Who uses a financial advisor?

[PYBUCK]

If you have as 401k through your company the plan admin can help you set up your 401k and guide you in your personal account as well. The company pays then plenty to manage the 401k so usually they will advise for free

[TxAg]

So when people say, "you should max out your 401K as a first step", does this mean you should put the 18K limit towards your 401K every year? I understand the tax advantages, but there are a lot of people out there where that is not close to doable if they want to have some other savings to invest to use before the age of 60 (buy land, build a house, etc). Or, does this mean that you should be putting enough into your 401K as to max out your employers matching contribution,if available? Honest question as I am trying to learn.

I'm not getting into a pissing match on my own post asking for advice nor was I pointing the jackass comment towards one person. But if you feel the shoe fits then wear it.

I am not asking for a lesson here. I am asking for opinions on a financial advisor. I do not have the time to keep up with it all. I obviously do fairly well on my own. I just want to improve. I don't want to put it all in a 401k as I plan to retire early.

To those of you who have helped, thank you.

Also, Burnadell was simply stating that a sales pitch wasn't needed from obvious posts. I'm not saying anyone was right. But I do respect his opinions as I know he is a good dude. I do ask that if you want to argue about all that then do it elsewhere. Thanks

Let's say you feel comfortable investing $12k.

You can can contribute to your 401k up to the employer match, then max out a Roth IRA ($5,500 max), and what's left of the $12k also goes in your 401k. So you'd be investing $6500 before tax and $5500 after tax.

There are about 8 ways to pull from your Roth IRA before 59 1/2 without penalty so don't let that scare you if you plan to retire before then.

[TxAg]

Yes I know that as well and have always done it. I just hear it all the time and was wondering if people were talking about that or the 18K.


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When people say max it out, yes they mean the full $18k

[Burnadell]

If you have as 401k through your company the plan admin can help you set up your 401k and guide you in your personal account as well. The company pays then plenty to manage the 401k so usually they will advise for free

Wrong Kemosabe. They cannot act as a fiduciary, and the Dept of Labor new regulations on how all retirement accounts must be handled complicates things even more.

[meltingfeather]

A friend is trying to convince me to use a guy he has been using for a few years. I'm skeptical. I do ok on my own but always looking to improve. I'm 27 and keep at least 5 figures in savings and put into my 401k a fair bit (75k in the last 4 years). Is a FA worth it? I need to talk to him but my buddy said he charges 1%. What's the going rate, what do I look for etc. And if I recall, there's a few members here who do that line of work.
Thanks in advance.

what I want to know is how you got $75k into a 401k in 4 years legally as a 27 YO.

[Shane]

what I want to know is how you got $75k into a 401k in 4 years legally as a 27 YO.

Disciplined savings, company match, investment growth....

[nchunter]

So when people say, "you should max out your 401K as a first step", does this mean you should put the 18K limit towards your 401K every year? I understand the tax advantages, but there are a lot of people out there where that is not close to doable if they want to have some other savings to invest to use before the age of 60 (buy land, build a house, etc). Or, does this mean that you should be putting enough into your 401K as to max out your employers matching contribution,if available? Honest question as I am trying to learn.

It's a valid point. My point is that money for land or a house should not be invested. They should be saved. Even if in a money market account. If the time horizon is too short, they can and will be burned. Remember the Dow was at roughly 6500 in march 2009.
My point is that if you can't put in 18k into your work 401k or at least get the full employer match with target dated mutual funds and or total market mutual funds, you have no business having a "financial guy" invest your money. His or her returns would never beat year in and year out a passive investment vehicle like a total stock mutual fund that you buy and hold for 25-40 years. Their fees will eat up your gains.
First you invest for your retirement, then you save for wants. You should invest a minimum of 15% of your earnings not including the employer match. Lock it up long term and let compounding interest work for you

[nchunter]

Wrong Kemosabe. They cannot act as a fiduciary, and the Dept of Labor new regulations on how all retirement accounts must be handled complicates things even more.

You are obviously well versed and intelligent to share your knowledge. Thank you.

[Shane]

It's a valid point. My point is that money for land or a house should not be invested. They should be saved. Even if in a money market account. If the time horizon is too short, they can and will be burned. Remember the Dow was at roughly 6500 in march 2009.
My point is that if you can't put in 18k into your work 401k or at least get the full employer match with target dated mutual funds and or total market mutual funds, you have no business having a "financial guy" invest your money. His or her returns would never beat year in and year out a passive investment vehicle like a total stock mutual fund that you buy and hold for 25-40 years. Their fees will eat up your gains.
First you invest for your retirement, then you save for wants. You should invest a minimum of 15% of your earnings not including the employer match. Lock it up long term and let compounding interest work for you

When I routinely review my clients' accounts with them and look at their performance of the last 5 - 18 years, why does it show that they have matched or even slightly exceeded a matching blended index performance (after fees)?

You have a good enough understanding to be doing a good job with your own finances, apparently. But you aren't properly informed or aware of what happens when people work with financial advisors. Certainly there are examples out there that would fit your perceptions (and worse). But you are making blanket statements that simply are not correct across the board, and you are giving blanket financial advice that may not be the best advice for everyone. In fact, it isn't. There is no one set of guidelines that fits every person's situation. People are different. Their goals are different. Their risk tolerances are different. Their levels of sophistication and knowledge are different. Their personal desire to do it themselves varies widely. It's irresponsible to speak in absolutes giving blanket advice and claiming that it's the right advice for every person.

The average individual investor's longterm returns average about 1/3 of the return of the S&P. That average individual investor holds an investment a few months, because he/she isn't knowledgeable enough, isn't disciplined enough, gets too emotional when markets make major moves, and/or thinks "this time is different" too often. The average DIYer trades too much, and the more often you trade the more often you make mistakes. You and a couple others on this thread may be knowledgable and disciplined enough to be wildly successful on your own. I have no doubt that you are. But you are the exception and not the rule. Most people do better by working with a professional, and whatever it is they pay for that advice is cheap compared to what their mistakes would cost them if they tried to do it on their own. Theory is one thing, but real world rubber meeting the road is another thing. Most people need and want help. Many people like you don't, and there is absolutely nothing wrong with that. But you are potentially going to cause harm to someone who truly does need help if you talk them into going it alone when they're not equipped to do it successfully.

It's OK for you and others to do it yourselves. It's also OK for other people to get help and advice from professionals. If everybody meets their long-term goals, that is what matters most. There is more than one good way to get there.

[keep]

what I want to know is how you got $75k into a 401k in 4 years legally as a 27 YO.

You can do it in less than 2 yrs at age 27 assuming your plan allows after tax dollars

[keep]

Wrong Kemosabe. They cannot act as a fiduciary, and the Dept of Labor new regulations on how all retirement accounts must be handled complicates things even more.

Will the new regs regarding fiduciary liability go into effect now? Last I heard they were up in the air

[Huntindad]

what I want to know is how you got $75k into a 401k in 4 years legally as a 27 YO.

My hat is off to him for doing so. Todays salaries are much more now than than when I was 27. Sounds like he is well on his way to an early retirement.

Also, my guess is that is a combined amount with his wife.

[Shane]

Will the new regs regarding fiduciary liability go into effect now? Last I heard they were up in the air

Everything is up in the air in Washington right now. So far, nothing has changed on the DOL regs though.

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[kmitchl]

I've been through several. Seemed like they invested in self serving products and their results only tracked the market. The last bunch was going to cash when the market went sideways. Didn't do squat during the last correction. That got them sent down the road. Now I run from those three letters - CFA.

[Burnadell]

Will the new regs regarding fiduciary liability go into effect now? Last I heard they were up in the air

As of now, the new regulations go into effect April 10. There has been speculation that Trump might rescind the new regs, but no way to guess that. He has also discussed putting all pending regulations on hold for 60 days. Joe Wilson, Rep from SC introduced a bill to delay the DOL regs for two years.

Who knows?

I suspect there will be some delayed effective date, and maybe a total repeal of the regs. It is a major deal, and, as written, calls for major changes in how all retirement accounts are managed.