Paying someone to manage my finances June 15, 2019

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?

Paying someone to manage my portfolio: My review of Financial Engines February 21, 2013

A while back I discussed trying a portfolio managing service through my 401k.  Since they were giving me a 3-month free trial, I figured I’d try it out.

I had forgotten to write a review of the program until a friend of mine got a similar offer, and she wanted to hear what I thought of it.  So, here we go!

When I signed up, I think I told them my age, and what my other retirement accounts looked like, and I told them to go ahead and do their thing.  They changed the ratios of the funds that I’d “buy” each pay period.  Then every month, they’d slightly re-balance my portfolio, so as to not change everything over all at once.

The first time I called to cancel (before the 3 month trial period ended), they offered to give me another 3 months, so I kept it.  They hadn’t finished their re-balancing, so they wanted me to stay with the program to see if I’d like it more after they fully re-balanced my portfolio.  The 3 months passed, my portfolio got a bit less lopsided, but then it got to be a little over 3 months, so I ended up getting charged for some of the portfolio management (whoops!).   I paid a total of $9.25 in fees for my forgetfulness… not terrible, but annoying.  ALWAYS set a reminder for when you want to cancel something so you don’t get charged!

What I liked:  I got to be lazy, and let them make decisions for me.  I knew that my portfolio was  not set up very well, but I think I was a bit too chicken to actually change anything about it.  Knowing these people have experience in portfolio management and that they would do it in a smart way was helpful.  Because honestly, had I not signed up, my 401k would have remained very unbalanced and poorly planned. Let them worry, that’s their job!

What I didn’t like:  I couldn’t change anything on my own; I basically had signed over all control to them, so I couldn’t change anything directly myself.  So, if I wanted to change things, I’d probably have to call (which I didn’t).  They basically had a plan, and worked towards that plan (certain diversification plan).  Also, the way they do the reallocation, they do it bit by bit once a month, instead of all at once.  Which felt a bit slow to me, but I guess that’s a safer way to do it?

Also, having my 401(k) on autopilot, I sort of ignored my other retirement funds (my Rollover and Roth IRAs), and then realized once I stopped using Financial Engines, that I really should have been paying attention to all my accounts!

I think this program is good for getting your funds on the right track, and they do provide advice for your other accounts (they had ideas on my IRA since you could import your accounts for them to evaluate), but sometimes the advice doesn’t work (like recommending a fund that was unavailable required a huge minimum)

If you get a free trial for a portfolio management service, I think you should try it out, as long as you set a reminder for yourself before the trial period ends.  It’s a good way to make some changes to your portfolio that you may have been afraid to go ahead with, and if you don’t like it, you can cancel.  Keep in mind that the amount of time it will take for their entire re-allocation plan might be longer than the trial period.

Have you ever paid someone to manage your portfolio?  Or tried a program like Financial Engines? What did you think?  If you haven’t, would you?

Would you pay for someone to manage your portfolio? November 24, 2011

The other day I got an envelope in the mail.  It was an offer (through my 401(k)) to sign up with a retirement advice company.  My employer signed up through them to offer a retirement portfolio management service.

My first response was:  No Way.  I’m not paying some people to do something I could do for free!

But then I read the paperwork they sent me.  Apparently I have two options available to me.  I can use their site for free to continue to manage my 401(k) on my own.  Or I can pay a fee to have them plan out, monitor, and rebalance my portfolio. Of course, the paperwork tries to point out how much better things would be if I did pay them for help.  They included stats/graphs showing that if you get their help, you’re likely to improve your return over the long run.

So, will I sign up?  Turns out they’re offering a few free months to hook you onto the “paid” plan.  The fees actually aren’t horrible, and it’ll be nice to actually talk to someone about my fund selection.  Plus, I can import my other retirement accounts (like my Roth IRA and rollover IRA).  I’ve tried out their free program, and it has some decent advice (like how to reallocate my funds to have a slightly more aggressive portfolio) and what other funds I could invest in within my IRAs.  It also told me to increase my contributions from 5% to 7%.  So, I actually already changed the contribution amount.  It was an easy change that made sense.

As for the fund recommendations, they aren’t quite right.  For example, one of the funds they suggested I invest my Roth IRA in has a $1million minimum investment.  Um, no.  But it’s putting me on the right track, I guess.  I could look for similar funds that don’t have outrageous minimums or high fees.

I think I’ll try out the paid program, get my portfolio in order, then switch to the free advice system.  It sounds like Krystal is also thinking about briefly trying a financial advisor, then continuing to manage her portfolio herself.

So, like Krystal asked, would you pay for someone to manage your portfolio?  Would you pay for just advice?  I’ll admit, while I think I’ve got personal finance stuff covered, I’m not very confident about my investing skills.  So, trying this out to start, but then trying to learn more along the way (and shifting back to the free plan after the trial period is over) is the best way for me to approach this.

Paying attention to my retirement accounts May 4, 2010

In the past few days, I’ve paid attention to my retirement accounts.  Not sure what came over me, but I’d been debating making some changes, weighing short-term financial plans vs. retirement plans.  So what have I done these past few days?

I examined (and modified) the asset allocation mix of my retirement portfolio.  I have my rollover IRA, Roth IRA, and 401(k) all at Fidelity; with all my accounts with one firm, they could easily show me a nice pie chart of my asset mix.  And it was definitely not what my goal mix was supposed to be!  I am far enough away from retirement that I should have a pretty aggressive portfolio.

When I rolled over my old 401(k) to a rollover IRA, I didn’t really do much with the money.  I invested some of the money in a target fund, and left the rest in “cash”, i.e. a really low returns money market account.  It wasn’t until the other day, when I looked online and realized that my entire portfolio was way too heavy in short-term (i.e. cash) that I knew I had to do something to rebalance my portfolio.  So I used some of the money in “cash” to buy more of the target fund.  I’ll probably buy more of that later.  I figure I can use a little dollar cost averaging to my favor! 😛

I also decided that I might as well contribute more to my 401(k).  I had said that I was going to hold off increasing my contribution amount until I reached a goal amount in my savings accounts.  But then I realized that was kind of a silly plan.  I have enough extra cash in my checking account that I’ll still be able to continue my automatic savings plan even with a reduced net income.  I also realized raising my contribution by just one percent doesn’t really impact my cashflow, and I know that the more I contribute now, the better!  So, as of now, I’m contributing 5%, and getting matched on 4%.  I might be increasing the amount even more in the near future, once I finish doing a few more calculations.

Have you checked on your retirement accounts recently?

I rebalanced my 401(k) portfolio! December 13, 2007

Well I managed to rebalance my portfolio!  I finally figured out how to rebalance my 401(k) portfolio. It turns out, it’s REALLY easy to do, I just never clicked on the right link. I had way too much money in one fund (as I discussed before), but was moving towards 5 funds at 20% each. They’re mostly in growth funds, since I’m at a point where I can handle more risk (that is, I’m still pretty far away from retirement age). I figure I’ll rebalance them again in 6 months, know that I’m finally a lot more diversified; having 75% of your money in one fund just isn’t a good idea!