What kind of financial person do I need?

July 25, 2017 12:23 PM

After several unsuccessful bouts of trying to better educate myself on money matters, I'm starting to think that I actually might just need to hire someone who will, in a kind of hands-on way, help me manage my long-term finances across several areas. Or at least help me design a system I can wrap my head around. Is this a thing? Or would I need several professionals? Details within.

OK, so I grew up in a family that was always somewhere on the scale between "broke" and "straight-up poor." As a result, I basically learned to:

1) spend nothing, or at least feel bad about spending
2) be afraid of credit and never, ever use it
3) feel like everything about money is scary and complicated and Not For You

Somehow, I managed to wrangle myself a very good education with a very small amount of debt, and have worked pretty consistently. Life Lessons 1 and 2 mean that I now find myself in my mid-30s with pretty ample savings and no debt whatsoever. Yay!

But Life Lesson 3 means...I have absolutely nothing else sorted out. So like, my credit score is only so-so, because I use hardly any credit. I have a tiny tiny 401K that has been languishing since my last staff job, which was 8 years ago or whatever. Some of my savings are in a money market fund, but I'm sure they could be better used...just not sure how. And so on and so forth. I'm an independent contractor, so I don't have the usual kind of institutional systems in place - I can't just check the "contribute X to 401K" box, and such.

Moreover (as I've mentioned in previous questions), bureaucratic stuff and phone calls are just a nightmare for me. Yes, therapy, obviously, but frankly I don't think my finances can wait another X years until I get my childhood resolved. I'm already behind the 8-ball. So I think what I need is a person who can help me:

1) Make the phone calls that would allow me to do *something* about that old 401K
2) Decide what the best retirement savings plan would be and get it set up
3) Figure out a plan for building credit without being a dumbass
4) Help me maximize the benefits of the savings I do have

Is there that kind of person? What are they called?

Or could I hire someone to help me with SOME of these, making the rest less daunting?

Like I said above, I know there are millions of online resources for this stuff -- I've tried to use a bunch of them. I just have a huge mental block about it and create more problems than I solve when I try to enact them.

Thanks in advance!

posted by We put our faith in Blast Hardcheese to Work & Money (10 answers total)

Fee based financial planner.
posted by sandmanwv at 12:26 PM on July 25, 2017 [3 favorites]

Seconding fee-based financial planner. We finally switched to one a couple of years ago after seeing the same advice here and couldn't be happier with her. Interview a few to find someone you're comfortable with. We had a list of the things we wanted answers to, and after a month or so we were given a very detailed plan on where to move our investments to buy-and-hold at low fees, and we had lots of time to ask questions about why she was recommending what she was. She would be able to cover all of the things you're asking about here, and could give you advice on what to do now and what to do in the future. And after having one in the past, I would strongly advise against any financial planner you pay as a percentage of your portfolio or anything other than (a) a flat fee or (b) an hourly fee.
posted by craven_morhead at 12:48 PM on July 25, 2017 [3 favorites]

Oh, gosh, so the answers above are correct but I think they have the terminology backwards. Or maybe they have a different take on the situation?

I would argue you want a "fee-only" financial planner. Fee-based is a made-up term that basically means the opposite of "fee-only"--the planner gets a commission for steering your money certain ways. My understanding is that the term is deliberately misleading to confuse people.

The good news: once you find a financial planner you like, you can largely hand the reins over to them. Honestly, sorting out those two terms was the hardest part my husband and I found in getting a good financial planner; after that it was smooth sailing having them set up an awesome life plan for us.
posted by whitewall at 2:01 PM on July 25, 2017 [3 favorites]

Yes, fee based planner, but also read "The Millionaire Next Door".
posted by at at 2:04 PM on July 25, 2017

I meant fee-only, non commission.

FYI, this isn't super cheap. I've looked at a couple and an ongoing, multi-month relationship seems to run anywhere $2-4k. A intro/one-off discussion seems to run around $1000 with anywhere between $100 and $200/hour (which probably includes any analysis time) for extra work. I'm in NYC so YMMV.
posted by sandmanwv at 2:25 PM on July 25, 2017

I am a person with basically zero retirement savings.

Having said that, I know a guy who developed algorithmic trading strategies for some sort of trading firm (which I mention because, to me, that makes him smarter than me about such things), and he speaks highly of (and has his retirement invested via) Betterment.

I have no idea what does of fees they charge, but might be less taking to someone than actually talking to someone.
posted by booooooze at 3:06 PM on July 25, 2017

Yeah, I guess I thought fee-based and fee-only were synonymous, but I guess they're not. Take a look at the NAPFA.

And sandmanwv is right, it isn't terribly cheap. Our advisor charged $180/hr.
posted by craven_morhead at 3:45 PM on July 25, 2017

Here is an answer I posted to an earlier question - it is a fairly different question, but my answer gives some info about picking a financial advisor, and has links to search for one.
posted by 2 cats in the yard at 6:41 PM on July 25, 2017 [1 favorite]

I pay 1.25% per quarter to our Financial Advisor (mostly a guy we work with directly but he's part of a larger company). The 1.25% is based on the amount of money they manage, but they also offer some light tax planning and advice on my 401k that is not under their control. The guy who we work with asks us about our risk tolerance and when we want to retire, and then goes from there. We just each rolled old 401ks into their control with Schwab.

I used to try to do this myself, but it's just too overwhelming to try to keep up. In my case, the CEO of the firm is someone that went to school with my parents, so there really wasn't an issue with trust. My Dad said they help all the time, but they are most helpful during a downturn when us mere mortals would be panicking or selling off everything.
posted by getawaysticks at 6:06 PM on July 26, 2017

Just wanted to mention, our old financial adviser had a setup like getawaysticks', but as our portfolio grew the 1.25% cut turned into a lot of money every quarter. Our entire financial overhaul from our new hourly-rate adviser was less than three months' of fees under the old system. Obviously this will vary depending on how much money you have under management, but its worth sitting down to do the math. With a large enough portfolio the difference can be tens of thousands of dollars per year.
posted by craven_morhead at 7:53 AM on July 27, 2017