Announcement

Collapse
No announcement yet.

Should I hire a financial advisor?

Collapse
X
 
  • Filter
  • Time
  • Show
Clear All
new posts

  • Should I hire a financial advisor?

    I'm an attending, four years out of residency. I've been a long time casual reader of the blog and listener of the podcast. Here are my finances broadly:

    My income 165-300K throughout my career
    Non-physician spouse income 100-200K varies per year as an he is an independent contractor
    • We have a house with mortgage of 440K
    • My car is paid off, his car has 25K (partial deduction as a work expense)
    • My student loans are 25K at 1.6% and I have no plan to pay for them off while the interest is this low
    • We have been maxing out our retirement accounts for the past 4 years. I max out my employer 401K, and he maxes out both the employer and employee portion of his retirement account. The money is invested in Target date funds. We have also been maxing out our (backdoor) Roth IRAs for several years. Currently all are with Fidelity
    • We have a 529 account for my daughter and we have an automatic monthly contribution. We have a goal to contribute to some of her education but no number were trying to reach, or cover her entire education.
    • I have own occupation disability insurance.
    • My husband is not interested in getting disability insurance.
    • We do not have life insurance, although we have discussed getting term life insurance and are not certain we want to get it.
    • Do not have umbrella insurance.

    My question is the following:
    Now that we have some money leftover, I'd like to start investing it in a taxable account. However, I don't know how to do it myself.
    Should I look for a step-by-step guide of how to open an account? From what I've learned from WCI, I should invest in low cost index funds, such as with Vanguard, but how do I do that?

    I don't want to hire an advisor who tries to oversee all of your cash flow, as I think we already have a good handle on things and have been responsible so far. Are there advisors who would just set up a taxable account for me and I can do monthly transfers. Does it look like I need more help and should I actually hire someone to manage all of our accounts?

    Thank you!

  • #2
    I would get an umbrella. It is cheap coverage. Bundle it with your home an auto insurance. No brainer. It would be easy to set up a taxable account at fidelity since you already have an account there. Simply make a phone call or look around on the website. If you are in your 30s just buy the total index fund. Later you can add a bond fund and an international fund.

    Comment


    • #3
      Financial planning is not for helping you monitor your spending, although a planner needs to have good perspective on how much you can be reasonably expected to spend over your lifetimes. And it is certainly not to "manage all of our accounts". Not all planners even "manage" accounts. So how do they make money? They give great, actionable advice and helps the clients have clarity about their overall risk exposure, whether they are on track for FI, whether they are ahead of the target FI date. Knowing these things can really change your perspective about how you live, spend, and save today while you're still in your peak earning years.

      Planning helps you get context on what all that information you posted above means. what decisions are optimal to help you reach your long-term goals, how to prioritize among your choices for what to do with money as it accumulates. You really have no idea at this point. You have no life insurance, your husband has no disability insurance and you really haven't based that decision on anything meaningful, just a vague idea that you each make a relatively decent salary. To me, that is a little scary.

      A portfolio is not a plan. The plan dictates the portfolio. I am NOT saying you need to go out and hire a planner, though, simply trying to clear up some misconceptions. I don't even think you're sure of what the point would be right now. Most people don't until they really understand the purpose of planning, because it can be hard to articulate. It is the next step after you begin making a lot of money if it matters that you understand the long-term impact of today's decisions, rather than just the impact on today's bank balance. Huge difference.

      Thank you for dipping your toe in and posting for the first time!
      Working to protect good doctors from bad advisors. Fox & Co CPAs, Fox & Co Wealth Mgmt. 270-247-6087

      Comment


      • #4
        i am just going to answer to the part about opening taxable brokerage account;
        It is pretty straight forward not much different regular bank account (checking, saving) it is just within that account you can transfer money, buy stocks, funds etc. As Hatton mentioned you can just open one via Fidelity or Schwab or other institutions. I like Schwab personally my retirements accounts with Fidelity and taxable account with Schwab. You can start with total stock market index funds, along with WCI site this site has good basic info.

        Comment


        • #5
          I'd second jfoxcpacfp - but I guess you could say we're both biased on the value you could get, which is different than the bias most people on here will tell you. Most advisors will give you some type of free consultation for you to see any potential benefits of working with them before deciding.

          We don't offer this, but some advisors offer a one-time financial plan, which you could then follow up with some hourly planning work if you want to drive the process more. And if you did hire an advisor, it doesn't have to be this permanent commitment / if you ever felt comfortable handling things yourself, you just stop working with the advisor at that time.

          To your question though, hiring an advisor to just help you with monthly contributions to a taxable account, in my opinion, isn't worth paying an advisor for. You can easily get this through a robo advisor (wealthfront, betterment, Schwab Intelligent Portfolio) for significantly lower cost. Or the lowest cost, would be to try and get advice on here and just invest in a couple low cost index funds. It may seem overwhelming at first, but like justlearning mentions, it isn't hard to set up the account and then recurring monthly automatic contributions.

          The point of an advisor, is to take all of the moving parts, along with the goals you're saving for, and create an overall plan based on what's most important to you (which the biggest driver early on is cash flow decisions). Then to help you implement it over time, make adjustments as life evolves, save you time, take advantage of incremental opportunities you may not be aware of, and ideally give you some peace of mind from having a plan/clarity.

          There is no right answer here and everyone falls on a different part of the spectrum with how much help/advice/hand holding they need or want.
          Andrew Musbach, CFP® | Co-Founder & Financial Advisor at MD Wealth Management, LLC | Podcast Host - The Physician's Guide to Financial Wellness

          Comment


          • #6
            Originally posted by BackToRunning View Post
            I'm an attending, four years out of residency. I've been a long time casual reader of the blog and listener of the podcast. Here are my finances broadly:

            My income 165-300K throughout my career
            Non-physician spouse income 100-200K varies per year as an he is an independent contractor
            • We have a house with mortgage of 440K
            • My car is paid off, his car has 25K (partial deduction as a work expense)
            • My student loans are 25K at 1.6% and I have no plan to pay for them off while the interest is this low
            • We have been maxing out our retirement accounts for the past 4 years. I max out my employer 401K, and he maxes out both the employer and employee portion of his retirement account. The money is invested in Target date funds. We have also been maxing out our (backdoor) Roth IRAs for several years. Currently all are with Fidelity
            • We have a 529 account for my daughter and we have an automatic monthly contribution. We have a goal to contribute to some of her education but no number were trying to reach, or cover her entire education.
            • I have own occupation disability insurance.
            • My husband is not interested in getting disability insurance.
            • We do not have life insurance, although we have discussed getting term life insurance and are not certain we want to get it.
            • Do not have umbrella insurance.

            My question is the following:
            Now that we have some money leftover, I'd like to start investing it in a taxable account. However, I don't know how to do it myself.
            Should I look for a step-by-step guide of how to open an account? From what I've learned from WCI, I should invest in low cost index funds, such as with Vanguard, but how do I do that?

            I don't want to hire an advisor who tries to oversee all of your cash flow, as I think we already have a good handle on things and have been responsible so far. Are there advisors who would just set up a taxable account for me and I can do monthly transfers. Does it look like I need more help and should I actually hire someone to manage all of our accounts?

            Thank you!
            You opened a 529 account, opening a taxable account is just as easy. Not rocket science I can assure you.

            Comment


            • #7
              Originally posted by BackToRunning View Post
              Now that we have some money leftover, I'd like to start investing it in a taxable account. However, I don't know how to do it myself.
              Should I look for a step-by-step guide of how to open an account? From what I've learned from WCI, I should invest in low cost index funds, such as with Vanguard, but how do I do that?!
              Step One: Choose your brokerage. Since you're already with Fidelity, I'd suggest sticking with them (although Vanguard and Charles Schwab are good options as well).

              Step Two: Open a brokerage account (you can do this online, the website will walk you through the steps).

              Step Three: Once the account is open, link it to your bank account so you can fund the account via Electronic Funds Transfer (again, the brokerage website will have instructions on how to do this).

              Step Four: Transfer money electronically from your bank to your new brokerage account. It will go into a low-interest money market account (known as a sweep account).

              Step Five: Pick out the index mutual funds or ETFs you wish to invest in (at Fidelity, I'd suggest Fidelity Zero funds; look for S&P 500 or Total US Stock Market, Total International Stock Market, and down the road Total Bond) and use the money in the sweep account to buy shares.

              Step Six: Now that you actually own some funds, set up an automatic monthly investment on the brokerage website from your bank account into the funds you've purchased.

              Done! It's all very easy.

              Oh, and don't forget to name beneficiaries on all your online accounts!

              Once you have some significant coin saved up, THEN it's time to think about whether you'd benefit from consulting with a good financial advisor. (In the interim, get some umbrella insurance - it's cheap - and a term life insurance policy, and make the necessary legal arrangements for the care of your minor daughter should the unthinkable happen and you both pass away before she reaches adulthood.)

              Comment


              • #8
                You don’t have term life insurance? Why not?? You have a child

                Comment


                • #9
                  Originally posted by BackToRunning View Post
                  I don't want to hire an advisor who tries to oversee all of your cash flow, as I think we already have a good handle on things and have been responsible so far. Are there advisors who would just set up a taxable account for me and I can do monthly transfers. Does it look like I need more help and should I actually hire someone to manage all of our accounts?

                  Thank you!
                  I have not personally done it but why don't you shell out the $499 for Fire your financial advisor course. Or read his book. And at the end if you still feel that you need a FA, get one where you pay a set amount per year to review your investments and guide you.

                  That will be your cheapest option.
                  Last edited by Kamban; 10-23-2020, 08:24 PM.

                  Comment


                  • #10
                    Originally posted by jfoxcpacfp View Post
                    A portfolio is not a plan. The plan dictates the portfolio. I am NOT saying you need to go out and hire a planner, though, simply trying to clear up some misconceptions. I don't even think you're sure of what the point would be right now. Most people don't until they really understand the purpose of planning, because it can be hard to articulate. It is the next step after you begin making a lot of money if it matters that you understand the long-term impact of today's decisions, rather than just the impact on today's bank balance. Huge difference.
                    I can't agree more with this statement! Money and investments are just the hammer and nails to whatever it is you want to build - they are nothing more than tools. But given a hammer, nails, a pile of wood and some assorted tools without a blueprint or skilled experience/knowledge there can be some blemishes or larger structural faults to what is put together if you are building your own house. It may seem bias coming form Andrew Musbach , myself and Johanna as professionals in the industry but I can assure you that part of what drives advisors like us to become independent fiduciaries is the deep vale for planning that major firms just aren't providing at the level to best server higher earners like yourself require.
                    Founder, Coastal Wealth Planners- Fiduciary Tax-Sensitive Retirement Planning & Wealth Management www.coastal-wp.com email: [email protected]

                    Comment

                    Working...
                    X