When Should You Hire An Investment Advisor? Two Case Studies
Money For the Rest of Us
J. David Stein
4.5 • 1.4K Ratings
🗓️ 17 August 2022
⏱️ 32 minutes
🧾️ Download transcript
Summary
We analyze two listeners' portfolios. One who is close to retirement and considering hiring an outside money manager. The second is 45 and just sold a business and is trying to decide whether to fire Schwab's robo-advisor service and manage his portfolio on his own.
Topics covered include:
- What elements are part of a financial plan
- What to consider when researching an investment advisor
- What is a core-satellite investment approach
- Why Schwab was fined $180 million for misleading its clients about the cash balance in its Intelligent Portfolios service
- How to decide if an investment advisor is a good fit
- Why no portfolio can be on autopilot, but they can be as simple as two ETFs
For more information on this episode click here.
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Show Notes
Schwab Subsidiaries Misled Robo-Adviser Clients about Absence of Hidden Fees—SEC
Cease-And-Desist Order Against Charles Schwab & Co, June 13, 2022—SEC
Related Episodes
92: What Robo-Advisors Recommend
248: How to Avoid Investment Fraud
303: How To Do Financial Planning
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Transcript
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| 0:00.0 | Welcome to Money for the Rest of Us. This is a personal financial on money, how it works, |
| 0:06.0 | how to invest it, and how to live without worrying about it. I'm your host David Stein |
| 0:10.5 | today's episode 398. It's titled When Should You Hire an Investment Advisor? Two Case |
| 0:16.7 | Studies. I've had several questions recently from members of Money for the Rest of Us |
| 0:22.1 | Plus surrounding financial plans and hiring financial advisors. Typically, I answer these |
| 0:27.5 | questions in the weekly premium podcast episode for plus members, but I thought it would be |
| 0:33.5 | interesting to address their questions in a regular podcast episode to hopefully benefit you. |
| 0:40.2 | In this episode, we'll look at two families' investment allocation as they grapple with whether |
| 0:45.8 | they should hire or continue to use an investment advisor. First, though, I want to address a question |
| 0:52.2 | from a member to help set the stage. The member asked, What does it mean to have a financial plan? |
| 0:59.4 | If I have an investment asset allocation plan, a net worth statement, and a basic understanding |
| 1:06.7 | of how much I need to retire, and how much I can withdraw each year during retirement, |
| 1:11.8 | what else does one need in a financial plan? Well, I googled it just to make sure I didn't |
| 1:17.5 | miss anything because I don't have a formal financial plan, but I have the elements that make up |
| 1:24.2 | a financial plan. The first is a net worth statement, as his member mentioned. This is a snapshot. |
| 1:29.8 | It's something that I do every month because I share my allocation percentages with members of |
| 1:35.6 | Money for the Rest of Us Plus so they can see how I'm allocated as well as the trade to make. |
| 1:40.9 | This member also has a retirement plan. Additional elements of a financial plan could include |
| 1:47.4 | your financial goals. It can include some budgeting. I do, or Leproni, we do an annual budget. |
| 1:55.6 | We use mint to track our spending, and then I update a spreadsheet once a month just to see |
| 2:01.9 | what our spending has been, and then track that on an annual basis. A financial plan can include |
| 2:08.6 | some type of debt management plan. How soon will debt be paid off or a plan to get out of debt? |
... |
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