Do you use a financial advisor? If not, why not?

TSgt Christopher D. — Sat, 02 May 2015 11:06:50 -0400

In a given day, I speak to many professionals about investing. Many well-educated people typically respond with "I manage my own investments," which I've come to understand usually means they aren't doing any investing. Too often, they aren't even doing any saving. As vets and retirees, we have resources available to us 'free of charge,' but after examining plenty of 'free' services and packages available to vets from big name companies, I'm less than impressed. If you're using a financial advisor or investment company, which one do you use? How did that advisor earn your business? If you're not using an advisor, what are you doing to prepare for life after working?

Response by LTC Stephen C. made May 2 at 2015 11:14 AM

LTC Stephen C. — Sat, 02 May 2015 11:14:13 -0400

TSgt Christopher D., I think everyone should. Most people seem to think that an attorney or a CPA will give them all the guidance and service they need, but it's simply not true. One must have a financial professional as part of their "guidance" system.

Response by SPC Charles Brown made May 2 at 2015 11:14 AM

SPC Charles Brown — Sat, 02 May 2015 11:14:15 -0400

That is what my step-daughter thinks she if for. She is full of ways for me to spend my money on her and her kids. Seriously though, I don't simply cannot afford a financial adviser.

Response by Lt Col Jim Coe made May 2 at 2015 11:28 AM

Lt Col Jim Coe — Sat, 02 May 2015 11:28:03 -0400

I use a financial advisor because I don't have the knowledge or experience to handle investing retirement funds. I use The Mutual Fund Store.

Response by Lt Col Fred Marheine, PMP made May 2 at 2015 11:34 AM

Lt Col Fred Marheine, PMP — Sat, 02 May 2015 11:34:05 -0400

Love this question and very interested in seeing the responses...though I'm gonna go out on a limb and predict there won't be that many.

First job after retirement was as a financial advisor with First Command Financial Planning. I know there are a bunch of strongly held opinions about that company and it's predecessors - and I have a few myself - but at the time being an advisor was my dream job. By the time I left active duty, I had all the securities licenses and most of the corporate training complete and went from out-processing to my first meeting with a client (under supervision, but still). I left 2 years later for a number of reasons, the most pressing of which was kids approaching college and insufficient income to stay on glide-path. For the record, I left active duty in July 2007...right before the crash...great timing to be a new advisor with a company that was completely overhauling their business model and compensation system during the biggest down-turn in recent memory.

I do most of my own planning now, though I do occasionally use my First Command advisor for a second opinion / sanity check. I've moved all of my accounts to USAA simply because of the convenience of having banking, savings, investments, and P&C insurance in one place. With a recent divorce, I've got some significant work to get done, but am on course for my version of success at age 70.

What am I doing? I cover down on risk management via insurance products from my employer and purchased privately. I have an aggressive monthly spending plan (aka budget) that sets aside savings and investments up front. I'm currently over-committing to these activities to recover from the divorce, which drives my discretionary spending down into the negligible range (hence typing responses on RP on a beautiful Saturday afternoon). Bottom line is I'm working it hard for the next 3 years to try and get out in front of the power curve rather than trying to catch back up.

Response by 1LT Nick Kidwell made May 2 at 2015 12:09 PM

1LT Nick Kidwell — Sat, 02 May 2015 12:09:42 -0400

Need to have actual finances for a financial advisor to advise me on. :)

Response by SFC Michael Jackson, MBA made May 2 at 2015 7:21 PM

SFC Michael Jackson, MBA — Sat, 02 May 2015 19:21:58 -0400

I am a financial advisor/ investment advisor representative with primerica advisors. i possess the knowledge / experience to manage my own portfolio. i do manage my own investments. yet, as a professional, i still have another advisor review my investments.
working with an advisor is important to reaching your reaching your goals. They are keys and strategies that professionals employ to keep you on teack. They can help predict future costs, help manage risks, and help you determine investments for your particular situation.

Response by CDR Private RallyPoint Member made May 4 at 2015 10:07 AM

CDR Private RallyPoint Member — Mon, 04 May 2015 10:07:20 -0400

I have in the past, when I spent the majority of my time under water and was unable to read/learn/invest on my own. What are your thoughts on the book Killing Sacred Cows?

Response by MAJ Private RallyPoint Member made May 4 at 2015 10:13 AM

MAJ Private RallyPoint Member — Mon, 04 May 2015 10:13:18 -0400

I used to work with 1st Command. But I felt their products performed poorly in all markets. I closed all accounts with them.

After looking at several other companies I concluded that "advisors" are just salesmen who earn commission selling managed funds and insurance. I haven't found any who can really understand the economy, the financial system or the numbers on the products they are selling.

Today I am a self directed investor focused on high yield, short term trading as well as development of revenue streams. This does not require much money but it does require some serious Google time and reading fine print. I avoid insurance like the plague as it is a liability and I can do better by putting my saved cash into a low risk/low yield account.

My platform of choice is NinjaTrader which you can use for free while you learn.

Response by CAPT Kevin B. made May 4 at 2015 10:39 AM

CAPT Kevin B. — Mon, 04 May 2015 10:39:07 -0400

I'm an engineer. I don't do brain surgery, baseball, and most other things because I'm lousy at it. A financial advisor can help you figure out what to do with your earnings so you keep more of it working for your future. You won't be able to work for salary at some point and usually don't want to at some point sooner.

If you're military AD, you'll need more than your retirement. If you put into the TSP, great. The critical late time you'll need an advisor is when you hit 59 1/2 and can roll the TSP into something else.

Your goal should be to quit working and not see a difference in salary with some inflation protection. It's doable with two careers under your belt by 60 along with the 401/TSP Medium if you have an retired annuity or 401/TSP Heavy if you don't have one.

Response by 1SG Private RallyPoint Member made May 4 at 2015 11:01 AM

1SG Private RallyPoint Member — Mon, 04 May 2015 11:01:29 -0400

My world is a little different and you really don't hold leadership positions until you make E-8, up until then you are just a guy on a team. Once I made MSG I would include financial planning into my quarterly counseling, I was shocked to see how many senior E-7s I had with nothing but a savings account and the long term plan of their military retirement. It was staggering to see intelligent grown men consider a savings account an investment.

I do manage my own investments and have done pretty well especially with the extra investing power of deployments but I am getting to the point where I have amassed an amount that pushes past my investment knowledge. I have been a long time customer with Fidelity and have had no complaints with their website function, knowledge, of investment funds. In fact as the year comes to a close I plan to have them manage both accounts I hold with them.

Many companies have minimums before they will manage your money but I advise guys I have who are new to the game to just call USAA and start their if they have an account. You can literally tell them you want a Roth IRA, how much you have/can afford a month and how much risk you are willing to take.

Response by Sgt Private RallyPoint Member made May 15 at 2015 9:07 PM

Sgt Private RallyPoint Member — Fri, 15 May 2015 21:07:04 -0400

Before anyone decides whether they need a financial advisor, they need to have a basic understanding about investing. The difference between stock and bonds, balanced investing, saving more than you spend, etc. The resources out there are endless, Vanguard.com, Military.com, Investor.gov, etc...etc.

Expend the effort to learn about budgeting, , saving, and investing. You can then decide whether you can handle your own investments or need a financial advisor. If you decide you need help, at least you will know what the Financial advisor is talking about, and can make an informed opinion as to the advisor having your best interests at heart.

Response by SGT Private RallyPoint Member made Jun 9 at 2015 1:15 PM

SGT Private RallyPoint Member — Tue, 09 Jun 2015 13:15:47 -0400

Great question, TSgt. I would always recommend, when seeking a financial adviser, asking how they would be compensated for my investment. In the past I have received responses that the advisor compensation arrangements amounted to a kickback for sales of their investment products. So their so called investment recommendation, was apparently in the adviser's interest rather than mine. I would strongly recommend checking the adviser's background, including any FINRA complaints (available on the FINRA web site, "broker check"). Also, when investing in actively managed mutual funds, compare the "information ratio" among funds. The information ratio is the measure of risk-adjusted excess return (over the benchmark). If you invest in active funds, you want to beat the benchmark (e.g. S&P 500) but you don't want the fund to take on too much risk to achieve that excess return. And look at fund metrics in a long term perspective, beyond a single year'd performance. Growing in popularity are low-fee passive (index) funds. I would recommend those to anyone how does not have the interest/ability to research active funds. A former Marine, Rick Ferri has a blog the covers investing in passive funds. You may care to check that out.

Response by SSG Private RallyPoint Member made Jan 5 at 2016 6:44 PM

SSG Private RallyPoint Member — Tue, 05 Jan 2016 18:44:12 -0500

Financial advisers need to be paid for their time and I really don't feel the need to diminish my earnings in exchange for information I already know.

Response by CW2 Ernest Krutzsch made Jan 5 at 2016 6:54 PM

CW2 Ernest Krutzsch — Tue, 05 Jan 2016 18:54:34 -0500

I think the stigma that used to be associated with financial advisers is that they were primarily Life Insurance salesmen, that may have changed, but the perception is still there