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Our advisor is a CPA who works for himself. He does financial advising through the brokerage firm of HD Vest. The advisor interfaces with clients, gathers information about them, helps them assess their risk tolerance and then passes the information on to HD Vest which uses it to determine the appropriate basket of mutual funds in which to invest the client's money. While they will honor requests for certain funds, or to increase or decrease the risk in a portfolio, HD Vest controls the investments in the account--they decide which funds to buy, and which to sell, and when to do so. The idea is that they have people who keep an eye on the industry, who know which funds do well, and which do not, and know when it is time to get out of a fund that has been doing well (say when the fund manager changes).
Transferring money from one manager to another takes time--several days. Unfortunately when we moved from our prior investments to HD Vest, the timing was such that we ended up with less money in HD Vest than we had with the old custodians--the movement of the market over a few days made a difference. That wasn't HD Vest's fault and I don't criticise them for that. However, during the time our money has been with them, all of our other investments have made money; the accounts with them are still worth less than what was deposited in them. A large part of the reason is the fee they assess (and which we agreed to pay) of slightly more than 1% of the account value. I sat down the other night and did the math--had we invested my husband's IRA in Vanguard's Target Date fund for his age group, his account would have $8000 more than it has now. HD Vest's fees on that account since we opened it have been about $4000. In other words, had they invested our money in Vanguard's Target Date fund, and still taken their $4,000, we would still be $4,000 better off than we have been with their chosen funds.
As I said above, I am not mad at the advisor; however, I am mad at HD Vest right now; not because they failed to equal my other investments (you win some, you lose some) but because they are charging us $95 each for three accounts to transfer the money out. I saw an article today that talked about how Vanguard with its low fees was hurting a lot of Wall Street firms; I guess this is how HD Vest gets back at people for choosing not to stay with them. Because of that fee, I'm putting their name in this article and I'm recommending staying far away from them. All total, in the year and a half we have had those accounts, we have paid fees of $6678.72, including that last $285.00 hit. Our account is worth $12,234.52 less than it was worth when we deposited the money in August, 2014. This has definitely been an expensive lesson.
We got a little financial advice and a couple of dinners out of our advisor during the time we used him. What I really wanted when we entered into this relationship was someone to look at our overall financial picture, especially the fact that we have a son who will likely need financial support his entire life (he's autistic), as well as our other goals and savings rates. I was hoping for a plan that said "save this much", put together this type of trust, and fund it this way. Instead, what I got was a mutual fund portfolio, quarterly meetings to explain that the market was down and that balanced portfolios were faring the worst, and a little generalized tax advice. Frankly I've learned more reading blogs, and I don't think his predictive model was any more accurate than any on any mutual fund family homepage.
Have you ever used a financial advisor? Were you happier than we are?
Have you ever used a financial advisor? Were you happier than we are?
Yes, I have used advisors. One (out of six) was excellent. She worked with us 30 years ago when we had very little money.
ReplyDeleteSince then I have come to understand that the reason they have such lovely buildings is because they have a part of my money.
We do most of our investing on our own and have been mostly out of the market this last few years. Too much for my stomach. In the past we have more then doubled our money by choosing five to ten larger companies that we know a lot about (because we use their product or services) and let it roll. I never invest in small amounts or things. I do not have the time or energy to keep an eye on them.
My philosophy on the markets:
No one takes better care of your money then you.
And
Remember the money is much more like gambling then it is like saving. Know when to hold 'em and when to fold 'em.
We used a couple if financial planners early in our retirement planning and they were great for high level stuff like understanding each others risk profile and for general education. We didn't use them for investment selection, we do our own research and we run our own superannation fund. We don't use an adviser these days.
ReplyDeleteJan from Retiring not Shy!
www.retirement-planning.info
We used a couple if financial planners early in our retirement planning and they were great for high level stuff like understanding each others risk profile and for general education. We didn't use them for investment selection, we do our own research and we run our own superannation fund. We don't use an adviser these days.
ReplyDeleteJan from Retiring not Shy!
www.retirement-planning.info
I've had good advisors and mediocre ones. Even the bad ones helped me get further in my goals. I had to start somewhere and develop an investing habit, and working with an advisor helped me get comfortable with the mechanics and statements. But that was the 90s.
ReplyDeleteNow, it seems much easier to get information and to invest online. I think a service like Wealthfront or Betterment is a great way to get your feet wet, and I don't think you can ever go wrong with Vanguard.
I still use an advisor for some investments. For instance, I have an inherited IRA that I have to take yearly distributions from, and I think it was both easier to set up with my advisor and to have my advisor remind me about the mandatory distributions. He helps me pick out individual muni bonds for diversification.
That said, we don't always agree. Sometimes I say no to his suggestions, because I have my own ideas about what to invest in and do my own research. We're both okay with that.
Finding a company who specialise in financial advice can be extremely hard. We recently started our search for a company who would help us plan for our retirement. Luckily we found a great financial firm who offered us independent advice on the best ways to save money for when we no longer work. There are good financial companies out there.
ReplyDeleteHenry Hansen @ Ethica Private Wealth Specialists
Thank you for sharing such great information. about Retirement Plan Company and so on.
ReplyDelete