Financial advisor advice

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ukchard
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Joined: Sun Apr 04, 2021 1:23 pm

Financial advisor advice

Post by ukchard »

Hi all,

We are relatively new to investing so please be kind. We have a financial advisor we got through wci.com. He has been very helpful thus far, helping us set up some basic financial stuff. We paid $1500 to start and $300 monthly. Meanwhile, our goal has always been to use him to get started and then independently manage our finances. We are at the point of setting up a joint investment account which it sounds like our advising company uses Vicus, as the federally registered investment advisor (RIA). Vicus charges fees based on AUM. The custodian would be fidelity. The question is: is this typical? It seems having a CFP (pay $300 a month) then Vicus means we will get double charged (Vicus has it own contract with AUM fees of 0.65%).
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retired@50
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Re: Financial advisor advice

Post by retired@50 »

Welcome to the forum. :happy

Do you still lack the confidence to handle investing on your own?

If so, then you could consider the Vanguard Personal Advisory Service, or the Vanguard Digital Adviser. Either of these options would cost less then the .65% AUM fee mentioned in your post.

Link: https://investor.vanguard.com/advice/co ... ial-advice

If not, look into the Bogleheads.org wiki pages to learn about the three fund portfolio, and many other topics.

Link: https://www.bogleheads.org/wiki/Getting_started

Regards,
If liberty means anything at all it means the right to tell people what they do not want to hear. -George Orwell
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retiredjg
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Re: Financial advisor advice

Post by retiredjg »

Welcome to the forum. :happy
ukchard wrote: Sun Apr 04, 2021 1:49 pm We are relatively new to investing so please be kind. We have a financial advisor we got through wci.com.
Do you really mean wci.com which is a communications company? Or something else? White Coat Investor maybe?

He has been very helpful thus far, helping us set up some basic financial stuff. We paid $1500 to start and $300 monthly.
This is not cheap unless you have a lot of money invested there.

Meanwhile, our goal has always been to use him to get started and then independently manage our finances. We are at the point of setting up a joint investment account which it sounds like our advising company uses Vicus, as the federally registered investment advisor (RIA). Vicus charges fees based on AUM. The custodian would be fidelity. The question is: is this typical? It seems having a CFP (pay $300 a month) then Vicus means we will get double charged (Vicus has it own contract with AUM fees of 0.65%).
Not sure. Paying 2 sets of fees does not sound like a good idea but maybe we don't know everything.

If your goal is to do this yourself, what is stopping you from doing that now?
Doctor Rhythm
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Re: Financial advisor advice

Post by Doctor Rhythm »

I don’t know if the proposed arrangement is common, but my hot take is that it’s sort of moot. When you use an advisor, you have to 1) play by their rules, and 2) pay a higher cost to invest. It doesn’t matter how many parties get paid, or whether your costs are in the form of % AUM, fixed fees, loads, capital gains tax, or high expense ratios. The only number that matters is how many dollars you’re paying above the DIY cost. Sadly, many advisees don’t even know that number because it’s obscured in an overly complicated portfolio. If you have the sophistication to determine the true opportunity costs of using your advisor, you’re ready to leave.
Jack FFR1846
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Re: Financial advisor advice

Post by Jack FFR1846 »

I'm sorry, but unless you have an incredibly complex group of LLCs, trusts and obligations, you are getting absolutely hosed. The initial charge seems fine but going through an AUM company to invest at Fidelity? Why? Just invest yourself at Fidelity. A 3 fund there is as simple as can be with zero funds or traditional low cost index funds. I'm sorry you were misled at wci, but this is just wrong.

From an investment perspective, if you're still scared of doing the wrong thing, put everything into a target date index fund. Vanguard is easiest to do this as Fidelity has target date index and target date Freedom (high cost) funds. Even having taxable accounts with target date funds is less expensive than what you're paying.

Come to think of it, you can invest in a 3 fund using ETFs which makes them transferable to anywhere easily. If I were to do this, I'd simply use VTI, BND and VEA. (VEA is developed international, which is what I use)
Bogle: Smart Beta is stupid
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Wiggums
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Re: Financial advisor advice

Post by Wiggums »

ukchard wrote: Sun Apr 04, 2021 1:49 pm Hi all,

We are relatively new to investing so please be kind. We have a financial advisor we got through wci.com. He has been very helpful thus far, helping us set up some basic financial stuff. We paid $1500 to start and $300 monthly. Meanwhile, our goal has always been to use him to get started and then independently manage our finances. We are at the point of setting up a joint investment account which it sounds like our advising company uses Vicus, as the federally registered investment advisor (RIA). Vicus charges fees based on AUM. The custodian would be fidelity. The question is: is this typical? It seems having a CFP (pay $300 a month) then Vicus means we will get double charged (Vicus has it own contract with AUM fees of 0.65%).
$3,600/year + .65%/year + fund ER is a lot of fees to overcome

I am not sure how many funds they are planning to put you in and if there is a front end load. Also not clear if the funds are proprietary.
"I started with nothing and I still have most of it left."
Soon2BXProgrammer
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Re: Financial advisor advice

Post by Soon2BXProgrammer »

ukchard wrote: Sun Apr 04, 2021 1:49 pm Hi all,

We are relatively new to investing so please be kind. We have a financial advisor we got through wci.com. He has been very helpful thus far, helping us set up some basic financial stuff. We paid $1500 to start and $300 monthly. Meanwhile, our goal has always been to use him to get started and then independently manage our finances. We are at the point of setting up a joint investment account which it sounds like our advising company uses Vicus, as the federally registered investment advisor (RIA). Vicus charges fees based on AUM. The custodian would be fidelity. The question is: is this typical? It seems having a CFP (pay $300 a month) then Vicus means we will get double charged (Vicus has it own contract with AUM fees of 0.65%).
you are paying for two different services:

1) 300/mo to a CFP for advice which doesn't handle investments -- this is typically called Financial Planning
2) .65% AUM to Vicus for investments IMPLEMENTATION --- This is typically called Investment Management

You should ask the CFP if your 300/mo includes making investment recommendations just not implementing, and if the CFP will recommend a very simple index fund portfolio similar to the Bogleheads 3 fund portfolio.

Some places charge 1% for investments, some places charge 1% for investments and Advice. Some places only do investments, some places only do advice.

My goal if i was you, was to have a simple enough portfolio, i could do that part myself. Then pay for the monthly advice until you don't need it any more. (which might be forever, as some people like having someone to call on retainer).
Earned 43 (and counting) credit hours of financial planning related education from a regionally accredited university, but I am not your advisor.
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retiredjg
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Re: Financial advisor advice

Post by retiredjg »

Here is a potential pitfall to having someone else do the management (buying and selling funds for you).

Some advisors put your money into funds that are not particularly transportable. There are numerous examples, from fairly benign (e.g. DFA funds) to fairly evil (Fidelity Advisor series of funds).

When/if you decide to move the money, sometimes the funds cannot go with you....so there is a tax cost for getting rid of funds that are held in a taxable account. The problem is pretty easy to solve for money in an IRA/Roth IRA.

If Vicus is planning to put your money into low cost mutual funds or ETFs that can be easily moved, that could be OK. If they plan to put you into something like the Fidelity Advisor funds....not so much (unless things have changed).

This is one reason (there are others) that I suggest using Vanguard's Personal Advisor Service - they put you into funds/ETFs that can go almost anywhere. Or if you just prefer to stop the advisor service, you can do that easily and just leave the funds there at Vanguard and do it yourself.
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Taylor Larimore
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Re: Financial advisor advice

Post by Taylor Larimore »

ukchard:

Welcome to the Bogleheads Forum!

The most popular portfolio on the Bogleheads Forum is The Three-Fund Portfolio which seldom requires an advisor. This is the link:

viewtopic.php?t=88005

Best wishes.
Taylor
Jack Bogle's Words of Wisdom: "There may be better investment strategies than owning just three broad-based index funds but the number of strategies that are worse is infinite."
"Simplicity is the master key to financial success." -- Jack Bogle
pkcrafter
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Re: Financial advisor advice

Post by pkcrafter »

Welcome to the forum. Please clarify a few things,
ukchard wrote: Sun Apr 04, 2021 1:49 pm Hi all,

We are relatively new to investing so please be kind. We have a financial advisor we got through wci.com.

WCI--do you mean White coat investor? If yes, did you get the advisor through Physician Financial Services? Did they set you up with life insurance?


He has been very helpful thus far, helping us set up some basic financial stuff. We paid $1500 to start and $300 monthly. Meanwhile, our goal has always been to use him to get started and then independently manage our finances. We are at the point of setting up a joint investment account which it sounds like our advising company uses Vicus, as the federally registered investment advisor (RIA). Vicus charges fees based on AUM. The custodian would be fidelity. The question is: is this typical? It seems having a CFP (pay $300 a month) then Vicus means we will get double charged (Vicus has it own contract with AUM fees of 0.65%).
No, it doesn't sound "typical." You are paying an an advisor to select and manage your accounts, so it doesn't seem necessary to pay a second advisor. Perhaps Vicus isn't actually charging you directly. At any rate, lots of members here use fidelity and manage their own portfolio.

Since you have found your way to Bogleheads', you can use the 3-fund as posted by Taylor above, or some variation as recommended and used here by other physicians.



Paul
When times are good, investors tend to forget about risk and focus on opportunity. When times are bad, investors tend to forget about opportunity and focus on risk.
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