Three Essential Considerations When Working with a Financial Advisor

If you are thinking of working with a financial advisor, here are three things you should probably consider first.

1. Understand the Fees Involved

Even if they're humble enough to realize that they themselves aren't gonna beat the stock market, they will still most likely put you in at least one fancy mutual fund to justify their charging you 1% of your assets. I call this the 'You Never Would Have Found This Fund Without Me' Fund. And odds are that it costs you at least another 1% just to be in that fund.

2. Calculate Your Effective Fees

Now that we're up to a 2% annual fee, remember we were trying to live off of 4% of our assets in retirement. So now 50% of what you were expecting to live off of, well, that's going to your advisor's retirement account now.

3. Look for Competitive Fee Structures

If you're looking to work with an advisor, just make sure that the fund fees are no more than an average of like 0.05%, that you're paying them a flat annual fee for their service. Or, you know, you could just put 80% of your assets in a domestic index fund, 10% in an emerging markets fund, and 10% in a small cap fund. Keep 100% of your own assets for your own retirement.

If any of this is helpful, like and follow, and I'll keep trying to get you one step closer to where you need to be.

Source