Why Do You Need $500,000 BEFORE Hiring a Financial Advisor?

Why Do You Need $500,000 BEFORE Hiring a Financial Advisor?

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[vu]

To be honest, now that I look back at it, my financial advisor really sucks. I lost a ton more money hiring a financial advisor than managing my own money.

[TheBrothersRise]

Can you make a video on saving 100k and what happens after 100k is invested?

[FunStuffBuddy]

Let’s just say the truth (I know from other financial advisors)…it isn’t worth THEIR time for small accounts (they won’t make enough money or be worth THEIR time). It’s simple, period. Regardless, I love their free content and they are great folks!! Just certain things people never say. They still spend tons of their time to educate others and love that!

[SolidroK]

I wouldn’t mind paying an advisor a set fee or cost for a service. I hate the idea of paying someone 1% of my hard work and discipline. I never understood why their services cost more base on how well I have done so far.

[marc]

I just got my dad to leave a financial advisor. Wasting 1% every year has cost him so much over the years. My brother and I can do as good without taking his money. I don't think a financial advisor is necessary but in the most complicated sense. If anything get one for a couple years than drop them, once you know what to do.

[junkequation]

I don't think anyone consuming this content needs a financial advisor. In some rare cases, like young athletes who find themselves making very large amounts of money, maybe it's worth it. Not really though.

It is extremely simple, and I don't know how financial advisors get away with charging so much.

Live below your means. Save as much money as you can. Put the extra in an index fund.

Here's your financial plan. Pick a day of the month to pay your bills, like the 15th. Build up your bank account to have 1 to 12 months living expenses, whatever you're most comfortable with and whatever you need based on your circumstances. Anything over that, put 90% into the EFT: VTI. Put the remaining 10% into 30 days tbills. Stagger the tbills to mature weekly. For stocks, fund your IRA first. When that's full, continue in an individual brokerage account.

Oh, and send 1% of your entire net worth to me every year because what I just told you is somehow that valuable. Just kidding, that would be a huge rip off.

[carrybigspeaksoft]

If I made 500 K by myself without your help, how are you gonna help me afterwards?

[MrPrediluted]

Our investable net worth is at about $250k, prob $500k if you include everything, but my income has doubled to over $200k in the last 4 years, and is going to double again in the next 5. Effectively my income hit a rate where I can accumulate a lot of assets quickly going forward, where that wasn't a possibility previously - so we did hire a CFP despite being well under the $500k. There are advisors out there with a more fixed fee/subscription based model. He is also someone that assists on your whole picture - income /retirement planning, estate planning, setting short/mid/long term goals - to me all of that has substantial value, though I know on the true investment side we won't be gaining much, managing our financial life they have already been a huge help

[coderlifer]

The answer is really obvious. If a financial advisor charges based on the percentage of your net worth, he or she can make more money teaching someone about ETFs in one day to a person with $500, 000 than to another person who has only $50, 000. It's like a real estate agent. At 6% commission, if I have an option to choose whether to sell a $1M house or a $100, 000 house, and both of them require the same amount of time and effort to do the paperwork, why would I choose the $100, 000 house?

[frankfigueroa]

I had a financial advisor that I paid to many fees every year when I started out twenty years ago. He took a lot of my money over the years. I finally started to take matters into my own hands and have been managing everything on my own. I am just puzzled how advisors take so much money away from people that work so hard on their own to reach a certain amount. I think the Money Guy team does a great job educating people but I have lost trust in financial advisors. My question is that people work so hard to meet a certain amount of investments and savings and advisors than want to work with you because you have a lot of money. People need to be careful. I just know that I lost so much money in fees for years when I was young.

[ethenschoen]

People below 500k probably need financial coaching and/or hourly services more. Financial "advisors" who target young and middle class people typically are salesmen paid on commission. Again, coaching is likely more valueable and impactful to you than paying commissions to somebody. Work with somebody to solidify your psychology surrounding finance and condition your behaviors properly. Make a simple plan, tune it up and stick to it. You don't need somebody making commissions or AUM fees on you for the 15- 20 years it takes to get to 500k just to tell you to make a budget, spend less than you make, get your 401k match, invest in an IRA and get term insurance when you get married and have kids. Investment strategies at that age should not be complex. It's not the accumulation phase that is hard it's the management of asset maintenence and drawdown.

[almorrow]

IMO paying a 'financial advisor' (not insurance salespeople pitching WLI, IUL, etc.) brings a significant benefit in keeping clients accountable to maintain asset allocations, contributing to retirement accounts etc especially when the equity/bond markets are doing poorly ('blood in the streets'). Unfortunately, this 'value' of a financial advisor only quantifiable after the fact. and has nothing to with 'optimization'. The impact of poor financial choices most impacts those with some combination of low income, low dollar contributions to retirement plans and making long term hasty financial decisions amidst a down 'market'.

[EricK-vwwh]

Also need to be careful on definition of financial advisor. A lot of insurance salesman will have the advisor title but only exist to sell you their insurance company’s annuities or other shit products like whole life insurance. THEY ARE NOT FINANCIAL ADVISORS.

[maragirl]

I switched from paying someone at Merrill to manage my money to self directed Vanguard funds. I’m definitely not an expert but saw that he had most of my money tied up in funds that I paid fees to on top of the 1% I was paying him. I have a 6 fund (standard 3 - SP500, US Bonds, Ex-US Bonds plus 3 target retirement funds for my retirement year, retirement year +5 years, retirement -5 years). Obviously my money isn’t spread equally in those 6 funds but I’m happy because I feel like I have the diversification I seek as well as the benefits of rebalancing that occurs in the target retirement funds. I actually feel more secure with my portfolio now than I did before;

[lonz_]

Question for people in the comments and @The Money Guy Show: Do you all think that being 25 and wanting to retire in 2065 that having an estimated 1.2 million would be enough by then? I am confused trying to take inflation and everything into account. Thanks!

[rosspimental]

If all of your money is in 401k (no matter how much), do you even need a financial advisor?

[rgarri]

As a financial advisor we are in it to make money not give advice.

[raulalvarado]

My Financial Advisor said it was a common denominator for Net Worth over 1 million dollars to have advisors. I am assuming advisors Fees are

[TheIceWatkins]

Does that $500k-$600k number include 401k balances, or do you mean $500k-$600k of investable assets outside of 401ks?

[commonsense]

Tax advisors can be great but financial advisors are really only needed if you don't care to learn how to properly invest your money or you are too emotional to manage the money yourself (such as selling in a panic based on a news report)