2012 class...been working in IBD for almost a year now. I hadn't really been managing my finances seriously but in doing more reading on pension options, tax implications, etc...it seems like it might be worthwhile to find an adviser to sort all this out without me spending excessive time on allocation of funds between different account to minimize taxes, maximize employer contributions, etc. Thoughts? How many of you use financial advisers?
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The keys to building wealth are compound interest and reduction in fee drag. No one your age and asumed level of intelligence should need an FA to help them manage their money. If you are really lazy and pressed for time simply do the following:
1) pay off all high interest rate debt 2) contribute to company 401-k and get maximum match (free money) 3) set aside 3 months of living expenses / emergencies 4) open a brokerage account and allocate across 5 low cost index funds (domestic stocks, emerging markets, maybe REITs, maybe commodities, etc. Avoid fixed income given your young age, allocation will get less aggressive as you age)
Saved you an hour long sales pitch and having to be bombarded with products that ultimately benefit the FA.
This.
You can also consider making your index funds target at small-cap & value (I would expect offers higher expected return), and investigates the tax-benefits vs. liquidity loss that you'd get from doing your personal investing through your 401k or an IRA
At 22 / 23, you are not going to benefit much from a financial advisor. You don't a huge amount assets, likely no real estate, and should have fairly straightforward finances.
I love investing, but I'm not going to play with all my savings. Just like I wouldn't invest 100% of my savings with one manager. Even if you're in a HF / AM position, there's no shame in diversifying a bit. An allocation to low cost index funds / well managed mutual funds is reasonable.
That said, if you ever think you want to invest yourself, start accumulating experience now. Drop 10 - 20k in a brokerage account and go at it.
Ill run contra on this -- certain brokerages get deals on being able to avoid the high up front load fees and give you a wrap fee per year and also access to structured products which can be sexy to add to your portfolio
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