Is a Financial Adviser Worth the Cost?

We hired a financial adviser because we wanted some unemotional professional advice on whether we were on-track to meet our retirement and other financial goals, and, if we were not, how we could go about getting there.  We also were not happy with the performance of our stock portfolio and wanted some help picking new funds and thought it would be nice to have someone who knew what they were doing watching the funds and deciding when it was time to move the money elsewhere.  We hired a CPA we knew who has done our taxes a few times over the years when I thought I needed professional advice.  He offers financial advising services and sells life insurance and mutual funds.  He charges financial advising clients a percent of assets under management.  I really wanted someone who billed by the hour who would give us a plan and let us implement it, but I wasn't able to find such a person.  The CPA is an old friend and so we decided to give it a try. Still, I wondered "Is a financial Adviser Worth the Cost"?

We have been with him since July.  He interviewed us about our goals and about our risk tolerance.  He gathered the paperwork necessary to switch our IRAs and other funds to the firm with which he works (HD Vest), and gave us a pep talk about sticking with the program even in down markets (which we've been doing for twenty-five years).  I get that he gets paid for getting our money invested and keeping it there, so I was willing to forego the "advice" part of the equation until he got everything set up.  However, when we met recently, the phrase that came to mind was GIGO--garbage in, garbage out.  He had a nice chart drawn up showing how we were doing fine, how we were in the optimal zone to reach retirement on our schedule, with half our current pay (that would be possible but awfully tight) and he was only showing about 80% of our assets.  I asked him to redo the chart but he said it took a while to put it together.  We meet every three months and before our next meeting I will make sure I get him a full list of all our assets.  I really want to know how much money we are going to need, given our situation and lifestyle and how much we need to save every month to get there.  I know there are a lot of variables, but the information I got from him was information I could have gotten from any number of web calculators.  If what I am paying for is personalized advice, so far, I'm not impressed.

As far as the mutual fund portfolio, it has tracked the market, which is no great surprise.  On the other hand, I can really see the fees he is charging eating into our returns.  

So, is a financial adviser worth the cost? I'm going to watch things for another year or so, but I'm leaning toward going it alone again.  

Wandering the Web: 4/15/15

One of my main retirement goals is to be able to travel.  Ten ways to see the world on a budget has some ways to help with that goal.

Dividend-paying stocks are a hot topic right now, especially given the very low returns on bank accounts.  This calculator helps estimate how much you need to invest to live off of stock dividends.  Once you've invested all that money in stock, you'll need to keep up with it.  Personal Capital is a website than can help you with that task.

Hopefully by the time  you are approaching retirement, you already have a nest egg.  However Acorns is an app that can both help you start your nest egg and help you add to it even if you "have no money".

Have you read anything interesting lately?

Why We Hired a Financial Advisor

In my opinion, there are two reasons to hire someone to do something:   1) I don't want to do it and/or 2) the person I hire can do a better job than I can (and that includes jobs that I am incapable of).  Why did we hire a financial advisor?  It was some of both.  My husband and I have always handled our own investments and at one time investing was a favorite reading/research topic for us.  Then kids and life got in the way (and took away much of the free cash we used to invest).  We were somewhat aware that the funds we bought way back when were not the ones recommended today, but inertia had struck and while we talked about making a change, we never did.  Then my dad passed away and I realized I would soon have a large chunk of money to invest.  I also realized that we weren't up-to-date on the best places to invest, nor were we sure what asset allocation was best for us.  While we have always lived beneath our means and saved money yearly, we really didn't know if we were on target to meet our retirement goals.  We have between ten and fifteen years left in the workforce and our house is paid for; now is the season for the race to retirement and we wanted to make sure we were on the right track and running fast enough. We want someone to keep an eye on the funds and to get us out of those that aren't doing what they were purchased to do.  We wanted a plan and we were willing to pay for it.

For where your treasure is, there also will your heart be.

He is risen, He is risen indeed. Alleluia!  These words, or a close facsimile thereof are being said in Christian churches around the world today.  But what difference does it make?  And why am I discussing this on a blog titled "Racing Towards Retirement".  Well, to begin with, those of us who are people of faith believe we are all headed for a final retirment home unlike any we've seen here on earth.  While most of us are hoping for accomdations in the temperate zone, we keep in mind that the ultra-topics are a possibility.

I'm not a theologian, I don't play one on TV and I claim no special expertise in the subject.  I've often wondered why God chose to do it the way He did.  Why couldn't He do with Adam and Eve what we do with our children--admonish, perhaps punish, then forgive and forget?  Why did He choose to send His son to die (and not only die, but die horribly) for us and for our sins?  I think it was to give us a concrete example of how to live selflessly, and by doing so, to create a new life for ourselves and for others.  There are a lot of very good people throughout the world who do not believe in Jesus or the resurrection.  However, if you look at cultures as a whole, the ones that have adopted the Christian ethos of self-giving for the good of other humans are the ones, that as a whole, have become the most advanced, the most prosperous and the most peaceful.  Is that because God blesses us in a special way, or because self-giving ultimately helps all of us?  

I became interested in financial blogging while doing research on a new financial product I ran across on the internet--peer to peer lending.  I wrote about it on my general (mostly books) blog and then decided to move over here.  In short, with peer to peer lending, investors buy small portions of loans, and when the loans are repaid, earn interest.  In my experience so far (8 months), it has been a good investment.  But you ask, what does that have to do with self-giving?  There is another lending platform out there to which I'd like to introduce you:  Kiva Loans.  Kiva works with various anti-poverty, economic development NGOs to provide loans to help the less fortunate better their lives.  Much like the Lending Club platform, the lenders get to review borrow profiles and decide whether they want to invest their money in that particular loan.  While those investing with Lending Club gain economically, those who invest with Kiva get the satisfaction of knowing their loans have made life better for someone.  Unlike a straight charitable donation, there is a chance that your investment in Kiva will be repaid, so you can then re-invest, helping someone else (or  take your money out, if desired).  How good is that chance?  Honestly, I don't know.  I made a loan; I hope it is paid back; if it is not, oh well, it is a donation.  I hope my borrower is able to make a better life for herself and her family.  If she pays me back, I can help someone else with the same money.

Do you invest with Kiva?