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 Post subject: Finding a financial advisor when I have less than 100K
PostPosted: Wed Jun 20, 2007 9:48 am 

Joined: Wed Jun 20, 2007 9:42 am
Posts: 15
My employer offers a service that helps employees find certified, fee-based/fee-only financial advisors. When I inquired, they said that they only work with clients that have more than 200k, although a few worked with people that had 100k. Im only at 65k (combo of 401k and Roth IRA).

Is this typical? I could really use some guidance from an expert on what I should be investing in, retirement planning, etc. I have no debt (paid off that credit card last week). I already know that my 401k and Roth portfolios are underperforming, however I'm not confident in my investment knowledge (which is none) to go messing around with things on my own.

Am I really on my own with this?

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 Post subject: Re: Finding a financial advisor when I have less than 100K
PostPosted: Wed Jun 20, 2007 9:58 am 
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Joined: Wed May 30, 2007 11:23 am
Posts: 859
Location: Portland, OR
Velvet Jones wrote:
My employer offers a service that helps employees find certified, fee-based/fee-only financial advisors. When I inquired, they said that they only work with clients that have more than 200k, although a few worked with people that had 100k. Im only at 65k (combo of 401k and Roth IRA).

Is this typical? I could really use some guidance from an expert on what I should be investing in, retirement planning, etc. I have no debt (paid off that credit card last week). I already know that my 401k and Roth portfolios are underperforming, however I'm not confident in my investment knowledge (which is none) to go messing around with things on my own.

Am I really on my own with this?


Velvet,

In my experience, most people don't need financial advisors, particularly if they're not dealing with more complicated issues like tax and estate planning. Investing is not that hard, particularly if you stick to mutual funds and especially not now in this day of target retirement funds.

If you list here what your current investments are, what your 401k options are, and your age and risk tolerance info, I and others would be happy to help. I also would recommend that you read The Automatic Millionaire and Investing for Dummies. Both are pretty basic and easy reads but full of good information.

If you're not comfortable listing that info, you can PM or e-mail it to me and I'll do what I can to help.

good luck


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PostPosted: Wed Jun 20, 2007 10:29 am 

Joined: Tue Apr 17, 2007 9:34 am
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Location: Deep in the heart'a
Velvet,
I'm in the same boat. My net worth is just under 100K, and I'm having a hard time finding a fee-based financial advisor. Most of the places I've looked in my area are money managers - they want to get a fee for taking over my investment accounts.

Short but relevant story: I'm overweight, and have been so for most of my adult life. When I was in my late 20's I was nearly 300 lbs and knew I had to do something to improve my physical condition. I went to a gym (I'm not pulling any punches, it was a Gold's Gym) in my neighborhood and was refused a membership because they said that they didn't want the liability of my working out there. I was humiliated and angry at the same time. There's nothing like someone telling me that I "can't" do something to motivate me to prove them wrong. I bought some books, did some research, and within a year I was a certified personal trainer (and I'd lost 80 lbs!).

Right now, budget-and-money wise, I've hit so many brick walls in trying to hire someone that I'm going to have to make my own ladder. I am at the point where I think I'm going to have to do the whole thing myself - get my own education, read, take classes, and make a financial plan all by myself.

I think pf101 has the right idea - share what you are comfortable with, and get free advice here. We can also point you in the direction of some great calculators, books, and websites where you can educate yourself until you get to that magical 100K mark. Once you have a little education in finance, you'll be able to "speak the language" and can make a better decision in finding a financial advisor.

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PostPosted: Wed Jun 20, 2007 11:32 am 
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Location: Portland, OR
Gnashchick wrote:
Right now, budget-and-money wise, I've hit so many brick walls in trying to hire someone that I'm going to have to make my own ladder. I am at the point where I think I'm going to have to do the whole thing myself - get my own education, read, take classes, and make a financial plan all by myself.


What kind of ladder?

There are several pros here...take advantage of us. :-)

The advantage to learning on your own instead of hiring someone is that if you learn it, you know it and can implement it forever. When you hire someone you're at the mercy of a hired person forever which can get $$. In my experience, most people only need a pro when they start getting into tax planning/estate planning issues. For just regular retirement savings it's fairly easy to DIY, especially when there are boards like this to use to bounce ideas around.


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PostPosted: Wed Jun 20, 2007 12:44 pm 

Joined: Fri May 18, 2007 8:25 am
Posts: 520
Location: Santa Barbara
Just out of curiosity, why would anyone charging XXX$/hour refuse someone based on low net worth. Is that just because he/she would think you wouldn't be much for repeat business? I could understand why a planner charging %1 would be concerned about net worth, but fee-based...?

I agree. Especially for something as long-term as retirement where risk tolerance is higher, markets tend to rebound, and fees can add up quick, DIY is probably the way.


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PostPosted: Wed Jun 20, 2007 1:43 pm 
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Location: Portland, OR
Ryuns wrote:
Is that just because he/she would think you wouldn't be much for repeat business?


I think this has a lot to do with it. People with less money are less likely to look at alternative investment types where a FP would be helpful. The initial work with someone is time consuming so if it's a one-off the FP probably isn't making that much money off of the first meeting or two.

I have this problem myself and I charge a LOT less than most FPs (my whole class series is the cost of 1 hour with a CFP in DC). If I do my job right, I should never have to see my clients again. :-) Of course, I do have a few people who like to meet a couple times a year just to check in and have me review their stuff, but that's pretty rare. If I were smarter I'd hold back so they have to keep coming back, but that's just ugh to me. :? It's why I try to keep inventing new classes and am thinking of doing a 201 class series that is more in-depth on certain topics. It's also why I'm trying to expand the public speaking side of my business since it's more lucrative and I get to touch more people at one go.

But I have to say, there would be worse things than not being able to get clients because everyone had already received a great education about personal finance. :D That would make my day.


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PostPosted: Wed Jun 20, 2007 2:36 pm 

Joined: Wed Jun 20, 2007 9:42 am
Posts: 15
Age: 34
Income: $45,000 before taxes/deductions
Contribution to 401k pretax: 20%
Balance as of today in 401k: $61,106.01

401k funds available / % of my balance / YTD Rate of return
--Stable Value Fund / 0% / 2.24%
--Company Dodge & Cox Balanced / 30% / 6.5%
--LSV ValueEquity / 0% / 10.29%
--S&P 500 Index / 47% / 9.0%
--Company Harbor Capital / 0% / 6.14%
--EuroPacific Growth / 0% / 12.05%
--Brandywine / 17% / 14.1%
--CRM Small Cap Value / 0%/ 10.92%
--Company Friess Small Cap Growth / 6% / 14.0%
--Emerging Markets Portfolio / 0% / 17.75%

I'll be able to give more details about my Roth IRA at a later date. I started it back in 1999 and contributed the max each year, then 9/11 happened, I lost a ton of money, then got laid off and haven't contributed since. Right now I have $5,844.01. I'll get the info on exactly what I'm invested in later.

With both the 401k and Roth, I had a "set it and forget" mentality. However I didn't know jack about what I was doing. Now that I have more of a clue, I know I have to reconfigure things more to my advantage.

Thanks for offering to help me. :)

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PostPosted: Wed Jun 20, 2007 2:39 pm 

Joined: Wed Jun 20, 2007 9:42 am
Posts: 15
Gnashchick wrote:
Velvet,
I'm in the same boat. My net worth is just under 100K, and I'm having a hard time finding a fee-based financial advisor. Most of the places I've looked in my area are money managers - they want to get a fee for taking over my investment accounts.

Short but relevant story: I'm overweight, and have been so for most of my adult life. When I was in my late 20's I was nearly 300 lbs and knew I had to do something to improve my physical condition. I went to a gym (I'm not pulling any punches, it was a Gold's Gym) in my neighborhood and was refused a membership because they said that they didn't want the liability of my working out there. I was humiliated and angry at the same time. There's nothing like someone telling me that I "can't" do something to motivate me to prove them wrong. I bought some books, did some research, and within a year I was a certified personal trainer (and I'd lost 80 lbs!).

Right now, budget-and-money wise, I've hit so many brick walls in trying to hire someone that I'm going to have to make my own ladder. I am at the point where I think I'm going to have to do the whole thing myself - get my own education, read, take classes, and make a financial plan all by myself.

I think pf101 has the right idea - share what you are comfortable with, and get free advice here. We can also point you in the direction of some great calculators, books, and websites where you can educate yourself until you get to that magical 100K mark. Once you have a little education in finance, you'll be able to "speak the language" and can make a better decision in finding a financial advisor.


Holy moses! You take that DIY thing seriously! It's actually pretty inspiring that you just went out there and did your own thing. I've done that with other areas of my life, wish I could do it with my body like you did...but for now, I'll just start off with the money. :-D

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PostPosted: Wed Jun 20, 2007 2:49 pm 
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Posts: 859
Location: Portland, OR
Velvet Jones wrote:
Age: 34
Income: $45,000 before taxes/deductions
Contribution to 401k pretax: 20%
Balance as of today in 401k: $61,106.01

401k funds available / % of my balance / YTD Rate of return
--Stable Value Fund / 0% / 2.24%
--Company Dodge & Cox Balanced / 30% / 6.5%
--LSV ValueEquity / 0% / 10.29%
--S&P 500 Index / 47% / 9.0%
--Company Harbor Capital / 0% / 6.14%
--EuroPacific Growth / 0% / 12.05%
--Brandywine / 17% / 14.1%
--CRM Small Cap Value / 0%/ 10.92%
--Company Friess Small Cap Growth / 6% / 14.0%
--Emerging Markets Portfolio / 0% / 17.75%

I'll be able to give more details about my Roth IRA at a later date. I started it back in 1999 and contributed the max each year, then 9/11 happened, I lost a ton of money, then got laid off and haven't contributed since. Right now I have $5,844.01. I'll get the info on exactly what I'm invested in later.

With both the 401k and Roth, I had a "set it and forget" mentality. However I didn't know jack about what I was doing. Now that I have more of a clue, I know I have to reconfigure things more to my advantage.

Thanks for offering to help me. :)


Any way that you can provide tickers for those? Particularly the ones liek "emerging markets portfolio" that give no hint of a management company. Would make it MUCH easier to research. Also, how are you with risk? It sounds like you might be a bit leery considering your losses after 9/11, but I would also wager that you were not well diversified. Did you sell out of the investments that you were in? Most people I know who stayed in are back to where they were, if not much higher.


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PostPosted: Wed Jun 20, 2007 5:59 pm 

Joined: Wed Jun 20, 2007 9:42 am
Posts: 15
pf101 wrote:
Any way that you can provide tickers for those? Particularly the ones liek "emerging markets portfolio" that give no hint of a management company. Would make it MUCH easier to research. Also, how are you with risk? It sounds like you might be a bit leery considering your losses after 9/11, but I would also wager that you were not well diversified. Did you sell out of the investments that you were in? Most people I know who stayed in are back to where they were, if not much higher.


I'll be able to get those tickers to your tomorrow. Sorry about that. As far as risk, I took a risk assessment over at the ING Direct site and this listed me as a "Moderately Aggressive" investor. I understand there are risks involved, however I'm willing to face some of that to make more money. I feel I still have time to do that. If I were older, say in my 40s, I'd be more risk averse. And you are absolutely right. My account is not diverse at all. I'll have to call my bank, all it says is that I'm in their equity index fund b...whatever that means. I didn't sell anything. I didn't touch the account, I forgot about it for a while. I'd say that it's a few hundred less than where it was before 9/11. But it's not near anywhere where it could be.

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PostPosted: Wed Jun 20, 2007 8:03 pm 

Joined: Sat Apr 07, 2007 2:03 am
Posts: 872
Location: Taishan, Guangdong, China
I looked through the list of 401k options and they're pretty unbalanced choices -- not surprising though since many 401K administrators simply pick fund based on how they think they sound. (I like investments that grow - growth must be better!)

Quote:
Stable Value Fund
* Insurance guarantees

Dodge & Cox Balanced
* 65% stock (large blend) / 35% bond (medium, high CR)
* 0.52% ER

S&P 500 Index
* Large Blend
* 0.07% - 0.35% ER

LSV Value Equity
* Large Value
* 0.64% ER

Harbor Capital
* Large Growth
* 1.07% ER

Brandywine
* Midcap/Large Growth
* 1.08% ER

Friess Small Cap Growth (Brandywine Advisors)
* Midcap Growth
* 1.18% ER

CRM Small Cap Value
* Small Blend
* 1.14% ER

American Funds EuroPacific Growth
* Developed Intl - Large Blend
* 0.52% - 1.59% E/R (depends on the exact class you own)

Emerging Markets Portfolio
* Emerging Markets
* ???


The strange thing is the lack of a bond fund. Instead, they have a "stable value fund" that buys insurance guarantees for income. Wacky. That makes the decision pretty simple for 100% stocks in your 401K. And with only have singular options for international developed and international emerging markets, there's no choices there. Ordinarily I'd advocate a 45/45/10 for domestic/developed/emerging but it'll depend on how the expenses are. I also would prefer a simple 50:50 split for large & small but at 1.14% ER, I'd increase the large allocation more. Something like so:

Quote:
* 30% S&P500
* 15% CRM Small Cap Value
* 45% EuroPacific
* 10% Emerging Markets Portfolio


Then I'd transfer your Roth IRA to Vanguard to buy either bonds or REITs or both. Just the mention of "bank" and "B" tells me they've got you in a high commission/high expense fund that's probably underperforming.


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PostPosted: Thu Jun 21, 2007 6:09 am 
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Posts: 394
Location: New Jersey
An advisor that charges by the hour is often a good choice for people that do not meet the minimums set by many advisors. Advisors that have minimums usually perform some primary function other than advice like managing an account or selling products. But the delivery of actual advice or planning has nothing to do with the size of your accounts.

There is a nationwide network of hourly, as-needed financial planners called the Garrett Planning Network http://www.garrettplanningnetwork.com that are dedicated to serving middle-income folks and do not have any minimums or sell products to supplement their incomes. (In the sprit of full disclosure – I am a member of this network).

As to whether or not you need or want to hire an advisor, that is a personal decision. There is a lot of free information available in forums like this one, other Web sites, and at the public library. That’s the upside, the downside is that there is a lot of information out there, and it’s not all accurate, applicable, and is sometimes contradictory. You don’t have to be facing complex estate or tax situations to need a financial planner. It is really about making important decisions and whether you feel that there are enough moving parts involved that you no longer feel comfortable or are able to do it without professional help. It is not that different from the decision to pay a doctor or a mechanic.

The more you can educate yourself about personal finance topics, the more you can save if you do hire an advisor. If you hire someone that charges based on the time involved to create and deliver advice, the more you can do on your own means less of the advisors time and a lower your bill.

There is also a human/behavioral side to personal finance that doesn’t always jive with the math and the rules-of-thumb. Planners that are experienced working with people are able to address many of those situations better than a book or web site.

On last point, please do not look to hire an advisor to help you boost your investment performance. There are a number of great things a professional financial planner can do, but beating the markets is not one of them.


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 Post subject: Fund/Ticker info
PostPosted: Thu Jun 21, 2007 10:31 am 

Joined: Wed Jun 20, 2007 9:42 am
Posts: 15
Stable Value Fund (This is an institutional fund. No ticker symbol available.)
Company Dodge & Cox Balanced (This is an institutional fund. No ticker symbol available.)
LSV ValueEquity (LSVEX)
S&P 500 Index (VINIX)
Company Harbor Capital (This is an institutional fund. No ticker symbol available.)
EuroPacific Growth (RERFX)
Brandywine (BRWIX)
CRM Small Cap Value (CRISX)
Company Friess Small Cap Growth (This is an institutional fund. No ticker symbol available.)
Emerging Markets Portfolio (MGEMX)

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PostPosted: Thu Jun 21, 2007 10:39 am 

Joined: Wed Jun 20, 2007 9:42 am
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MossySF wrote:
Then I'd transfer your Roth IRA to Vanguard to buy either bonds or REITs or both. Just the mention of "bank" and "B" tells me they've got you in a high commission/high expense fund that's probably underperforming.


Thanks for sharing Mossy. I've provided specific ticker information below, just in case it makes a difference. And I agree with you about the Roth. I don't know much about investing, and even I can tell my account is doing poorly. I have no idea how much it's costing me to keep my money there. How would I transfer from my bank to Vanguard or someone else? Is it just cashing out with one, is it a wireless transfer? I don't know how that happens.

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PostPosted: Thu Jun 21, 2007 10:43 am 
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Velvet Jones wrote:
MossySF wrote:
Then I'd transfer your Roth IRA to Vanguard to buy either bonds or REITs or both. Just the mention of "bank" and "B" tells me they've got you in a high commission/high expense fund that's probably underperforming.


Thanks for sharing Mossy. I've provided specific ticker information below, just in case it makes a difference. And I agree with you about the Roth. I don't know much about investing, and even I can tell my account is doing poorly. I have no idea how much it's costing me to keep my money there. How would I transfer from my bank to Vanguard or someone else? Is it just cashing out with one, is it a wireless transfer? I don't know how that happens.


Call 1-800-VANGUARD and tell them you want to move your money from your bank Roth to a new Vanguard Roth. They'll walk you through the process. You can do it online or they'll send you paperwork in the mail.


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