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  • Is $1500 a good deal for FA?

    My wife and I met with a fee-only FA recently. I’m just about to start my first job out of training. I was wanting to just meet for 1-2 times to develop a financial plan for us and our future family. Thanks to WCI I have disability insurance and will soon be getting term-life. We have no kids yet. All debts will be paid off within a couple of months. We are currently renting and saving for a down payment in a new home. We also have a small emergency fund. Honestly I think we are doing alright for where we are in our life (both around 30 yo). However, I just learned about finances over the last 12 months so I’m still a rookie. My wife has more faith in me than I do in myself and I would feel more comfortable having a professional look things over and give suggestions. The FA we talked to said he charged $1500 for an all inclusive “financial plan” which he showed us and includes most everything other than like tax planning. Wife thinks maybe we should seek another opinion and that it is too pricey. We are in the Midwest so it’s hard for me to find many FAs close to us but I like being able to meet in person. Any thoughts on if this is a reasonable deal or are we paying too much? Thanks!

  • #2
    maybe you don’t know enough and it’s a great deal because they’re a competent advisor and will start you off on the right foot maximizing your available retirement accounts, recommending a reasonable asset allocation and steering you to low cost index funds helping you avoid mistakes that would cost you much more in the long run etc etc

    or maybe it’s a terrible deal because your situation is simple but they’ll show you data how their complex portfolio construction can beat the market and oh by the way they’ll try to sell you whole life insurance or some other garbage

    advice here is free. Or you could take Jim’s course for $500 or whatever and see where you’re at at the end of it

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    • #3
      I am too cheap. I never would have spent $1500 for this type of advice at your stage of life. I preferred to read and learn on my own. I preferred to invest my time in reading financial books and magazines and it all worked out great.

      There are good financial advisors out there, but they are rare. You are just as likely to get taken for a ride as you are to get good advice. As jacoavlu said above, you could easily end up spending your hard earned dollars on investments and life insurance that makes a lot of money for the financial advisor and is a bad deal for you. There are many threads on this forum from docs who were sold bad investments by an advisor, who are trying to find a way to exit these investments without losing their shirt.

      How did you find your financial advisor? "I know a guy..." is not a good way to do this.

      WCI has a list of vetted and approved financial advisors.

      https://www.whitecoatinvestor.com/financial-advisors/

      If you are not interested in learning about things financial for yourself, at least use one of the vetted advisors who is less likely to take advantage of clients with a lack of knowledge and less likely to cheat you. A good question to ask any advisor is, "Are you a fiduciary?" If the answer is no, they are legally allowed to take care of their own financial interests ahead of yours.

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      • #4
        Thanks for the suggestions. To clarify a few things...He is a fiduciary. He will not be investing our money rather help us determine how to invest our money with our current jobs (we have good retirement plans with 10% match). He does not sale anything and it wouldn’t phase me anyway because I have disability (and soon life) insurance through a WCI recommended person. Lastly there are no FAs in my state listed in the WCI recommended tabs or else I definitely would’ve contacted them.

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        • #5
          Originally posted by SportsmedMD View Post
          Thanks for the suggestions. To clarify a few things...He is a fiduciary. He will not be investing our money rather help us determine how to invest our money with our current jobs (we have good retirement plans with 10% match). He does not sale anything and it wouldn’t phase me anyway because I have disability (and soon life) insurance through a WCI recommended person. Lastly there are no FAs in my state listed in the WCI recommended tabs or else I definitely would’ve contacted them.
          Well, you don't have to have a financial planner who is in Missouri, just because you may live there. For example, several on the list, work remotely (even pre covid!).

          Secondly, why do you have term life and disability, when you have no debt, kids (and maybe not a house - did you find one?)? (it might be fine, just curious for your answer.)

          Thirdly, have you read the book? I'd read about Jim's course, which has a risk free 7 day trial or something. Might be worth a few minutes. Even if you go find an FA, you'll be better prepared.

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          • #6
            Investing and retirement planning aren’t that hard. Read WCI and Bogleheads forums. Read some books on investing.

            I used Rick Ferri’s service last year. He charges around $500 for one time consultation. He’ll look over your finances and recommend steps. He’s a regular poster on bogleheads. Listen to his interview on WCI from last year.

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            • #7
              Originally posted by SportsmedMD View Post
              My wife and I met with a fee-only FA recently. I’m just about to start my first job out of training. I was wanting to just meet for 1-2 times to develop a financial plan for us and our future family. Thanks to WCI I have disability insurance and will soon be getting term-life. We have no kids yet. All debts will be paid off within a couple of months. We are currently renting and saving for a down payment in a new home. We also have a small emergency fund. Honestly I think we are doing alright for where we are in our life (both around 30 yo). However, I just learned about finances over the last 12 months so I’m still a rookie. My wife has more faith in me than I do in myself and I would feel more comfortable having a professional look things over and give suggestions. The FA we talked to said he charged $1500 for an all inclusive “financial plan” which he showed us and includes most everything other than like tax planning. Wife thinks maybe we should seek another opinion and that it is too pricey. We are in the Midwest so it’s hard for me to find many FAs close to us but I like being able to meet in person. Any thoughts on if this is a reasonable deal or are we paying too much? Thanks!
              i personally wouldnt pay that much, but its not like its an unheard of amount.
              i would really get over the meet in person thing....both pre and post covid.
              but assuming its plan building, not actually control of your accounts, etc. its just a trade off of how much time you have and how much you want to learn.

              Comment


              • #8
                $1500 is really cheap. Maybe too cheap. What else is he doing besides recommending investments? Because that is arguably the easiest aspect of financial planning. And if you don’t really know his investment philosophy, he could just tell you to try to outperform the market through market timing, active management, individual stocks & options, etc. have you read his form ADV-2?. the other aspects of planning - tax management, insurance selection, estate planning, retirement projections etc. are where planners really provide value.

                I would go through the WCI vetted advisors or just keep working through self guided resources.
                “Work” is a four letter word for good reason.

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                • #9
                  Sounds like you may work for UofM with the 10% match

                  1) Do you want to DIY?
                  2) Do you want to have one-off help (hourly or a one time plan)?
                  3) Do you want to work with an advisor ongoing?

                  No right or wrong answer. A lot of people on here will help steer you in the right direction to DIY and people seem to speak highly of the WCI course, which seems like a bargain to help save you time from having to do all the research yourself.

                  If you decide to hire an advisor, compare the value that you're going to get with the fee. If you wanted someone else to create a plan for you, $1,500 is a very low price if the advisor was competent and provided you a plan covering all the areas of your financial life. I don't get why they wouldn't include tax planning recommendations though as that is a big part of what to do with your cash flow/overall plan. I'd be the same way as you of trying to get the best deal you can, but just like buying a stock, you want to make sure there isn't a reason it's that cheap.
                  Andrew Musbach, CFP® | Co-Founder & Financial Advisor at MD Wealth Management, LLC | Podcast Host - The Physician's Guide to Financial Wellness

                  Comment


                  • #10
                    You made it through medical school and residency. You can learn basic finances by yourself by taking interest in it. Some people make it out to be much harder than it needs to be. The more advanced things can be more complicated but you can still learn over time.

                    https://www.reddit.com/r/personalfin...i/commontopics this is the super basics with the prime directive, it's directed to the masses but the same principles apply.

                    https://www.bogleheads.org/wiki/Bogl...g_start-up_kit is the bogleheads version

                    https://www.bogleheads.org/wiki/Bogl...g_start-up_kit this is to learn the basics of investing. learn your risk tolerance and the basics is the 3 fund portfolio

                    if you're a w2 employee, it's very straight forward regarding taxes. 1099 may have tax strategies and more suited towards a good CPA. most of the other questions you'll likely have have been discussed through the forums and should be able to be found searching. if not, posting and getting random internet advice is free.

                    If you're the type of person to get overwhelmed at trying to learn something completely different or still have questions after trying to learn, then consider the FA. It's a small price to pay to steer your financial future towards your goals.

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                    • #11
                      I was in a very similar position to you when I finished training , 9 years ago. I paid a one time $1500 fee to a fee-only financial advisor for a roadmap moving forward. This was before I got interested in personal finance and before I read any blogs or books and when I knew much less. Do I think it was worth it for me at the time? Yes. If I had already been reading wci and forums and had some interest in the subject? Probably not.

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                      • #12
                        How much experience does the FA have? Doing what? And what before that? This post on how to read the FA’s ADV might help. (ALWAYS review the ADV before hiring an FA.)
                        Our passion is protecting clients and others from predatory advisors. Fox & Co CPAs, Fox & Co Wealth Mgmt. 270-247-6087

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                        • #13
                          Originally posted by SportsmedMD View Post
                          Thanks for the suggestions. To clarify a few things...He is a fiduciary. He will not be investing our money rather help us determine how to invest our money with our current jobs (we have good retirement plans with 10% match). He does not sale anything and it wouldn’t phase me anyway because I have disability (and soon life) insurance through a WCI recommended person. Lastly there are no FAs in my state listed in the WCI recommended tabs or else I definitely would’ve contacted them.
                          If you feel better going to meet with the advisor, then it is ok to do so. It sounds like the FA is a fiduciary and the FA will not be selling you anything or investing money for you where the FA will be incentivized by kickbacks that could adversely effect the quality of the advice that you receive. I would tend to agree more with your spouse than with you on this decision, but if you have a good income, it is within reason to spend 1.5k on the FA plan to make sure you are on the right track.

                          Another option would be to post on here or on bogleheads your financial picture and then ask the questions that you have. You will get a variety of opinions and can vet those opinions before making any moves. This could allow you to get feedback that will allow you to further tailor the questions you then ask the FA, or if done after your meeting, this could allow you to get feedback on the FA's advice if you post once you receive it.

                          I recently posted a moderately complex estate management situation on bogleheads for a wealthy relative who is seeking advice. I got over 50 responses to my questions and came away as a much more educated and sophisticated consumer. Many of those who answered my questions are well read laypersons, but others are CPAs, attorneys or even estate attorneys. Some of the answers were extremely informative, a few were erroneous, but those errors were rapidly called out as such by the professionals on that forum. In the end, we will end up using an estate attorney to handle the issue, but we are armed with all the right information to expedite the work with the attorney. Posting on bogleheads in advance of consulting with the attorney likely saved thousands in additional legal fees since we are now able to hone in on the critical issues rather than going through extra rounds of meetings with the estate attorney.

                          If you are smart enough to succeed in medicine, there is a very high likelihood that you can learn what you need to do to be highly successful in meeting your financial goals. However, knowledge about personal finance is not enough, you have to have the discipline to control your own spending and investing in accordance with sound financial principals. For many, the psychological aspects of finance are the bigger hurdle, and some find that having an outside FA will help them better stick to their plan. Unfortunately, some of us docs are hopeless and unable to get out of our own way despite personal financial knowledge and good advice. In the end, it all comes down to what you do to execute your plan, no matter the source.

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                          • #14
                            I have never used a financial advisor either. I would suggest developing a personal finance hobby. It is the one thing that I have done that has led to my success other than going to medical school. Posting specific questions here as suggested by WBD is a good idea. Reading some basics books and starting to follow some blogs really pays for itself. That being said $1500 could be cheap if it saves you from some unscrupulous salespeople.

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