Financial Planner/Advisor

[jeffp18]

Hello,

My wife and I recently had our first child and are now looking to buy a house. We are in our early 30s. We both have 401k through work and our own IRAs that we max out. In terms of retirement, we are way ahead of where we should be. We have a good amount of money saved up for our down payment on a house, as well as an emergency fund. Before we go out and purchase a house, we would like to go speak to a professional about things like how much should we be spending on a house, how much should we be putting towards retirement, how much can/should we put away for our daughter's education.

I am not sure where to start though. Should I be looking for a financial advisor or financial planner? What is the difference between the two? How do I go about finding a good one when I'm clueless as to what I'm even looking for?

Any advice would be appreciated. Thanks.

 

[QueenIsabella]

You want a CFP--definitely someone certified. You should probably interview a few and find one that seems honest and above-board. When we interviewed them, I gave them a hypothetical--what if $1M arrived in the mail, tax free--how would you tell me to invest it?

Also, know that some are paid "fee for service", and some make commissions. There are pros and cons to both, you just need to know which type you have, and be okay with it. We go the commission route, our choice. We have a guy through Northwest Mutual, and I can't say enough good things about them. Our money has grown at a steady pace--nothing wild, but we also didn't lose a whole lot in 1999, 2008, etc. We own a basket of mutual funds in our IRAs, and also have short-term and mid-range investments, for more immediate needs (emergency funds and down-the-road stuff, like a home renovation in a few years).

If you have specific questions, I'd be happy to answer them. Aside from the house, you should be thinking about funding college, if you haven't already. I know 529's are popular, I'm not personally a fan, but whatever works for your family. You could set up an account and have monthly transfers into it--they don't have to be large.

 

[Eastern]

Also, try posting your info on bogleheads.org for advice. They have a format for you to follow. https://www.bogleheads.org/forum/viewtopic.php?f=1&t=6212 There are a lot of very knowledgeable members who post regularly.

Some reading to get started: https://www.bogleheads.org/wiki/Getting_started

It pays to do some reading before you talk to any financial planners. Also, by the time you know enough to be able to select a financial planner, you probably will not need a financial planner.

 

[tvguy]

Ask your friends and neighbors who they use and if they are happy.
Set up an appointment and decide if you are comfortable with any of those people. Do they listen to your needs, wants and concerns?
Use common sense, don't let ANYONE talk you into doing things with your money that you are not comfortable with.
Monitor what ever financial plan you have, don't invest it and forget it.
As for CFP certification, don't let that lull you into thinking you can be any less diligent in monitoring your plan just because your adviser is a CFP. They are just as capable of giving you bad advice as someone without a certifiction.
Did I mention? ....MONITOR YOUR FINANCIAL PLAN DON'T INVEST IT AND FORGET IT.

 

[CoP Luv]

Use common sense, don't let ANYONE talk you into doing things with your money that you are not comfortable with.
Monitor what ever financial plan you have, don't invest it and forget it.

Great advice! We love our CFP and found the group from recommendations. There are a few things that we don't necessarily agree on (paying cash for a car instead of taking out a loan so we can make more money investing), but they are fine with our wishes. We work TOGETHER on our financial plan and trust them with our strategy. They are always available for conference calls, meetings, and respond in a very timely manner to questions, change in strategy, etc. I feel they are incredibly transparent in their work and am comfortable with them handling our money.

These are all points I would want when looking for someone or a group of individuals on a financial plan.

 

[fbb]

Also, try posting your info on bogleheads.org for advice. They have a format for you to follow. https://www.bogleheads.org/forum/viewtopic.php?f=1&t=6212 There are a lot of very knowledgeable members who post regularly.

Some reading to get started: https://www.bogleheads.org/wiki/Getting_started

It pays to do some reading before you talk to any financial planners. Also, by the time you know enough to be able to select a financial planner, you probably will not need a financial planner.

Read everything you can on Bogleheads for at least a month before you approach a planner.

 

[tvguy]

Great advice! We love our CFP and found the group from recommendations. There are a few things that we don't necessarily agree on (paying cash for a car instead of taking out a loan so we can make more money investing), but they are fine with our wishes. We work TOGETHER on our financial plan and trust them with our strategy. They are always available for conference calls, meetings, and respond in a very timely manner to questions, change in strategy, etc. I feel they are incredibly transparent in their work and am comfortable with them handling our money.

These are all points I would want when looking for someone or a group of individuals on a financial plan.

Those are all things they should listen to. My wife has ALL her 401k money in zero risk investments because she has enough money in the account that she can retire in 3 years. Our Financial Adviser does not manage that, but points out her return so far this year is only 1%, while the return on the small amount of money she has in the IRA he manages is 17%, but he understands she is willing to exchange growth for the guarantee that she will have the moneyt to retire in 3 years.
LOL on paying cash for a car. Our fleet is made up of 5 cars, 3 we paid cash for, 2 we financed, 2 purchased used, ranging in age from 10 to 52 years of age!

 

[fbb]

Those are all things they should listen to. My wife has ALL her 401k money in zero risk investments because she has enough money in the account that she can retire in 3 years. Our Financial Adviser does not manage that, but points out her return so far this year is only 1%, while the return on the small amount of money she has in the IRA he manages is 17%, but he understands she is willing to exchange growth for the guarantee that she will have the moneyt to retire in 3 years.

Another good point. Lots of things are up 17% this year.

 

[chalee94]

Those are all things they should listen to. My wife has ALL her 401k money in zero risk investments because she has enough money in the account that she can retire in 3 years...

While that's a good idea for several years worth of living expenses, if she's planning to use some of that 401k money for 10plus years down the road, it will need to be earning more than 1%.

 

[QueenIsabella]

Those are all things they should listen to. My wife has ALL her 401k money in zero risk investments because she has enough money in the account that she can retire in 3 years. Our Financial Adviser does not manage that, but points out her return so far this year is only 1%, while the return on the small amount of money she has in the IRA he manages is 17%, but he understands she is willing to exchange growth for the guarantee that she will have the moneyt to retire in 3 years.
LOL on paying cash for a car. Our fleet is made up of 5 cars, 3 we paid cash for, 2 we financed, 2 purchased used, ranging in age from 10 to 52 years of age!

See, I could never have investments that gave so little return--but, that's me, personally. The real important thing is is that everyone's needs/wants are different. I need to invest so that I can sleep well at night, as does Tvguy's wife.

I'm a big fan of "set it and forget it" for long-term investing, but that doesn't mean to ignore everything and blithely assume that everything's going fine. Even when things are quiet, we have annual meetings with our financial advisor, just to check in, make sure nothing gets overlooked, rebalance our portfolios, that kind of thing. Right now, we're dealing with a couple big financial issues--one is "passing the baton" to our DD22, another is the passing down of my MIL's estate, which involves multiple life insurance policies, IRAs, trusts, and other things. So, we're actively looking at investing for ourselves and our children. I consider myself fairly well-versed in these matters, but I'm still putting in a lot of time reviewing estate tax law.

 

[runwad]

Here's a site where you can find a "fee only" CFP https://www.napfa.org/find-an-advisor#tab=filters

These are people who charge an hourly rate and make their money that way instead of investing your money in a product that might not be "good" for you, but is "good" for them by the type of commission it pays them.

But I agree with the others, learn a little about investing before just blindly putting your trust in someone. And as others advised, always keep an eye on YOUR money because no one cares about YOUR money the same way you do!

 

[tvguy]

While that's a good idea for several years worth of living expenses, if she's planning to use some of that 401k money for 10plus years down the road, it will need to be earning more than 1%.

Between savings, an annuity that kicks in at age 65, and Social Security at 66 1/2, we may never have to touch any of our IRA's and 401k's. Well, we WILL have to take money out starting at age 70 1/2, but that doesn't mean that we have to spend it, just pay taxes on the minimum withdrawals. DW's 401k is just our safety net for 3 years.
DW made the switch in 2008 before the markets tanked. She hasn't earned much since then, but she is ahead of some of her co-workers who didn't bail out of stocks. However, our Financial Planner says DW should be able to get 4% in safe investment options after she rolls her 401k out into an IRA. He has investment options that are not available in her 401k plan.

 

[jeffp18]

Thanks everyone for responding. Looks like I have some researching to do. I appreciate the help.