Is a fiduciary/finance advisor worth it? [EU]

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krystal
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Joined: Sun Jul 18, 2021 1:07 am

Is a fiduciary/finance advisor worth it? [EU]

Post by krystal »

Hi,

I would like to get some advice. Me and my girlfriend have invested a large amount of money last year with a fiduciary company. This has actually been the best decision we have made regarding our finances. We have invested most of our money, have a nice and large diverse portfolio and have enjoyed nice returns this past year. I have also started to read books on investing, to try to get some knowledge, as we were clueless about it before. We of course paid the company a nice sum for them to create our financial plans, and invest through them. We have also paid for a "premium" yearly subscription to their services. With these we receive regular updates, news, advice,...a portfolio checkup and rebalancing advice a couple of times a year and of course they act swiftly in case of a sudden market downturn to limit losses.

Now our year of premium service is almost up and I am thinking of downgrading to their basic account (still have access to a tool with which we can check our portfolio, some limited advice,..).

It's because the difference in price is huge, the premium service costs almost 2% of our portfolio per year (a couple of thousand € per year in our case!), compared to "only" a couple of hundred € per year for the basic service. We plan to invest for years/decades and if our portfolio keeps on growing (fingers crossed!) this means that we would pay tens of thousands of € for their services. If we just invest this money in ETFs, this could mean hundreds of thousands € additional profit during our lifetimes.

However, when a big drop in the market occurs, their expertise and quick advice could prevent a large loss for us? And we won't be getting this if we go to the basic service.

I know that a market drop should be viewed as an opportunity to buy even more, but still if their advice would mean that our portfolio drops "just" 10%, instead of let's say 20% or 30%+, it would be worth it.

Any advice? Anybody using and paying for advisors and would consider them worth it or even a necessity, if (as is our case) you are not an expert in finances and have a relatively large portfolio?

We live in the EU.

Best regards
Call_Me_Op
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Re: Is a fiduciary/finance advisor worth it? [EU]

Post by Call_Me_Op »

2% is never worth it. I would continue reading until I realize that it's really quite simple to set-up and maintain an investment portfolio, and when I reach that realization, I would cut the cord. Until then, you might want to go with the lower cost plan and just keep the same investments. But be warned - they may not make it easy for you to change.

If you set-up the portfolio right, you do not need to worry about market drops at all. Someone/something along the way has convinced you that investing is hard and you need to pay close attention to your portfolio and be ready to take drastic action at any time. This is the opposite of the truth.
Best regards, -Op | | "In the middle of difficulty lies opportunity." Einstein
Genghis
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Re: Is a fiduciary/finance advisor worth it? [EU]

Post by Genghis »

As Call_Me_Op mentions, continue to do some reading and learn about passive investing. You’ll learn it’s relatively easy to do it yourself and pay tens of basis points in fees, not hundreds. You’ll learn it’s not possible to time the market, even for the supposed “experts” - if you sell, when do you get back in? - and that in investing it’s good to be “average”.
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zincTwo
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Re: Is a fiduciary/finance advisor worth it? [EU]

Post by zincTwo »

Even with an indexed portfolio, I've found having an [inexpensive] advisor worth it. Not only helping to keep me on track, but guide on goal setting, maximizing benefits from IRA/401K options, retirement planning -- especially as my runway to retirement is in the next few years.

I use a fiduciary advisor (in the US), but they also have experience supporting expat clients and international clients. I pay less than $100 per year (fixed cost).
Mark Zoril at planvisionmn.com
123
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Re: Is a fiduciary/finance advisor worth it? [EU]

Post by 123 »

2% is a considerable AUM fee. Your comment about them being able to reduce potential losses by selling quickly if necessary indicates some degree of uneasiness or fear of what they have you invested in. Bogleheads generally suggest an asset allocation of stocks and bonds that you can live with without the need for any panic selling.

Are you willing to bear the tax consequences of the "panic sell" circumstances? If a sell condition occurs after you have some accumulation of growth you may incur immediate tax obligations that could be avoided by a buy-and-hold position. Investors that held through the March 2020 meltdown have seen substantial growth. Many of those that sold have yet to return to the market having lost out on the intervening gains.

You may want to evaluate what they have you invested in. Are all the positions publicly traded stocks/bonds/mutual funds/ETFs that can be held at any brokerage? If any of them are proprietary investment products or funds that can't be held elsewhere you may be stuck with them (and the AUM fee) until you're ready to recognize any gain (or loss) on those investments.

The risks of using any financial advisor, even one that labels themselves as a fiduciary, is that they may be deriving income from your investment positions beyond the AUM fee.
The closest helping hand is at the end of your own arm.
student
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Re: Is a fiduciary/finance advisor worth it? [EU]

Post by student »

krystal wrote: Sun Jul 18, 2021 6:19 am It's because the difference in price is huge, the premium service costs almost 2% of our portfolio per year (a couple of thousand € per year in our case!), compared to "only" a couple of hundred € per year for the basic service.
I stop reading after seeing it costs 2%. That's too much...
Rex66
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Re: Is a fiduciary/finance advisor worth it? [EU]

Post by Rex66 »

That’s crazy high

You should research the impact of 2% over your lifetime
DJN
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Re: Is a fiduciary/finance advisor worth it? [EU]

Post by DJN »

hi,
the EU is not a country and your post doesn't provide adequate information as to the type of value an adviser will give you in any particular jurisdiction over another. For example if you live in a country with limited access to ETFs or if you don't understand your tax position an adviser might well be worthwhile.
What jurisdiction are you investing from?
BTW 2% is far too much money to pay an adviser and at that rate I would not be comfortable with their advice.
DJN
Last edited by DJN on Tue Jul 20, 2021 4:22 am, edited 1 time in total.
Yah shure. | Have a look at the Bogleheads Wiki in the first instance.
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racy
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Re: Is a fiduciary/finance advisor worth it? [EU]

Post by racy »

"The tyranny of compounding costs" made an impact on me. Google the topic to investigate yourself. Here's one: https://tinyurl.com/yjpetld9
glorat
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Re: Is a fiduciary/finance advisor worth it? [EU]

Post by glorat »

krystal wrote: Sun Jul 18, 2021 6:19 am However, when a big drop in the market occurs, their expertise and quick advice could prevent a large loss for us? And we won't be getting this if we go to the basic service.

I know that a market drop should be viewed as an opportunity to buy even more, but still if their advice would mean that our portfolio drops "just" 10%, instead of let's say 20% or 30%+, it would be worth it.
Since everyone else has addressed the 2% topic already... has your advisor made any claims that they would reduce a 20-30% drop to a 10% drop? If they are in any way reputable, they will make no such claim because the answer is simply no. They can't help you with that. Or... worse still, they help you sell out at 10% down and fail to give you any advice about getting back in the market. (Time in the market beats timing the market)

Please keep reading these forums and wikis and get educated! This education will save you about 1.8% a year :)
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andrew99999
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Re: Is a fiduciary/finance advisor worth it? [EU]

Post by andrew99999 »

krystal wrote: Sun Jul 18, 2021 6:19 am However, when a big drop in the market occurs, their expertise and quick advice could prevent a large loss for us?
Don't believe salesmen.
ROIGuy
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Re: Is a fiduciary/finance advisor worth it? [EU]

Post by ROIGuy »

Can they actually show you a portfolio that they managed that they were able to rebalance BEFORE the market correction. Anyone can rebalance after you lost 5-10%, and as you have stated, market corrections especially at a young age is a time for opportunity. The market correction actually does the rebalancing for you and then you should be adding more to your stock portfolio anyway. I believe a 2% fee over 40 years will cost you about 66% of your portfolio. No one has stock picking trading abilities to make up for that.
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