You can probably do without a financial advisor if you are only slightly wealthy - like up to a few million dollars in assets. However, if you are an ultra high net worth person, chances are that you have so many assets that keeping track of everything will be very time consuming. Bill Gross (possibly the most famous CFA), has a financial advisor; his portfolio is so big that managing it is a full time job.
It might also be worth hiring a tax, estate, or other lawyer to further optimize your portfolio. Even if the savings are incremental in percentage terms, they can add up if your portfolio is very big. I imagine that wealthy investors are also interested in ways to protect their assets in the case of unforseen events, like divorce.
Don’t agree with this at all. Maybe when it comes to investing, since you’re a Charterholder and know your way around an investment portfolio. But like BChad said, there’s more to personal finance than your asset allocation.
an advisor slash advisory team is best for those with little time to learn about or manage their investments (e.g. executives, business owners, etc) and those with with money that have no financial knowledge or a general lack of capacity to learn (e.g. anybody that can save well and has a DB pension like teachers, government workers, auto workers, or heirs of large estates).
advisors are generally not for CFA charterholders. but yes, nobody, including 25 yo bums, should attain an advisor that doesn’t at least have a BBA from an okay school. if you’re higher on the food chain, a CFA or CFP is a necessity.
Yes, and I can call you up on a tax issue. Or I can call up a lawyer if I have an estate issue. I don’t need some bum to do that for me for a cut of my wealth. I agree I need specialised advice. I don’t agree I need a salesman to coordinate that for me.
In general, most people would benefit from working with an Advisor. Managing money is complex and most all investors do not have the skill, ability or time to do it themselves. In addition, do it yourself investors may benefit as sometimes it can be difficult to manage your emotions in dealing with your own portfolio, or, that of your spouse (if you have different tolerence for risk for example, or different experiences or upbringing in dealing with $$).
Also, as a few other posters have mentioned, IM is only one component of your overall planning. You also need to focus on financial analysis, risk mgt (insurance), tax planning and estate planning. This is an area where most do it yourslef investors do not have the experience to handle properly and can benefit in working with an experienced advisor who can manage and coordinate accordingly.
Planning is not a one time event and is a continious process as you build wealth over time.
You can tell if you are working with a good advisor if they have a clear process in place to addressing your IM and planning needs, are clear on fees and can explain or demonstrate the value of their services.
Depends on the issue. For the tax side, I’d probably work with a CPA, but structuring and liability stuff I trust lawyers more in my experience. Generally I find you get quality with lawyers 99 times out of 100. I don’t trust accountants at all though really. I have one that I trust, but beyond that I’ve seen all sorts of garbage advice and stuff I have been able to figure out better on my own. I’m not saying you’re not good Greenie, but there are lots that just can’t deal with complex issues. The simple stuff I can handle myself, anything complex I go to a lawyer. I worked with three different CAs on a real estate issue, they all told me different things, all garbage that I didn’t trust. To get it sorted and to ensure I was compliant I needed to go through a tax lawyer. I’m sure he has CAs that he consults on certain matters, but the ones I dealt with were quite frankly crap. They didn’t provide anything I couldn’t figure out myself (I do have an accounting background).
To summarize: If I need someone to tell me how I earned my income, or how I should earn my income in the future (like investment account allocation), I’ll talk to an accountant but I’m comfortable with this myself. If I need someone to interpret tax legislation to come up with a solution, I’ll rely on a lawyer. This would also involve much of the trust/estate stuff, IMO. The more unique the situation, the more likely I’m going to the legal side. Cookie-cutter stuff I would be more trusting of an accountant.
nah fianncial advisors are here to stay. knowing abotu personal finance is easy and stuff but ppl are juss not interested. i got a friend who is super smart, in a top 5 phd program in bio engineering and not even kno what the S&P 500 is. to us here its a joke, but in all seriousness it doesnt matter how smart they are, most juss dont care.
anyone can literally be a financial advisor. i mean how hard is it to stay with the pact and put it in some mixture in etf indexes such as SPY and BND. Heads you are praised by the cleint. tails you blame the market and they can confirm it since everyone else is losing. A successfull fianncial advisor really juss needs to have a lot of aum. and the factors you need to be successful is having a rich network of friends and family, be smart, be convincing, and most imporantly be trusted by the people you know. Now if you dont have a rich net work of F&F that trust you then you really juss gotta be good at sales. hence the quote, “sell me this pen” which is pretty iconic of the industry even before that movie came out.
If you are looking for help with financial planning you could consider working with a Fee-only Financial Planner who charges directly for their services. They would not be licensed to sell investments or insurance and scope of service would be focused on preparing a financial / estate plan, retirement plan etc. Somce charge by the hour, some charge per service etc based on service required.
You would be responsible for implementing the plan, either by yourself (as a do it yourself-er) or through an Advisor or broker.
Not sure how it is up north, but most fee-only RIAs (and the FAs that have moved that way) have total discretion over their clients’ portfolios. That’s with a % of AUM fee structure. If you’re paying someone to give you advise then you have to implement it yourself…that’s pretty idiotic.
Personally 100% agree with the accountants bit. Most seem to think they know way more than they do about finance and as a result, I’ve largely discredited their entire kind. If I saw the CPA had a CFA, then I’m sure I wouldn’t think he is one of the rest. But largely they seem to think they are smarter than they are in other matters outside of tax or audit (at least in my experience)
^I’ve debated on the CFP thing. I’ve gotten two e-mails today from CFP telling me that I should do it. Haven’t taken the plunge.
The only reason for me to do it is if I start losing market share to the local CFP goons around town. Texas Tech has a big presence where I live, and they have a big, nationally recognized CFP program. So I might have an uphill battle someday if I don’t do it too.