Why do I need a financial advisor?

What's up WSO brotherhood!? 

I was talking to a former peer of mine from the good ol' CFA days.  He is hanging up a shingle as a financial/wealth/investment advisor.  In case it matters, he has a CFA Charter, CFP, and MBA among some other certifications.  He is hoping he can have a shot at managing my assets (~$1M) in Roth/Traditional/Taxable brokerage accounts.  My question to the experts here is why I need someone to manage my assets?

  1. I am a simpleton who believes markets are efficient.  I index invest for cheap and rely on target date funds for a portion of my retirement planning.

  2. I have an attorney for my estate planning needs and have wills, powers of attorney, and health care directives.

3.  I have a decent life insurance agent and ample term insurance (She is also a CFP begging for my assets). 

4.  I have 529s for the kids through a state that uses Vanguard index funds.   

5.  I completed 2 levels of the CFA exam, worked in asset management for a hot minute, and follow markets.  I have a practical working knowledge of managing my investments.  

  1. Emergency fund to cover a year of expenses (if that matters) in the bank.

7.  My taxes are simple with W2 income only.  I have several CPAs in my family, one of whom is a tax manager at a big 4.

His pitch.  But do you have a financial plan?  What's your plan?  

I really don't know what this plan is or what value it can bring?  I'm a cheapskate by nature and live well below my means and invest the rest.  What value would a advisor bring worth the 1% management fee? 


Comments (6)

  • Analyst 3+ in IB - Cov
Aug 15, 2022 - 11:17pm

As someone who came from the space: you don't. If you are just going to index your assets at are really just looking for beta, then just keep doing that - no need to slap another management fee on top of the expense ratio. 

If he can get you access to interesting funds, ideas, investments that you might be interested in, then it could be worth it, but that doesn't sound like it's up your alley.

I'd say skip it, save a few bucks. I'd keep him in your circle because if he makes it as an advisor, he can have solid connects and intros and can have a symbiotic relationship.

Most Helpful
Aug 16, 2022 - 9:09am
thebrofessor, what's your opinion? Comment below:

thanks for the tag but I'm trying to not be active on WSO anymore, got other things grabbing my attention and the forums have kinda turned into a cesspool.

just like all service businesses, you don't need one, you may benefit from one but it's not imperative, so keep being DIY so long as it's going well

also, tell your friend he needs a bigger pipeline if he's pitching you that hard, that's a huge red flag imo

Aug 16, 2022 - 8:23pm
Username_TBU, what's your opinion? Comment below:

Agree, no need. So funny because I recently (last week) had someone pitch me after telling them I know exactly what I'm doing (they asked how I sized my life insurance, how I think about allocation, etc. and I had rational responses for all) that still, they can provide a "financial plan." My understanding is it is just taking what I'm doing and putting it on a piece of paper.

People don't realize how much the fees add up. They're like, 15-40% of your return over time

Aug 17, 2022 - 1:53pm
Waterfalldown, what's your opinion? Comment below:

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