to you.

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Oh, I agree with that. But that reason given is nonsensical.

Totally agree.

I realized (after the fact), I should have interviewed him before I entrusted our funds with him. The more I knew about him, the more I realized we were not aligned in the manner we managed money.

It's really not that nonsensical, there is a reason lots of private bankers require 10m+ investable assets. It's too expensive and risky to deal with hundreds of 100k portfolios. Not talking about your portfolio specifically but if someone reading this post has a few hundred thousand invested and someone is claiming to have the secret sauce to beat the market and giving you the hard sell to turn everything over to them, run like hell in the other direction.

permabull said:

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It's really not that nonsensical, there is a reason lots of private bankers require 10m+ investable assets. It's too expensive and risky to deal with hundreds of 100k portfolios. Not talking about your portfolio specifically but if someone reading this post has a few hundred thousand invested and someone is claiming to have the secret sauce to beat the market and giving you the hard sell to turn everything over to them, run like hell in the other direction.

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Not what im talking about. I'm referring to the comment that the advisor said he would be doing his client a disservice by beating the S&P every year.

1. That would never happen.
2. If he was somehow able to do it, it's not a disservice. It's damn near a miracle and he would be a genius and prescient.

AG_2006 said:

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Cost is only an objection in the absence of value.

The hard part isn't making money. Even the forum wizards here can make 20%+, this year, in any S&P index fund. The trick is keeping your money, as your money. The advisory fee will pay off 10-fold later if your investments are layered in a tax efficient manner now….so that you control MORE of your tax destiny later.

A good FA won't promise any returns. Their value is in the planning.

(I am not a FA/FP, but I do see their value)

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Can you give an example on how someone will not be layering their investments correctly now? And how the financial advisor would be paying off 10-fold down the road?

A CFP/FA will build a plan covering diversified asset classes (stock picks, index funds, cash, bonds, real estate, etc) and then diversify the investment vehicles across different tax classes (tax deferred accounts, taxable accounts, vs tax free accounts).....to optimize net returns after taxes after filtering all of that against your personal lifestyle constraints, age, employment timeline, family and goals. One way to ATTEMPT to keep Uncle Sam out of your pocket later, is by taking the right investment steps now. Rich people are rich because they keep their money, their money. I think TRUMP had a good line about tax planning back in the 2016 election.......something along the lines of "+/- being smart for paying as little tax as possible." That's the best I can articulate it. Some CFP/FA will have to chime in from there.

TxAG#2011 said:

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AG_2006 said:

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Cost is only an objection in the absence of value.

The hard part isn't making money. Even the forum wizards here can make 20%+, this year, in any S&P index fund. The trick is keeping your money, as your money. The advisory fee will pay off 10-fold later if your investments are layered in a tax efficient manner now….so that you control MORE of your tax destiny later.

A good FA won't promise any returns. Their value is in the planning.

(I am not a FA/FP, but I do see their value)

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Can you give an example on how someone will not be layering their investments correctly now? And how the financial advisor would be paying off 10-fold down the road?

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One quick way that comes to mind is helping clients figure out how to pay less in taxes towards the end of their lives and especially upon their death by way of estate taxes, taxes associated with liquidating IRAs by their heirs, helping them not make mistakes associated with utilizing step ups in basis…

Another might be helping expose their client's to growth while not having to participate in market downturns. Not everybody is looking to track the S&P…it's awesome to be able to do so in up years, sucks to do it in the down years. Not everybody is as brilliant as the DIYers here on TexAgs, so they may need help in understanding different strategies that go beyond sticking money in VOO and hoping for the best.

This is absolute correct and my FA has been instrumental in stratification of my assets into different income buckets - Cash, Protected and Risk.

I'm retired so I'm not looking to generate more money as much as avoid taxes and RMDs down the line. The money has been made, now I'm protecting it.

Fidelity did all our advising for free when I was with Delta. I hired a FA after that to set up the next phase.

Now, all the money is where I want it: an annuity for each Grandchild. An income bearing annuity to supplement my SS and pension, and IRAs that I've been rolling into Roth accounts to avoid RMDs later.

My FA uses Fidelity and I believe I'm at the point where I can do what he does, especially with advice from Fidelity which is pretty much free.

My FA has been great for 3 years but I just can't justify paying the 1% anymore.

Thanks Ags for your insight and acumen.