5 Key Questions to Ask Your Investment Advisor

In this video we'll look at a portfolio a viewer sent in to me. It's from their investment advisor, and we will be asking 5 key questions about the portfolio that I would ask if an advisor put me in the same portfolio.

1. What's the target asset allocation?
2. Have you made any changes to the target asset allocation?
3. How do you pick the funds to implement the plan?
4. Why isn't a simpler, less expensive portfolio a better choice?
5. How do you invest your own money?

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#retirement #investing #robberger

ABOUT ME

While still working as a trial attorney in the securities field, I started writing about personal finance and investing In 2007. In 2013 I started the Doughroller Money Podcast, which has been downloaded millions of times. Today I'm the Deputy Editor of Forbes Advisor, managing a growing team of editors and writers that produce content to help readers make the most of their money.

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DISCLAIMER: I am not a financial adviser. These videos are for educational purposes only. Investing of any kind involves risk. Your investment and other financial decisions are solely your responsibility. It is imperative that you conduct your own research and seek professional advice as necessary. I am merely sharing my opinions.

AFFILIATE DISCLOSURE: Some of the links on this channel are affiliate links, meaning at no cost to you I earn a commission if you click through and make a purchase and/or subscribe. However, I only recommend products or services that (1) I believe in and (2) would recommend to my own mom.

[phd_angel]

Investment advisors hate to answer questions. I was fired by one because I asked questions about how much I was paying in fees, and I also fired advisors because of their sloppy decisions. Now I run my own portfolio independently and am very happy with the results.

[MattT]

If people understood what a 1% AUM fee costs, they would never agree to pay it.

[circusfreakRob]

This was pretty much my experience when I was with an advisor. I didn't have much confidence in what I knew at the time so I went with an advisor for a couple years. The portfolio they had me in was at least twice as many funds as this one has. I assumed a complex portfolio must mean they know what they are doing and it will outperform. Eventually, I learned more and used tools like this to plug in their portfolio to backtest against a simple Boglehead 3 fund. Well, it turns out, both portfolios had about identical returns, but all of their funds had larger ERs and also my 1% AUM fee. So, I was losing out significantly by using the "expert" portfolio. Now I self-manage a simple portfolio with basically no fees and I am much happier!

[bingoknows]

"Do you eat your own cooking" well said Rob!

[nobuharu]

Rob is trying to say "don't get ripped off" without saying it.

[AdamGoodmanlv]

As an advisor, I agree if a client is paying 1% (or anywhere near that) for investment management and are only getting a stock/bond portfolio (that they could do themselves), easy to make a case there isn't value there in excess of the cost (but does vary client to client). Where I see a good advisor add value far in excess of the fee/cost is using alternatives (things like structured notes, buffered investments and annuities) to stocks bonds that clients either can't access themselves and/or don't understand how they work, how to use them, if they are right for them, if so to what degree. Also if an advisor does tax planning that can easily add value far in excess of the fee/cost, as many do it yourselfers that I have met with are overlooking/missing annual opportunities. Some people also find value/comfort in having a 1 to 1 client/advisor relationship, someone that understands them, their goals, tolerances and resources and is available to answer questions, provide customized advice etc...

[jamesmarsh]

Thanks Rob. You are changing peoples lives. Well done sir.

[davidboston]

Great video. Really hits home with my wife and I because we have never used an advisor and have wondered if we should look in to working with one. Thank you for your expertise!!

[davidroberts]

Great video
This hits home
Thank you for sharing

[kennycheng]

excellent questions. thx for the candid video

[lebowski]

I'm currently preparing for a quarterly meeting with my advisor, and this excellent video is very timely! Fortunately, my advisor is very transparent on these topics, but it's good to let him know I'm watching!

[twilde]

I've flagged this one Rob! Very helpful. Many thanks!

[swright]

This is a great discussion. My advisor charges .48 AUM and uses a mix of Vanguard ETFs (VOO, VUG, VTV, VO...) in an IRA and ROTH IRA. The ROTH is more growth focussed than the conventional and we are doing ROTH conversions up until 2025 when the TCJA ends. My logic is that they can create a better and more tax efficient plan for growth and distribution than I can by doing it on my own. If I make a small mistake, the impact could be bigger than the price I am paying for their services on a $1M portfolio.

[Yette]

Question 1: Why are any of my investments outside index funds?

[Eric-wclx]

Excellent video! As everyone should know from your videos, portfolio returns are mainly driven by fees and asset allocation. International has been a drag for two decades now, even though all the experts recommended 20-30% allocations.

[vsjjwny]

Don't forget when speaking with your advisor: IT'S YOUR MONEY

[rick_vv]

With a 1% fee on AUM, your 4% safe withdrawal rate becomes a 3% safe withdrawal rate in retirement.

[mr.m]

Thanks for the excellent work. I have been 'encouraged' on several occasions to consider 'robo-advising' for a very small fee. Personally I have a strong aversion to this mainly because I feel that so much advising is 'robotic' anyway. A lot of advisors utilize an algorithmic approach in their management and can actually demonstrate very little 'activity' in an actively managed portfolio. I manage our portfolio, keep it very simple, and have found that we, the average investors, can do a very effective job at providing for their financial security - IF we will take the time to educate ourselves about the basics, and, as you suggest, ask the right questions.

[dalenelson]

My advisor charges 1.5% and a $1200 yearly fee 😫. Going out on my own very soon.

[Rand-obfm]

Love your channel and very relevant content Rob!
After months of internal debate & procrastination, I finally tried the New Retirement planner tool. Disappointed to see it needs a lot of work...not intuitive (at least for non-Finance professionals), very buggy, with inconsistent behavior entering/modifying information. I'll stick with Excel.