I’m 59, have $750,000 in savings, and ditched my financial advisor. what is my move

Financial Planners


question: I’m 59, divorced, and have about $750,000 saved for retirement across index funds and a few individual stocks. The mix is ​​approximately 70% traditional IRAs, 10% Roth IRAs and 20% individual stocks/cash. We also have an emergency fund with 6 months of payroll, which we keep in individual stocks and cash. I am very interested and knowledgeable about retirement investing and saving.

Last year I hired a CFA who said he was a fiduciary. CFA transferred approximately $300,000 from my self-managed, low-fee his ETF and index funds into a low-cost diversified ETF and index portfolio that he manages. At our first meeting he made all the usual recommendations.He made sure my retirement age, budget and savings rate were on track. (Looking for a Financial Advisor? Use this tool to find people who might meet your needs.)

In the year I was with him, he contacted me 3 times to check on the status of some fund transfers. I scheduled a check-in at the end of the year and he said we should talk more often, guessing I should request time with him. A year later, his administrative expenses totaled $3,000. Portfolio results were in line with the market, but below average when considering fees.

Let me be clear, I don’t mind spending $3,000 as long as I get something of value, but I didn’t feel like I was getting anything of value, so I I ended the relationship. My question is, what am I missing? Is there something my financial advisor offers that I don’t get today that I don’t understand? How can a financial advisor become a trustee if their primary motivation is to manage their money and earn more fees? But now that you’ve done your homework, you might want to work with a CFA who bills by the hour.

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answer: While you seem to be in control of your own finances, there’s certainly a chance you don’t need professional financial help, said Cristina Guglielmetti, certified financial planner at Future Perfect. I’m here. If you need a financial advisor (for peace of mind or to solve a lesser-known problem), there is no doubt that an hourly or project-by-project advisor is your best bet.

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But before we get into that, it sounds like there was some misunderstanding or misunderstanding in your expectations of your current relationship with your financial advisor. You stated that you enjoy investing your own money and doing your own research, so you are unlikely to benefit from shifting that responsibility to someone else. Didn’t understand or respect it (big red flag). “Why did you contact me, how did that conversation go, what expectations you put forward in working with your advisor, and how your advisor described their working relationship. I wonder if there was an initial conversation to understand,” asks Guglielmetti.

How can an advisor be of value to you without having control over your investment?

Experts we spoke to said we likely wouldn’t need an investment manager, but we would need an advice-only financial advisor who charges a flat or hourly rate for financial planning advice and doesn’t manage your investments. may become. Zach Hubbard, Certified Financial Planner at Greenspring Advisors, said:

Such advisors can be found at the National Association of Personal Financial Advisors (NAPFA) or the Garrett Planning Network. Rates vary by expertise and location, but hourly financial planning services range from $150 to $600 per hour and $1,500 to $10,000 per project.

So what can advisors do to help? You seem to be handling your own investments well, so you need someone who can provide value in other areas. “Depending on your circumstances, you may want to ask an advisor to help you create a retirement income plan, help with tax and estate planning, or help plan your transition to retirement,” says Hubbard.

Bruce Primeau of Summit Wealth Advocates said there are other retirement-related issues to consider. The only way to know if a strategic Roth IRA conversion makes sense is to prepare a long-term tax forecast and compare your current tax situation to the expected future tax situation. “

Amir Noor, Certified Financial Planner, United Financial Planning Group, said: Regarding your children and possibly grandchildren. ” And he has to consider things like portfolio rebalancing, insurance, and whether $750,000 is enough for him in retirement.

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Similarly, Blaine Thiederman, a certified financial planner at Progress Wealth Management, says she is clearly a knowledgeable and diligent investor, but misses an important aspect of financial planning. “Having $750,000 may feel like a lot, and it may be enough, but there’s a lot more to financial planning and investing than picking a few funds. If so, robo-advisors would have already replaced advisors everywhere,” says Thiederman.

Was your advisor really acting as a fiduciary?

You also asked: “How can a financial advisor become a trustee if their main motivation is to manage more money and earn more fees?” “A person or organization acting on behalf of another person or individual who has a duty to maintain and puts the interests of the client above their own.” Therefore, to become a fiduciary, you must be legally and ethically bound to act in the best interests of the other party. Fundamentally, this means that they cannot recommend investments that pay a fee, but advisers are not allowed to offer investment management services because everyone can definitely benefit from financial advice. You can act as a fiduciary by undertaking your business without

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CFP vs. CFA

CFP may be a better choice than CFA. Certified Financial Planner (CFP) and Chartered Financial Analyst (CFA) are separate qualifications with different roles (CFP is typically focused on helping clients with their personal investments, CFA is institutional often assisting with home investment choices).

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Certified financial planner Cary Carbonaro, director of women and wealth at Advisors Capital Management, says there is no one-size-fits-all strategy for financial planning, regardless of previous professional qualifications. According to Carbonaro, the main purpose of working with her financial advisors, whatever their professional vocation, is to reach their goals, increase their net worth, and win in the commission and after-tax markets. Here are her 15 questions to ask any financial advisor she might be hiring.

Have questions about your financial advisor or are you looking for a new advisor? Send an email to picks@marketwatch.com.

Question edited for brevity and clarity.



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