>>My take is that if you have acquired wealth on your own, you're doing okay and don't need someone telling you what to do with your money. >>
On the contrary, if you want to HOLD ON and GROW your investible assets, then
good professional advice from an experienced fiduciary can be extremely helpful. We have certainly found it so.
We would not have started a DAF if our CFP firm had not suggested it to us when we told them we would be increasing our charitable donations going forward. I knew DAFs existed, but had no idea it was applicable to our situation. We were always barely middle class in earnings/savings, even a few years after retirement.
I made all the savings/investment decisions while we were working. But in retirement, we had accumulated enough assets through inheritance that I did not want the hassle of dealing with the tax situation on distributions, especially in light of using some foreign-based funds and the Alternative Minimum Tax threatening.
I was fortunate to have worked in the Fin. Svcs. industry and so had contacts to refer us to independent CFP firms that the average person will never hear about. They don't do "hard" advertising; >80% of their business will come from personal referrals, such as we received.
This is the critical sticking point for the middle-class. In many ways they need good financial advice most of all - but because everyone's situation is unique, working with a $200,000 portfolio takes as much time as a $2,000,000 or even a $20,000,000 portfolio. So inevitably, the best pros work with higher-net worth clients, because it's the most efficient use of
their time. Like attorneys, doctors, insurance agent, et. al., time = money + requisite expertise.
The OP learned a valuable lesson and it is an important point worth noting. Not even the best professionals can be of much help
if you do not know, or have not completed, the basics of financial planning. There is a ton of good quality, free information on the web. Read them!
ANY professional welcomes a more informed client. They can teach you the basics, but you are paying premium rates for it - why do so, when you can learn the basics for free? It's like going to an insurance broker and saying, "I don't know what insurance is, or what it's good for, or why I need it at all. Can you explain all of it to me so I can figure out what to do?"
If you know the basics, you can better understand WHAT questions to ask, and how the answers may or may not fit your situation.
YOU are the manager of the relationship; if you work together, more can be achieved.
For example:
- Do you have a will? It was surprising how many people wanted an interview with the CFP I worked for, but hadn't even thought about making a will yet, let alone knowing whether or not they needed a trust. No Power of Attorney, no Healthcare Directive - zip. Nada. Tip: You won't get accepted as a client by a reputable CFP firm if you don't have those documents for their own records.
- What are your short-term goals? What are your mid-range goals? What's your budget and your plan for retirement? Are you staying in your house forever or downsizing to a senior facility in your later years? If you're a couple, have you had serious discussions to see if you both agree on the same goals? You'd be surprised how many couples haven't a clue as to what the other person REALLY wants to do in retirement.
- What are the obstacles that YOU think might prevent you from achieving any of those goals? How good is your health? Your partner's health? What's your family histories of health?
- Are you aware of the impact of inflation on your retirement income 15 or 20 years down the road?
- How is your career going? Is it stable, or threatened by outside factors? Is there a pension or retirement annuity if you are vested?
- When the market plunges - like now, or as it did in 2008-9 - did you "ride it out" or panic and sell?
- Do you know some of the basic financial terminology? What is NAV? What is LIFO vs FIFO?
- Do you have kids? Or grandkids? Or elderly relatives to care for?
We use a fee-only independent CFP firm and are extremely satisfied with their performance, meeting with them regularly. We use them not for me, but for my spouse, heirs, and successor trustee (should she be needed). Most people do not enjoy the decision-making on investments, distributions, and taxes - especially in stressful situations such as eldercare emergency, disability or death.
Having a fiduciary backstop is a "peace of mind" solution, and thus, worth it for us on that basis alone. Fortunately, with their investment advice we have earned more than we have taken out in disbursements, putting us ahead of the game (thankfully!).
