• Question
  • Two financial advisers?

    Asked by someone from Titusville, FL on 10/8/2013

    Rolling a 401(K) into an IRA at (say, Fidelity) why should I hire a fee based adviser too?
    I'll be retiring in about 18 months, so I went to a free consultation with a Fee Based Certified Planner for some advise. (Was looking for advise on how to use my 401(K) or rollover IRA to pay down a mortgage after I retire - Also, how/where to roll over 401(K)
    I asked him how they got paid for their service & was told they got 1% of the amount they managed. He also told me which company they normally referred people to for Rollover IRAs. Why would I want to pay an additional 1% for what the financial company (ie: Fidelity) already does?
    In addition, I took in all my financial information for him to consider. After looking it over, he said he would put together a package for me, gave me a form to take home & fill out with more specific financial/expense info & send back. Then if I wanted to continue with the planning process I'd have to pay $600 at my next visit.. (Sorry. Here's question Two) I only have one source of income and one 401(K) -Vanguard 2015 Target - Do I really need a Financial Planner? -

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  • Categories: Financial Advisors, Retirement Planning

Answers

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  • I'm glad that you have asked this question about the value of a financial advisor. Since I am from one of the largest programs in financial planning, it might be too easy for me to say that you will need an advisor. However, there are some important benefits in having an advisor:

    -You will be provided with guidance with regards to your finance. Ideally, an advisor will look at your financial picture as a whole and identify areas of concern that you need to pay attention to. For example, your insurance coverage might not be adequate or maybe you currently don't have an estate plan. He or she will work with you, identify your goals and help you manage your resources so that you can have a better chance to achieve those goals. Indeed, for some people, the most important benefit of having an advisor is the peace of mind knowing that their finances are taken care of and that they don't have to worry about money, allowing them to live a fuller, more meaningful life. After all, there is much more to your life than the money in your account.

    Yes, planners do charge a fee. However, they are providing a highly valued service backed by their expertise in such matters. What is different is that they do not charge you a fee to sell you a product. Their recommendations are based on your goals and needs, as well as your unique tolerance and capacity for risk in order to achieve those goals. Financial planners with a CFP designation have a fiduciary responsibility, that is, they place your best interests above their own.

    -Regarding your question about the 401(k) rollover, I cannot give a definite answer to your specific situation. I do agree that you can roll over the account easily by yourself. However, a good advisor can provide other important services. These include matching your investment with your risk tolerance, making sure your portfolio is properly diversified as well as creating an appropriate asset allocation.

    Generally speaking, some firms will require an one-time fee to initiate the planning process. However, the fee may be rebated if you choose to have the firm manage your investment account.

    This answer is provided as general information only and provided by students pursuing a degree in Personal Financial Planning at Texas Tech University. No warranty is made regarding the fitness or accuracy of the information provided in this answer. You should seek advice from a licensed CPA, attorney or Certified Financial Plannerâ„¢ as to your unique financial situation.

  • Login to rate this answer:   Answered on 10/9/2013
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  • Depending on all of your needs, working with a planner can provide guidance in more than one area of personal finance and provide another source for guidance and motivation. The CFP Board's website has additional resources you could use to help you make your decision, http://www.letsmakeaplan.org/working-with-a-financial-planner/what-to-ask.

    This answer is provided as general information only and provided by students pursuing a degree in Personal Financial Planning at Texas Tech University. No warranty is made regarding the fitness or accuracy of the information provided in this answer. You should seek advice from a licensed CPA, attorney or Certified Financial Plannerâ„¢ as to your unique financial situation.

  • Login to rate this answer:   Answered on 10/10/2013
**All above answers are provided as general information only. No warranty is made regarding the fitness or accuracy of the information provided in this answer. You should seek advice from a licensed CPA, attorney or CERTIFIED FINANCIAL PLANNER™ as to your unique financial situation.