Forking it over for financial frankness
August 3, 2011 11:06 PM   Subscribe

We've made an appointment with a financial planner. What can we expect from our first visit?

My husband and I are at a point where we are seriously considering buying a house and thought it was time to meet with a professional to help us determine if this is really feasible. We want to pull from our 401K's to help with the down payment and we're not sure if this is a great idea or if we're going to get seriously dinged due to recent employment changes for both of us. Plus we want to just get into better general financial shape since we're not getting any younger.

Due to the above reasons, we've mad an appointment with a well reviewed financial planner that I found on Yelp, I know not the most reliable sources but you gotta to start somewhere. Anyway, we have an appointment with him and he's charging us $180 for the initial meeting. He said " I charge for the first meeting as it is planning session where we get right to work. I realize many advisors offer a complementary "meet and greet", however it is because they charging much more per client than I do (or are selling commission based financial products)." We don't have an issue with paying per se but we would like to know what we should be getting for the money, especially out of a first visit.

Can we expect to know from this meeting if our plan to buy is a good one? We also need concrete advice on what to do with our 401K's and other retirement plans. Is this reasonable? Also, any other advice on what we should be asking/looking for would be appreciated.

Thanks bunches smarties!
posted by lannanh to Work & Money (9 answers total) 5 users marked this as a favorite
I don't have any real experience with financial planners but having read through your question I recommend perhaps broadening your search for a different financial planner. A first session is often free, as you acknowledge, and I think for good reason. You want a first session to acquaint yourself with the financial planner and see their perspective and how they plan to work. What good is it to start right away and get straight to work for $180 if you don't like the financial planner and don't think you're on the same page?

I suggest to keep looking for a different financial planner that will offer a free consult.
posted by masters2010 at 1:17 AM on August 4, 2011

Best answer: Can we expect to know from this meeting if our plan to buy is a good one? We also need concrete advice on what to do with our 401K's and other retirement plans. Is this reasonable?

He sounds like a straightforward guy, so just ask him. Personally, I like and am much more comfortable with the model your (maybe) financial planner adopts. Were he able to answer my key questions in the affirmative, so that I knew that at the very least I'd depart with a plan for house buying, I'd be fine with that.

All of the free consults I've had in this area have been wishy washy and not resulted in anything concrete. That's because they're really meet and greets. That does not sound like what you actually want. It sounds more like what you want is immediately delivered professional advice, and $180 is a very reasonable charge to meet that need.

posted by DarlingBri at 3:49 AM on August 4, 2011

The way I remember it, we paid $650 about eight years ago for a couple of visits. The guy worked for American Express's financial planning arm, so he gave us a guarantee that he'd save us double what we paid him. He came pretty close, by consolidating our insurance with a lower-cost agency. Today we know we could do that ourselves.

Here's what I remember getting from our guy: 1. Cheaper insurance. 2. An explanation why we should get life and disability insurance, which convinced us, although he certainly got commission on it. 3. His opinion on our 401(k) allotments. In truth, neither of us changed our philosophies; I remained aggressive, my wife conservative. But with this guy explaining that an aggressive approach made sense at our age, it probably helped convince my wife that my philosophy was not a bad idea. 4. Repeated explanation of compounding interest pre-tax vs. post-tax until even I finally understood the difference, vis-a-vis 401(k) vs. IRA. 5. Other more longview-y things like how much our current retirement savings might amount to by the time we retired, including an interesting detour into how our expenses also might change.

So I would say you can expect to know from this meeting whether your advisor thinks your plan to buy is a good one. (Ours discussed with us the benefits and drawbacks of paying off extra principal each month.) I would find it odd if you asked and he said you gotta pay more to get the answer to that question. But if you're especially concerned about it, call him again and ask him how that will work.
posted by troywestfield at 6:23 AM on August 4, 2011

You might want to know how long this session may last to help determine if $180 is a fair price. Things you can do to make the session more productive is to make sure that you have the following information ready:

* How much you earn and how much you take home
* If you are saving now, how much.
* The delta (ideally positive) between your monthly take home pay and your average monthly expenses
* Balances for all your investment and saving accounts

Most importantly, have an idea of your near term goals.
posted by dgran at 6:33 AM on August 4, 2011

I agree with masters2010's comment. I met with a financial planner who was fee based. When I say fee based I mean this - charges by the hour only and not a percentage of your portfolio's worth. You can find such a planner at Garrett Planning Network.

We want to pull from our 401K's to help with the down payment and we're not sure if this is a great idea or if we're going to get seriously dinged due to recent employment changes for both of us

In my readings you will be unable to do this because you do not work for the employer presently. This is one of the main reasons borrowing from a 401k is risky. Yes - you are "borrowing" from yourself, but should you loose your job you must pay it back immediately. Most people are unable to do so.

If you want concrete advice on your 401k and other retirement plans only I have found the services of Smart 401k to be excellent. They also provide fee based services (based on my definition).
posted by BuffaloChickenWing at 6:48 AM on August 4, 2011

A lot of what you get from this person is an objective view of the state of your overall financial picture.

You are probably used to looking at a bank statement here, a 401(k) statement there, and a paystub in between. The planner will pile all those docs up in front of them, go through the various allocations in your retirement plans, and sum it all up for you. When my wife & I did this for the first time, I found this to be the most interesting/valuable aprt of the whole thing.

The F.P. will probably suggest a few changes, big and small (change asset allocation, dump the IRA for a Roth IRA, etc.). He may offer more general advice, too, based on thing he's learned across his carrer, watching his clients' lives change as they age. This is also useful "wisdom" if you're younger.

Like dgran says, the more of your paperwork you have organizaed and with you, the better the F.P.'s advice will be.

That reminds me, I have to call our guy again!
posted by wenestvedt at 7:18 AM on August 4, 2011

If I read your question right, it sounds like you're asking whether you'll get all the financial information you need at present out of this initial meeting. I think there's a reason that it's called an "initial meeting"--there's an expectation that there will be additional ones. Unless you are submitting your financial information ahead of time, there's a certain amount of "number crunching" that needs to take place based on the information you provide and stated goals as discussed in the initial session, and it's unlikely to take place while everyone's huddled around the laptop. However, I think DarlingBri's advise is good--I'd just call and ask how long the process typically takes with young couples and fairly simple financial situations.

For what it's worth, we're currently working with a fee-based financial planner, and while our financial situation is quite a bit more complex than yours, we are 4 sessions in and still a ways away from being "done" with the process. However, we've been able to get specific answers to specific questions as we go (like, "would it make sense to cash a smallish college savings account in an S&P index fund to cover our son's HS student exchange tuition in a couple of months?)
posted by drlith at 7:24 AM on August 4, 2011

You will be paying a financial planner for his/her services, but you may not like or understand the information provided. Ameriprise Financial offers a money back guarantee. They do charge a minimum of $300.00, but $600.00 is quite common. If after they put together a package you don't like, you can ask for the money back and terminate the relationship. Be forewarned that Ameriprise, and many other "fee based" planners can and do sell products where they get a commission. They tend to push you towards front loaded funds ( A shares), when there may be no load equivalents available. However if you are in it for the long haul A shares can be cheaper in the long run.
posted by Gungho at 9:55 AM on August 4, 2011

Response by poster: Thanks for your advice/antecedence so far. We definitely assume this will be the start of a long term relationship but I just wasn't sure what the norm was for these sorts of things. I'm just starting to take this stuff seriously so it's somewhat new to me.

As I said, this guy doesn't have a ton of ratings on Yelp, which isn't surprising considering the industry but they're all 5 star. He said the meeting would be 90 mins or less. He's sent us a comprehensive sheet to fill out with all of our financial data and a budget to submit to him beforehand. Because he'll have all of this information prior to the meeting, it seems like we really will be able to get right to work.

I'm definitely feeling more comfortable with this meeting but any other stories or advice will definitely be read.
posted by lannanh at 10:02 AM on August 4, 2011

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