ill keep it short and sweet (26m) i have received a 250k settlement & went and deposited that into my savings (hysa) i paid my cc debt ($4k) anyways & then the manager there asked me to speak to their financial advisor, he says he can help me invest and diversify but obviously theres a fee working with him. he wants to meet again this Wednesday 8/25 to talk specifics and basically he wants a yes or no personally i dont wanna pay someone to take care of my money but if anyone out there can offer any insight on the benefit of a financial advisor i would really appreciate it.
financial advisor advice
byu/silvergator17 inpersonalfinance
Posted by silvergator17
6 Comments
In my opinion you can do better than most financial advisors by investing in the S&P500 vanguard
Before doing anything you need to understand what is an ETF and generally the market
Spend some time studying if you want to take care of your money đź’°
And do not look for financial advice in any sub or social media
Put in some effort young man!
They are going to charge you an AUM fee. The reason not to pay AUM (percentage of Assets) fees is because they will eat into your returns, every single year. Typically around 1% (again, every year) is a huge haircut to be taking. Most advisors don’t beat the market. So if you grow to $1mil, you’re paying $10k/yr for not beating the market. If you have $10mil, you’re paying $100k/yr for that.
Anyone can invest in any ETF they want with as little as $1 at Fidelity, with zero account fees. I like total world, set and forget. https://www.thestreet.com/etffocus/trade-ideas/why-vt-and-chill-is-probably-best-etf-investing-strategy-out-there
Tl;Dr, this 1% is an every-year fee you don’t need to pay
Go to our wiki, click “Windfall”.
You don’t need an advisor.
If you put the money in a brokerage like Fidelity, you likely can speak to their financial advisors for free.
Alternatively, you can hire a fee-only advisor at an hourly rate to create a financial plan for you.
Or you can simply manage it yourself. At your age and at that asset level, I see no reason at all why you couldn’t manage it all yourself.
Start here: [https://www.reddit.com/r/personalfinance/wiki/commontopics/](https://www.reddit.com/r/personalfinance/wiki/commontopics/)
Then here: [https://www.reddit.com/r/personalfinance/wiki/commontopics/#wiki_windfalls](https://www.reddit.com/r/personalfinance/wiki/commontopics/#wiki_windfalls)
Cancel the meeting on Wednesday. You can always hire an advisor later if you decide you want help understanding something or developing a strategy, and at that point you can decide what you’re looking for in an advisor and who you want to hire. Don’t let them make this seem urgent or that you need them to help you.
You didn’t have this money a few months ago, and you don’t need to rush to decide what to do with it now. You already knew enough to put it in an HYSA. It will sit there and at least keep up with inflation while you learn everything you need to learn to manage this money on your own.
If later on you decide you want financial advice, you can get it then, and you’ll go into it with more knowledge and confidence so that you can make sure you’re still the one making the final decision about what to do with your own money.
One thing I will recommend though is to open another HYSA at a second institution and move at least $10K there. At 4% APY, your $250K is going to earn $10K interest per year, and $250K is already the maximum for FDIC insurance for an individual depositor at an insitution. Bank failure is uncommon, but it happens, so move a chunk to a different institution for a separate $250K insurance limit, so that all the interest will remain insured as well.
Edit: Personally, I agree with your gut instinct. I’m not interested in hiring an advisor for my investments either; I’ll pay myself to educate myself and make decisions. But I don’t know your situation, so you may decide it’s beneficial to you.
I’m a licensed advisor and tbh most simple situations where someone just wants to invest a lump sum without any big complications can just use the AI of their choice. Ensure to ask the AI what questions you should be asking and what you may be missing. My industry is already obsolete.