Ask The Readers: Should I Be Using A Financial Planner

Ask The Readers: Should I Be Using A Financial Planner

This topic has come up in many a discussion with my friends. My wife and I currently don’t use a financial planner.

In regards to financial affairs of the house, I have done everything on my own using personal finance software and am very comfortable managing this aspect of our lives. As readers of this blog, you know that I meticulously track returns.

I have set up all the necessary accounts to provide for our family as well as our retirement. I am unsure of what a finance planner/advisor would provide me over and above what I find relatively easy to do myself? Am I missing something?

A friend of ours swears by his financial advisor, but when I began probing, it seemed that what he really liked about his planner was the customer service. The finance advisor would respond quickly to e-mails and texts. He would drive out and visit my friend personally to discuss the state of his financial affairs, but all of that doesn’t matter to me.

What matters to me is returns, and it doesn’t seem that his financial planner is offering up better returns when you take his fees into consideration.

What I’ve done so far is to use online tools to determine the best asset allocation based on our age, goals, and risk tolerance. I have then used that assessment to determine which funds to buy within our different accounts.

On my own, I have set up our 401ks, 529 college savings accounts, and investment accounts. I track returns to ensure we are consistently meeting or exceeding market returns. I have set up our disability insurance and life insurance.

What’s funny is how our friend told me that his financial advisor suggested that he purchase whole life, though I don’t see any advantages in whole life. I prefer the lower cost term life insurance while investing the difference in cost between whole and term.

Is there something I am missing? As you can tell from our asset base, we have a lot. Is it time for someone to take a look at our finances to determine if we are maximizing returns and mitigating risks? Let me know how you feel, I’m eager to hear what you have to say on this topic.

About The Author

Edwin is a marketer, social media influencer and head writer here at I Am 1 Percent. He manages a large network of high quality finance blogs and social media accounts. You can connect with him via email here.


11 Comments

  1. [email protected]&More

    It might not hurt to meet with a fee only planner just to see if you missed something. You are pretty organized it seems so it hopefully wouldn’t cost more than a couple hundred dollars and an hour or two. I personally don’t se a planner either but have nowhere near the assets you do.

    Reply
    1. Investor Junkie

      I agree about the fee only planner. Though I think most personal finance bloggers should do ok on their own. An advisor might help double check your work and/or give some suggestions that you didn’t think about.

      Reply
  2. Brandy

    I often wonder if I should get a planner too. I seem to be doing fine on my own, but I wonder if I am missing something.

    Reply
  3. Mrs. Pop @ Planting Our Pennies

    I’ve been thinking about it for us recently, and actually have kindof a compromise position. My company hires a fee-only planner to come out for appointments with employees a few days every few months. Next time he’s there, I plan on getting on the schedule and meeting with him for an hour or so to see if there’s anything obvious he thinks we are missing out on. (Free to me – so the opportunity cost is pretty low.)

    Our accountant has given us good tax savings advice for next year, which isn’t necessarily the same thing, but is a useful service for free when he does our taxes.

    Reply
  4. A 3 percenter

    I am using a financial planner occasionally, actually for free since my company offers this as a benefit. What I have found particularly useful is having them answer and advise me on specific questions rather than do a full review of my financial situation. Some things I have asked them about

    – advice on term vs whole life insurance. While I did go with term in the end, I learned several new points on whole life that may serve me well in future should I need to diversify more. And I did test with them the level of term insurance to go for, and recalculated it based on their advice

    – advice on using Roth 401k and on IRA vs 401k in the context of the options offered by my company

    – discuss healthcare coverage at retirement (again in the context of options offered by my company)

    – clarify for me social security strategies (file and suspend, spousal benefits, etc)

    – some basic guidance on estate planning – as a result of which we did a living trust

    – some advice on college savings options

    and a few other things

    For tax advice I use the CPA who is doing our taxes, he gives me the occasional consultation for free (his fee at tax time is large enough:), but if I didn’t have that I would ask them for tax advice as well.

    I like to do my own research and manage our own assets, but it’s helpful to have somebody to bounce ideas with, and to test your understanding of some not so straightforward matters. Again, having this for free makes it a no brainer, but I would have done it anyway – perhaps on annual basis

    Reply
  5. Andrew

    At the end of the day, the person that cares the most about your money is you. As Lance says, maybe chatting with a fee-only planner would be beneficial to see if you missed anything.

    95% of my money is controlled by myself. The only thing that I am a bit fuzzy on is tax and estate planning, which I will need to get advice on in the future.

    Other than that, I’m very comfortable managing my own money.

    Reply
  6. Early Financial Freedom

    I am also with the suggestion that a fee-only planner would just do. Please let us know how you proceed with this.

    Reply
  7. B

    I agree that a fee-only planner “checkup” may be worth a few hours of your time and what you pay for it. We’re 2 percenters (if not 1%) and I do everything including taxes for us — but I do have an MBA in finance. I definately cannot see paying an advisor 1% of assets ($1MM = $10K per year) in such a low interest rate/return environment. I’ll keep the $10K, thanks.

    Reply
  8. David

    Honestly I don’t think you need a financial planner, or at most an hour or two with a fee based one could be helpful. I don’t personally like using the ones who make their living off a percentage of your assets, or through account fees, or basically anything that you don’t pay for up front. It doesn’t take much of an account balance for that 0.5-2% yearly fee to be more than just paying the adviser an hourly rate.

    Most of the “free” financial advisers I have worked with are just trying to hawk a list of products and as far as I’m concerned, are way over compensated. The fee based ones should have no financial incentive to sell certain products, so they’re more likely to provide objective advice. I like to ask them what they are personally invested in and why.

    Just my opinion.

    Reply
  9. Mike

    I would think that you don’t need a planner – although many do, so this is a bit misleading. I don’t think it is necessarily about how much money you have – it’s just a matter of whether you want to put the time into it. My planner takes care of keeping up with the funds on a daily basis, tax law changes, and basically my overall plan – while I live my life and know that I’m in good hands with someone I trust. We meet twice a year to review things and I call if something is happening that might affect our overall direction.

    It’s kind of like hiring a yard service, nannies, maids, etc…… you delegate some of the work and pay a fee for it. It’s not about performance per se. But since you are handling all of this and have some knowledge in this arena, it would likely be a waste of money for you – but a great value for many of your readers.

    Reply
  10. Debt Snowball Calculator

    When i acknowledge around the fee merely planner. However I do think many individual finance writers ought of do alright independently. A expert may also help make sure your job and/or give many tips that you just didn’t think about.

    Reply

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