Graduated Learning: Life after College

I got my degree, I got a job…now what?

Paying someone to manage my finances June 15, 2019

Filed under: Personal Finance — Stephanie @ 3:29 pm
Tags: , , , , ,

I know what you’re thinking: Stephanie is wasting her money! Doesn’t she know you just put everything in low cost index funds and call it a day?

Well, here’s what I’m doing, and why.

Remember years ago when I tried out Financial Engines? I was given a free trial to have someone manage my 401k for 3 months.  It was beneficial for getting some of my portfolio re-balanced, but it wasn’t quite enough to make sure I had everything in order.

So, now, we’ve signed up with Financial Engines again (FYI, this isn’t a sponsored post, just sharing what we did).  Luckily, my employer still has a deal with them, so managing the 401k portion of our portfolios will be cheaper (only a fraction of a percent for managing this part of our money). They are also managing our IRAs for a higher fee.

Why did we do this? Honestly it’s because we were stuck in “analysis paralysis”, unsure if we should have everything in one index fund or many, how to balance between lower and higher risk options, and just needed to make a move. We had too much money sitting in the “cash” part of our accounts that we never invested, and we knew if we didn’t pay someone to take care of it for us, our accounts would continue to sit stagnant and poorly invested.

We discussed our risk threshold and retirement goals and they selected the funds that matched our needs. I confirmed with them that they’d be doing mostly low cost index funds and ETFs, and that they were a fiduciary (working in our best financial interests). They were!

Our intention (and we should make sure we set a calendar reminder for this) is to cancel the service after 6 months. This was basically our way of jumpstarting our retirement accounts and getting things in order. We don’t plan on staying with this service long term, as the fees definitely would add up over the long run.

Yes, it will cost us a little money for these 6 months, but compared to how much gains we could potentially lose out on having our accounts sitting mostly in money markets and a few target date funds (that were a little bit more expensive than standard index funds), I think (and hope) we’ll come out ahead. I liken this decision to signing up for a personal trainer: you might hope to get in shape, and you have a basic idea of what you need to do, but you need that extra push and guidance to get you going in the right direction and kick you into gear!

Have you ever paid someone to manage your finances? Was it worth it?


5 Responses to “Paying someone to manage my finances”

  1. Abigail Says:

    Never done that but I’d i get to the point of investing outside of retirement I’ll probably take that step at least to get myself started. For now I just have targeted Vanguard retirement funds and have to hope they do the best they can for me.

    It sounds like you’re already getting your money’s worth so that’s good. It really is like a personal trainer now that you mention it!

    Liked by 1 person

  2. I’ve considered paying for financial advice but only if they could offer me more nuanced and valuable information than I can gather on my own and so far that hasn’t been the case. I had money in Target funds for a while then moved them to index funds, then in recent years dumped almost everything into VTSAX and the rest into VBTLX for my investments and the equivalent in our Fidelity account. Keeping it simple!


  3. FreedomFIter Says:

    I have not paid anybody – but maybe someday! Right now they feel pretty straightforward.


  4. Kristin Says:

    I’ve had financial engines manage my 401k portfolio for a long time now. Previously it was all just sitting in cash while the market went up but I was still scared of the risk from the recession.

    I see it as, I only have so many brain cycles to manage various things. I choose to spend most of them at work where I don’t end up in analysis paralysis, which hopefully leads to bonuses, promotions and raises. Making more money there is probably better than spending lots of time analyzing this stuff or sweating the management fees? I probably should pay more attention to it but I don’t plan to start picking my own funds anytime soon.

    Liked by 1 person

  5. Your post rocks! I couldn’t agree more. Knowing yourself and how you handle your personal finances is the number one area of your finances that you need to grasp and it sounds like you’re honest enough with yourself to find a dedicated “trainer” who will help keep you on track.

    I’d also like to note that these “trainers” can be very handy especially when it comes to tax efficiency or if you want a more stable portfolio while maximizing returns. AKA staying “Sharpe”.

    A reason that someone might consider this is if they are looking to place capital into a variety assets such as real estate or purchasing a business during a market downturn. I’m not totally sure what the exact correlation is between the housing market and the U.S. stock market, but we have seen in the not so long ago past that if housing recessions are significant enough then they can put the entire economy on shaky ground.

    To your point, financial planners and money managers or trainers as you put are actually pretty useful depending on who you are and what you’re trying to do.


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