My wife and I have an appointment with a CFP next week to discuss retirement planning. This first visit is just a free consultation and I’m not sure what to expect. She emailed me a pretty detailed list of things to gather and send to her before our meeting, basically everything dealing with income, expenses, investments and life insurance. I Would like to have some questions prepared to ask when we go if the LR has any tips or advice?
I do estate planning work. I deal with financial advisors often. Please interview several of them. You should discuss your goals long before you discuss investments. I also generally am uncomfortable with any financial advisor who also tries to sell insurance or annuities
My wife and I just worked with a CFP for the first time. We did purchase some term life through them, but our conversations seemed to focus only on life insurance. He continued to push whole life as the missing link to our current portfolio, calling it a volatility buffer. While I understood the concept, I politely declined the whole life, then asserted that I did not want it, then asked that he just stop talking about it, then started ignoring him when he mentioned it… My next step is to find an accountant. I feel like I would get better advice on where to put money, spend money, and make sure I am saving as much at tax time as possible.
First off I highly suggest reading bogleheads.org. This is a much better site on what to ask/expect from a CFP. I believe User Summit here is a CFP or CPA and can provide some good input, based on his/her input here in the past, I would trust him/her.
The CFP is really trying to gauge where you are from a financial picture, what is your net worth, where are your current investment strategy and how risk averse you are. It sounds way too personal but this is what they need. BUT also remember most CFPs are first trained as salesmen, not advisers.
I would ask a lot of questions to see if she will act like a fiduciary. How much is she going to charge you? Does she invest in index funds or managed funds (you want index)? How often does she reallocate your funds (2x a year at most). Does she work with front-load or end load funds (you want neither)? What are the net expense ratios on the mutual funds she sells (you want less than 1%, ideally under .5%)? If she tries to sell you whole life insurance or an annuity, tell her to pound sand and run away those two only profit her.
Finally, my two cents, grab a few books and spend a few months reading them. You can do this on your own, you don’t need her, even if she is honest, its just an extra expense for you. Any questions can be answered on the site I listed above. They also have a good Wiki.
My wife and I just worked with a CFP for the first time. We did purchase some term life through them, but our conversations seemed to focus only on life insurance. He continued to push whole life as the missing link to our current portfolio, calling it a volatility buffer. While I understood the concept, I politely declined the whole life, then asserted that I did not want it, then asked that he just stop talking about it, then started ignoring him when he mentioned it… My next step is to find an accountant. I feel like I would get better advice on where to put money, spend money, and make sure I am saving as much at tax time as possible.
Whole life profits only him. Your first payment to whole life is something like 80% commission to him. If he is trying to sell you whole life, I would question anything else he is recommending.
Walk in and ask their investment philosophy. The answer will be fluffy bullshit but sets a tone.
Next ask how they get paid. Not what but how. If they are fee only they have an incentive to not fuck you.
Ask if they are confident enough to have a hurdle. (I’d be shocked if they said yes, but again sets a tone)
If they bring up life insurance other than asking if you have it i.e. they try to sell it to you whip out your junk and clean the desk with it before walking out.
Any monkey can pick a diversified portfolio so I am more worried about ancillary services. Ask why should I trust my hard earned money and future with you.
Ask to see 5 years of audited returns. They’ll say everyone is unique but again sets the tone.
Understand that a good portion of these folks are fuck sticks, another good portion are well meaning incompetents, and a minority are actually honest and competent and worthy of your business.
First off I highly suggest reading bogleheads.org. This is a much better site on what to ask/expect from a CFP. I believe User Summit here is a CFP or CPA and can provide some good input, based on his/her input here in the past, I would trust him/her.
The CFP is really trying to gauge where you are from a financial picture, what is your net worth, where are your current investment strategy and how risk averse you are. It sounds way too personal but this is what they need. BUT also remember most CFPs are first trained as salesmen, not advisers.
I would ask a lot of questions to see if she will act like a fiduciary. How much is she going to charge you? Does she invest in index funds or managed funds (you want index)? How often does she reallocate your funds (2x a year at most). Does she work with front-load or end load funds (you want neither)? What are the net expense ratios on the mutual funds she sells (you want less than 1%, ideally under .5%)? If she tries to sell you whole life insurance or an annuity, tell her to pound sand and run away those two only profit her.
Finally, my two cents, grab a few books and spend a few months reading them. You can do this on your own, you don’t need her, even if she is honest, its just an extra expense for you. Any questions can be answered on the site I listed above. They also have a good Wiki.
thanks for the info and resources!
Walk in and ask their investment philosophy. The answer will be fluffy bullshit but sets a tone.
Next ask how they get paid. Not what but how. If they are fee only they have an incentive to not fuck you.
Ask if they are confident enough to have a hurdle. (I’d be shocked if they said yes, but again sets a tone)
**If they bring up life insurance other than asking if you have it i.e. they try to sell it to you whip out your junk and clean the desk with it before walking out. **
Any monkey can pick a diversified portfolio so I am more worried about ancillary services. Ask why should I trust my hard earned money and future with you.
Ask to see 5 years of audited returns. They’ll say everyone is unique but again sets the tone.
Understand that a good portion of these folks are fuck sticks, another good portion are well meaning incompetents, and a minority are actually honest and competent and worthy of your business.
Pretty much. I’m a DIY kind of guy (though I’m a CPA with a keen interest in personal finance and investing) and always take these assholes on a ride if they have the balls to try and sell me a whole life policy. Drinks and dinner on you dipshit. If they mention my kids as part of their shtick it’s a sure sign to order the most expensive thing on the menu.
Buy Turbo Tax and do your own taxes.
Buy Turbo Tax and do your own taxes.
You must not have complicated returns.
I always ask about their qualifications and what they bring to the table that I cannot do for myself.
How they get paid is big - also how do they think they generate a return/ create value big enough to cover costs.
I would ask how they would create income streams in retirement from your investments if that is a goal for you. Also if they think there are other professionals you need to enlist (they should mention a lawyer for a will at a minimum) and if they have recommendations. Good people have good connections that can really help you out.
These are just some things that differentiated people we met with.
Understand that CFP means nothing but that they studied for and passed a test. A CFP must continue their education to keep the certification, but again, there are millions of CFPs who only sell life insurance and annuities. It’s not an end all, be all guarantee that you’re working with a competent financial adviser.
My financial planner is a CFP and someone who has been in the business for many years - through two major stock market crashes.
Ask around for referrals. Your first major investment should be the time required to find the person you want to work with. So take your time. Interview several people. Find comfort in the other person.
A lot of people think that tax returns are complicated. They aren’t.
Buy Turbo Tax and do your own taxes.
You must not have complicated returns.
Most people don’t. Only 30% itemize deductions and sch A is a long way from being complicated. The percent of tax payers that file “complicated” returns is probably <5%
This has been covered a lot here but based upon both a poor financial understanding and a number of school boy errors following advice here i have read;
A random walk
Bogles red book and the BH site
Edward o thorp - perhaps the most interesting man in the world and definitely worth of a post of his own
So you want to be rich?
There is a reading list here from ww somewhere
Anyway the result of my enlightenment was in the first instance 1) index funds 2) i will not invest in something i can not understand 3) trading / transaction costs eat capital
Whats their fee structure
Total up costs of percentage taken of funds being managed, plus transaction costs and any fund annual cost and see where you get to
A random walk, boggles red book and EOT’s are enlightening and if your CFP / FA can not articulate clearly why they are prescibing a specific course of action do you really want to leave cash with them?
Buy Turbo Tax and do your own taxes.
You must not have complicated returns.
Most people don’t. Only 30% itemize deductions and sch A is a long way from being complicated. The percent of tax payers that file “complicated” returns is probably <5%
I guess we’re a 5%er
Buy Turbo Tax and do your own taxes.
You must not have complicated returns.
Most people don’t. Only 30% itemize deductions and sch A is a long way from being complicated. The percent of tax payers that file “complicated” returns is probably <5%
I guess we’re a 5%er
Me too, though I’m not a 1%er. I have an S-Corp and I also do some work as an insurance adjuster where I have all sorts of expenses. Up until last year I did my own taxes, but prefer to pay someone to do them for me now as my income from both sources has risen to the point that I want someone more experienced handling them.
I guess we’re a 5%er
Yup, the numbers are right, an enormous majority have trivial tax returns, and a large percentage of folks who itemize also have straightforward returns that can be handle by TurboTax or a different program.
My wife and I have an appointment with a CFP next week to discuss retirement planning. This first visit is just a free consultation and I’m not sure what to expect. She emailed me a pretty detailed list of things to gather and send to her before our meeting, basically everything dealing with income, expenses, investments and life insurance. I Would like to have some questions prepared to ask when we go if the LR has any tips or advice?
I have been a CPA for 30+ years and have specialized in financial planning for about 25 years. I hold several professional designations and have taught financial planning, at the university level, for 17 years. (End of my back door brag).
To me, the questions I want people to ask planners, and myself, before they begin (in no particular order) are:
What types of clients do I specialize? Doing planning for a family with a million net worth is a different skill set than a twenty million net worth.What professional credentials do they maintain?Any other relevant experience?What will planning encompass? Is it limited to investments, insurance, etc. or is it comprehensive?After the plan is complete, what are the next steps? How are the recommendations evaluated and implemented?If I’m planning for a married couple, I insist that are meetings include the spouse. I represent both husband and wife. When discussing goals, I find husband’s goals may be the opposite of wife’s goals. I’m surprised how often planning is completed with only one spouse.How do I get compensated? Everyone gets paid. My group charges a flat fee based on total assets under management, and planning is included in that fee. If you account increases, we earn more. It goes down, we earn less. You buying a particular investment or trading activity doesn’t change our comp. We also don’t handle any propriety investment funds.My group doesn’t sell any insurance products but we will refer them to independent advisers if that is a need. I don’t receive any comp from those referrals and I disclose that.There isn’t anything wrong with paying a commission. Just disclose it.If investments are going to be purchased, what are ALL the fees? I disclose our management fees, the embedded internal fees, and any other fees that might apply. Some advisers will disclose the management fee but not the internal charges.For an initial meeting, I generally do not ask prospective clients to bring any documents. I want to interview them as they interview me. I’m at the stage of my career that I am interviewing the prospect as much as they are interviewing me.I’m happy to provide references but I think the value is limited. No one is going to provide the name of an unhappy client.As a planner, I want clients that are good to work with. Generally, during the initial meeting I will make a judgement if we are a good fit. If not, I graciously decline the engagement.
If I think of anything else, I’ll add later.
Buy Turbo Tax and do your own taxes.
I used to use Turbo Tax when I just had work income, but yes, my taxes are much more complicated. Between rental properties, Farm ground, and general work income I don’t feel turbo tax can make sure I am itemizing everything appropriately.