I'm getting married next spring. My fiancee wants to go to a financial planner to help her figure out where she should have her 401k invested as well as getting some general advice. We discussed, and decided we would go together and come up with a financial plan we both agree on since we'll be in this together in a few months.

I'm researching the fee-only financial planning firms in our area, and all of their websites talk a lot about investment advice and very little about financial planning & savings goals (e.g., retirement, saving for kids' college funds). Some mention financial planning more prominently than others, but most of them seem to list investments first.

While getting advice on 401k investments is nice, I would really like to get more advice on our finances in general. Answers like "here's how much house you can reasonably afford and how much you should set aside for taxes & repairs," "here's how much you should put away for retirement," "here's how much of an emergency fund you should have," and "here's how much you should save for a child's college." These are all questions we can get answers to ourselves, but I thought it would be nice to have someone actually take a look at our income, savings, and spending, and make personalized recommendations. Moreover, I think it would be nice to go back to the same person who knows our situation and goals for a periodic check-up.

Is that the kind of advice that financial planners give? Or are they mostly going to make investment recommendations and leave us on our own for the rest of our financial situation? If we want a holistic view of our financial situation and help setting realistic goals, what kind of a professional do we want?

Frankly, one of the ways that many financial planners make money is by selling investments or insurance. If you go to a financial planner with the understanding that you are going to pay a fee and will not, under any circumstances, make any investments or buy any insurance for that planner or anyone recommended by that person then you should be ok. There are good reputable planners out there that truly are in it to help people but they also need to make a living. So you might pay a higher fee to these people. Expect to pay at least $100 per hour for a planner that is not selling you anything else.

My suggestion is to keep looking but also hang out on this forum and ask questions for a few weeks. We might be able to answer many of your questions for free. Then when you do meet with the planner you might save some time and money because you have already had some of your questions answered.

Financial planners are a real crap shoot. Most want to push investments on you that they get some sort of a commission or kickback on even if they do charge by the hour. If you have a CPA to do your taxes every year I might start there since most of them are pretty conservative, know the tax rules, & aren't trying to sell anything.

I would suggest you & your significant other form a plan & set of goals that you would like to accomplish financially, personally, & professionally. It doesn't have to be set in stone but a general idea before getting professional help is a good idea.

I'd do a bunch of research here as a starting point...

We already have these goals. We already track our spending and know what we want to apply our money to, and how much. What we don't have is a professional to tell us if our assumptions are reasonable and suggest ways to improve our strategy.

Post your assumptions here & we'll take a crack at it. We actually have some professionals here that won't charge for their two cents.

>>I think it would be nice to go back to the same person who knows our situation and goals for a periodic check-up.>>

As I seem to be one of the very few consumers who has actually worked for a fiduciary advisor (an independent CFP) and also hired a second independent CFP firm to handle a family member's investments, let me say that first, I congratulate you on thinking of the need for financial advice before you get married. That's extremely rare foresight on your part.

A good fiduciary advisor will look at your work on goals and immediately want you as a client. So many people "get in their own way", it's unbelievable until you see it. The job of a fiduciary advisor is to analyze your financial situation, examine your goals, and to "look for the weak spots". That's how you use them most successfully: you want the fiduciary advisor to ask the hard questions that neither of you have thought of yet. There are always solutions, but only you can decide which solutions are most palatable to choose.

Finding an independent CFP is one of the hardest jobs ever. There just aren't many of them, proportionately. I would never use any CFP that didn't have at least 15-20 years of experience in the industry. They need that long-term perspective to be able to give good advice. What I thought I knew at 30 was crap compared to what I knew at 55, LOL.

On the FINRA and NAPFA websites there are excellent downloadable papers and forms to help you understand the questions you should ask to find a fiduciary advisor. I'd also check out the Garrett Planning Network – Sheryl Garrett lists only CFPs who will work on an hourly basis.

You want a fiduciary advisor who is experienced and competent (yes, and references should be checked too) but also one whose personality makes you both comfortable. The advisor I would have picked for my own accounts is different than the one I picked for my MIL; I had to take her personality into consideration to make sure she would be feel at ease with the CFP firm.

Good luck going forward, and again, congratulations on having the foresight to do this now.

People toss "fiduciary" around a lot. First off, there is a difference between being LEGALLY obligated to be a fiduciary and obligated b/c you pay dues to a club every year. Next, it is very squirrely if you COULD ever prove someone who was suppose to be acting in your best interest didn't. Smoke and Mirrors.

My 2 cents, check out the Bogleheads book from the library for your soon to be spouse. It will make for some good reading on the beach during your honeymoon. It is rather simple once you get a few things down.

Personally, I wouldn't bother with the FA. Unless their name was Ferri or Bernstein, but that would just be to talk to them for an hour or two.

The fact that you have goals and track your spending makes me agree with others here that you could probably handle this yourself without a financial advisor. Agreed on the Bogleheads recommendation, and you can do some research on couch potato investing (aka index investing or passive investing) to learn more. (By the way, even though it's aimed at Canadians, the Canadian Couch Potato website, by finance journalist Dan Borlotti, is one of the best sites in the world on this topic and I highly recommend it. The model portfolios are of course set up for Canadians, but his background pieces and the many blog posts on specific topics are very educational and have alerted me to all kinds of issues I never would have considered on my own: http://canadiancouchpotato.com).

DIY investing is not for everyone; there's a learning curve, and the deeper you get into it the more complex issues you have to grapple with and make decisions about (e.g., how to handle the international portion of your investment portfolio -- currency-hedged funds, unhedged funds, tax implications, etc.). Sometimes it feels way too complicated for me, and sometimes I'd rather be spending my time on other things. My sister hired an advisor because she has no time to manage her own finances and it doesn't interest her in the slightest. I'm a DIY investor and so far have managed just fine, but sometimes I feel like I've bitten off more than I want to chew.

If you've set financial goals and track your spending, it means you're probably interested enough and committed enough for DIY investing.

I think someone associated with NAPFA is definitely what you want. I took a class with one in college and he covered all of that stuff and more.

For what it's worth, I read Bernstein's Four Pillars shortly before getting married, and it convinced me that saving and investing separately for many different things is complicated and unnecessary. We treat all of our savings as one big portfolio, and when the time comes to deal with an unexpected car repair, buy a house, or send a kid to college we will just liquidate the portion we need and rebalance the rest according to our chosen asset allocation. We know how much we need to save, or what we can afford, by playing with a spreadsheet that takes our current net worth and projects our year-to-year income, spending (including those big one-time expenses), and investment returns (I use 3% real). As long as we can still hit "our number" for retirement, we're OK.

If you haven't read one good investing book (i.e. something on the Boglehead's reading list), do that before paying to get advice from someone. You'll instantly know if the person is full of crap, and you'll be much better equipped to generally navigate any financial decision.

Tim

I find it to be very un-time consuming and find myself doing frivolous things just b/c I enjoy it. When I get busy, those things fall by the wayside and I carry on with my life. It is all relative I suppose.

Also, it should be pointed out, if one is truly interested in becoming a DIY'er, the OP's situation is ideal. The amount of money invested has a heavier weighting towards nestegg size XX years down the road than where they put the money. Saving the actual money is the key and any "investing" mistakes are rather minor at the OP's age and place in life (I assume them to be in their 20's or 30's). One exception would be paying high fees, as it is easily avoidable and more than likely better for your returns.

I probably spend a grand total of 4 hours per year managing my investments, so I agree that it's not time-consuming. But getting to the point where you can spend 4 hours per year managing your investments requires quite a bit of reading and learning. And just when you think you have it figured out, you learn something new that makes you realize you've only scratched the surface.

For example, I was blissfully unaware until recently about the foreign witholding taxes that apply to international investments, even though international ETFs have been part of my portfolio for 15 years now. Fortunately those taxes don't affect me in my current investments (all of which are in a registered retirement account), but they would have if I'd held those investments in a different type of account, which I was considering doing until I learned how these withholding taxes can cut into your earnings even more than MERs do.

So it's not quite as simple as "buy a diversified portfolio of ETFs, sit back, and maintain your asset allocation."

In January of 2010 I picked target date funds for our retirement accounts and set up automatic contributions. I also made one lump sum purchase of VTSAX in a taxable account with our excess cash. I haven't touched anything since then. Eventually I will make another lump sum VTSAX purchase since our pile of cash has been growing. My tolerance for asset allocation drift is pretty high. No need, in my opinion, to worry about "currency-hedged funds, unhedged funds, tax implications, etc."

In order to feel comfortable with this approach, though, I did have to spend much of 2008-2009 reading, researching, tinkering, and learning about investments the hard way. I still spend an inordinate amount of time thinking about this stuff, but only because I enjoy it.

Tim

Sometimes I think that's what I should do too, as it's so much simpler, especially since you can get target date fund from Vanguard with an MER of 0.18%. But if you don't have access to Vanguard you have to be careful because most other firms' target date funds are a lot more expensive. If you have $500,000 in a target date fund with an MER of 0.75%, you're paying $3,770 every year in management fees, compared with just $900/year with Vanguard. Over 20 years that difference adds up to more than $57,000 and that's assuming zero growth in your portfolio.

Certainly there are nuances. But, the things young people tend to do for saving are rather straight forward. 401k, check, IRA, check, e-fund in "high yield" savings, check, pay off debt, check. Dipping one's toe into the taxable investing is typically a couple years down the road. I know we shouldn't generalize, but the main question is, are you better off with a FA than without? And regardless of all the excuses one can come up with to have one, they really aren't needed if you spend a couple of hours educating yourself (probably about the same amount of time, perhaps a bit more, that you would spend with a FA/prepping to meet w/ FA).

Yes, we have the Vanguard target date funds in our IRAs for 0.17%. Our other retirement account is the federal TSP, in which all funds cost only 0.02%, so we are lucky for that.

In writing this I have realized that I should just use VTSAX in our IRAs, at 0.06%, and then choose a more conservative TSP target date fund to get the same overall asset allocation at a lower price. Look what you've made me do.

I also just realized that you are Canadian. Weird. A quick peek at the Vanguard Canada website (like an alternate universe...) indicates that things are more complicated for you guys (no funds? just ETFs? all the currency hedging you talked about...)

Tim