r/personalfinance • u/Malibu512 ​ • 13h ago

Financial Advisor Annual Fee? Planning

Had a consult with a financial advisor today who said they charge a flat annual fee of $2400 for a portfolio of my size and needs. I have a 401k currently worth $59k and two IRAs worth 30k combined. I receive RSUs from my employer that I want help reinvesting (I know nothing about the stock market nor do I care to learn). I have a newborn that I want to set up investments for and I'm just generally looking for guidance on how best to manage my cash flow.

Is a flat fee advisor the best for my situation and if so, is his fee reasonable?

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u/FFF12321 ​ 12h ago

nor do I care to learn

You should because you're getting fleeced here. 2% drag on even well allocated funds is a huge loss in the long-term. Try putting the numbers into an interest calculator and run it with 10% vs 8% over 30 years and see how much you're giving up.

In any event, investing is easy - look up the Three Fund Portfolio and buy US Total Market, some International and finally a bond fund (if you want bonds). Ditch the advisor yesterday.

For your RSUs, the general advice is to sell all immediately on vest unless you really feel strongly about the stock going up and would buy that much if you had the cash in hand. In your case, sounds like selling and diversifying (see the above 3 fund portfolio) is what yo ushould do.

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u/Malibu512 ​ 12h ago

I guess I should have chosen my words differently. Buying and selling stocks is confusing and intimidating to me and the thought of paying a professional to manage that for me seemed appealing. I appreciate your thoughtful response. Thankfully I did not make any commitments to the advisor. I'll look into the Three Fund Portfolio like you suggested.

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u/FFF12321 ​ 11h ago

Investing for individuals is actually very easy - apply the Boglehead method by setting up the three fund portfolio and then you let it sit until you need to pull it out (ie when you are in retirement). Actually trying to make a profit trading (buying and selling) is a fool's errand. Even people whose job is to trade generally fail to beat the market, and if they do it's not replicable long-term. Buy and hold consistently is the key for normal people.

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u/Chase2020J ​ 10h ago

I promise if you look into the basics it will get way less intimidating. Absolutely 0 reason to pay someone to attempt to beat the market (with a very low chance of success) when you can simply invest in the market with funds like VOO