Working with financial planner/advisor?

[rokdog49]

Originally Posted by jazzereh

I'm not here to primarily suggest getting a planner is a good thing, mostly I'm pleased to see the positive experiences that many have had. Far too often the responses are very negative with lots of stories about bad planners [yes they are out there].

I do believe that getting a good financial advisor is a good thing but matching your goals and personality with the planner is part of the equation. There are lots of good, competent people providing advice so the interview is important but you need to have a good idea what you need for the future going into that.

Everyone will have different requirements for their financial future and the planner needs to understand those requirements and objectives in order to provide individual guidance. Find someone with the appropriate qualifications and personality and you're off to a good start.

This comes from someone who has been retired for many years but spent most of my working life in financial services. For many years I was a CFP and taught CFP courses along with a number of other qualifications from being in the brokerage business.

Again, glad to hear the positive experiences above.

I agree with you on this.
A CFP will guide you based on your individual goals for retirement. Because they already get a fee for that, you generally will get unbiased advice with no agenda.
Financial Services folks are in the business of selling you stuff. Nothing wrong with that except they tend to err on the side of what is most beneficial to them making money.
It sort of like going into a car dealer to buy a Toyota Camry and driving off with a Lexus when all you really needed was the Camry.

[Photojeep]

I hope I'm not derailing this thread but I'm 4 months away from retiring so for those of you who have retired, do you have a financial planner?

Or do financial planners do their work to get you safely to retirement?

My retirement savings are not something I would wish to submit to the whims of the market so I'm inclined to keep it where it is now and continue my living-within-my-means lifestyle. I've done various analyses using online calculators and even my own spreadsheets and find that even with the withdrawals I will need to maintain my current lifestyle my money will outlast me.

For someone like me this close to retirement, what can a financial advisor do for me that I'm not already doing?

Again, if I'm derailing the thread please let me know.

Best,
PJ

[rokdog49]

Originally Posted by Photojeep

I hope I'm not derailing this thread but I'm 4 months away from retiring so for those of you who have retired, do you have a financial planner?

Or do financial planners do their work to get you safely to retirement?

My retirement savings are not something I would wish to submit to the whims of the market so I'm inclined to keep it where it is now and continue my living-within-my-means lifestyle. I've done various analyses using online calculators and even my own spreadsheets and find that even with the withdrawals I will need to maintain my current lifestyle my money will outlast me.

For someone like me this close to retirement, what can a financial advisor do for me that I'm not already doing?

Again, if I'm derailing the thread please let me know.

Best,
PJ

Financial Planners can advise you on both pre and post retirement strategies. Among those are how to avoid paying more taxes than necessary when you begin to withdraw funds from your nest egg if applicable. There are numerous other “helps” you may be totally in the dark about.

Have you accounted for everything? Do you own a home? Have you considered maintenance and replacement costs of things like a furnace, a roof, appliances, plumbing repairs, etc.? Do you own a car? Will it have to be replaced at some point? Utilities will increase,so will real estate taxes.
Are you including the cost of your health care insurance in your retirement plan? Medicare isn’t free.
Do you have sufficient funds should you need to go into long term care or are you insured for it? Long term care costs are off the chart. Even a few months can be devastating to your savings.

Unless you are on top of the current and sometimes complex issues concerning retirement, you may want to consider talking to someone.

[Jeff Scott]

Originally Posted by rokdog49

Financial Services folks are in the business of selling you stuff. ...they tend to err on the side of what is most beneficial to them making money.

If they're following the law, this is no longer the case.

[Tracerbullet]

Originally Posted by lfoo6952

My financial advisor works for Edward Jones. He is worth his weight in gold. The amount of money I have made due to his advice has far exceeded his fee. It is important to find one that you trust, one that is a fiduciary, and one that you can form a bond with. My financial planner takes a holistic approach to money management - he looks at my entire family situation, not just how much assets I have in my portfolio. Things like social security income, insurance, estate planning, tax planning. He has mapped out my financial future for the next 30 years, which is very comforting feeling.

This. I can’t say enough about my Edward Jones advisor

[Methos1979]

Originally Posted by Photojeep

I hope I'm not derailing this thread but I'm 4 months away from retiring so for those of you who have retired, do you have a financial planner?

Or do financial planners do their work to get you safely to retirement?

My retirement savings are not something I would wish to submit to the whims of the market so I'm inclined to keep it where it is now and continue my living-within-my-means lifestyle. I've done various analyses using online calculators and even my own spreadsheets and find that even with the withdrawals I will need to maintain my current lifestyle my money will outlast me.

For someone like me this close to retirement, what can a financial advisor do for me that I'm not already doing?

Again, if I'm derailing the thread please let me know.

Best,
PJ

You're not derailing things at all. In fact, you're pretty much in the same position as me and why I started this thread in the first place. As I expected, lots of opinions and differences. I'm likely still a couple years out and things are going well so I might just continue to educate myself and keep interviewing planners and advisors and then maybe by the time I'm ready or in need I'll either have found someone I want to work with or will have educated myself to the point where I can continue to go it alone.

[Cypress Knee]

Thirty or more years ago I was in financial services for several years - insurance sales, stockbroker, pension consultant, investment specialist and compliance officer.

Among the most lucrative marketing targets were people approaching retirement age with significant sums in company pension plans to rollover. It did not matter if the advisor was a fee-based manager or a commission-based transactor, they want your business. You may have multiple opportunities to enroll programs that end up with an appointment with someone trying to earn your business.

Having supervised many investment and insurance "financial planners" back then, I have come to the conclusion that if I want a financial planner in my future, I will want someone who is straight fee-based with no expectations of assets under management.

If I want an investment manager, then I expect to pay commissions and fees for assets under management.

The two are not diametrically opposed.

It also matters where you are in the planning cycle - are you accumulating or withdrawing?

In my own case, during my peak earning years my accountant had me contributing the maximum to a SEP/IRA. I managed my own investments.

Later I discovered that I could have opened up a Health Savings Account and a solo 401(k) plan that would have allowed me to deduct even more from my income and at the time save on taxes. When I brought those issues to my CPA's attention, it was like, "Yeah, yeah, you ought to do that." It was too late for any significant change for me, but for a couple of years I was able to max out 401k contributions for both my wife and myself in solo 401ks made possible through Schedule C business returns. I wish I had known about that earlier, we would have been so much further ahead of the game!

So that is part of my story. Another part is that I prefer owning stocks and use REITs, MLPs, and BDCs as fixed income investments instead of bonds and cash.

One reason I do that is because a financial planner type years ago suggested that I consider Social Security income as a fixed income government bond investment. So I do. Even though I am not accessing it, it works like this: if your Social Security benefit is $1,000 a month and long-term government bond rates are at 2%, then you can consider your social security income as the equivalent of $600,000 invested in a government bond portfolio paying 2%.

Anyway, enough rambling for tonight.

[rokdog49]

Originally Posted by Jeff Scott

If they're following the law, this is no longer the case.

Hi Jeff,
I’m aware of the law.
I’m also aware of how easy it is to get around it.

[rokdog49]

Originally Posted by Cypress Knee

Thirty or more years ago I was in financial services for several years - insurance sales, stockbroker, pension consultant, investment specialist and compliance officer.

Among the most lucrative marketing targets were people approaching retirement age with significant sums in company pension plans to rollover. It did not matter if the advisor was a fee-based manager or a commission-based transactor, they want your business. You may have multiple opportunities to enroll programs that end up with an appointment with someone trying to earn your business.

Having supervised many investment and insurance "financial planners" back then, I have come to the conclusion that if I want a financial planner in my future, I will want someone who is straight fee-based with no expectations of assets under management.

If I want an investment manager, then I expect to pay commissions and fees for assets under management.

The two are not diametrically opposed.

It also matters where you are in the planning cycle - are you accumulating or withdrawing?

In my own case, during my peak earning years my accountant had me contributing the maximum to a SEP/IRA. I managed my own investments.
.

You confirmed the point I was trying to make to rllink who had, in my opinion, misconstrued the differences between paying an advisor a one time fee for advice/planning and investment managers who get paid continuously. I was under the impression he didn’t think he was paying for that. Perhaps I misunderstood.
We pretty much followed the path you took and we are now in the “withdrawal” stage in full retirement. We are literally living comfortably off our combined SS incomes and one annuity that we will continue to receive until we are both dead. We have zero indebtedness.
We have limited the “growth” portion of our assets to about 20% of the total. The rest is in interest bearing short term financial vehicles.
Not much money is being made for sure. On the other hand, none is being lost and we are paying no commissions, fees and very little taxes.
When you’re 71 years old and in good shape financially, growth is not a priority, security is. At least it is for us.
This year begins our mandatory withdrawals which stinks, because we have no need for the money. The plan is to give some to our kids and put the rest back in some form of short term stuff. Uncle Sam just won’t leave you alone no matter how well you plan.

[The Watchman]

We've used a CFP for twenty years, well into our retirement. The valuable service they provided was helping to discuss and establish our goals (leave an inheritance or not, lots of travel, new home, etc.), and to calculate our net worth and assets. They made us aware of how much money we would need in retirement - just showing us how much money we needed per year in retirement was an eye opener. We paid for that initial analysis and guidance, and the investment part came after that. Their guidance was about matching all investments (including bonds, real estate, cash accounts, IRAs, pensions, 401ks, social security, etc.) to your goals under multiple scenarios.

Lots of people enjoy playing in the markets, but I dont. I would not have nearly done as well on my own.

[Mr. Jelly]

Originally Posted by rokdog49

This year begins our mandatory withdrawals which stinks, because we have no need for the money. The plan is to give some to our kids and put the rest back in some form of short term stuff. Uncle Sam just won’t leave you alone no matter how well you plan.

You might give some thought into putting the RMD into tax exempt municipal bonds or a bond fund. Let the tax payers pay you for awhile.

[rokdog49]

Originally Posted by Mr. Jelly

You might give some thought into putting the RMD into tax exempt municipal bonds or a bond fund. Let the tax payers pay you for awhile.

Thanks for the tip.
We’ll look into it. The problem I see with bonds is corporate taxes are going up soon and interest rates will follow.
That will make bonds unattractive.

[H165]

I live in southern Californina and have local access to an unlimited field of choices. I have worked with two financial planners over 24 years of retirement.

The first was a direct personal reference and a personal friend. He worked for a large firm (Morgan Stanley), and was a terrible financial advisor. Lost about 40% of the value of my portfolio by buying MS-sponsored utility "investments" which devalued to zero quickly. When confronted, he claimed he was barred from discussing these losses with me due to "company policy".

The second (and current) advisor was a referral from a bank-startup expert and working small-bank president. This advisor/planner has outperformed my expectations for 20 years. Were it not for his outstanding management of my investments, I would likely need to return to the workforce.

Keep your decisions on this matter professional and impersonal. Don't hire your friends or relatives!!

[Jeff Scott]

Originally Posted by rokdog49

Hi Jeff,
I’m aware of the law.
I’m also aware of how easy it is to get around it.

Those are the FAs I would avoid.

[JonWint]

Originally Posted by rokdog49

We have limited the “growth” portion of our assets to about 20% of the total. The rest is in interest bearing short term financial vehicles.
Not much money is being made for sure. On the other hand, none is being lost and we are paying no commissions, fees and very little taxes.
When you’re 71 years old and in good shape financially, growth is not a priority, security is. At least it is for us.
This year begins our mandatory withdrawals which stinks, because we have no need for the money. The plan is to give some to our kids and put the rest back in some form of short term stuff. Uncle Sam just won’t leave you alone no matter how well you plan.

As soon as you realize that you have more assets than you need to live, your investment horizon lengthens to that of you heirs. Why forego maximum potential returns? You can afford a temporary market drop.

I'll be 69 in a month. We're about 75% stocks; 25% bonds. Up 226% since retirement in 2014. My 96 year old mother made 9% last year in an income fund. I'm thinking of putting her into a riskier fund. She'd have to live 15+ more years to outlive her money. (I don't think she will.)